Question

7. Imagine that several inexpensive brands of energy-efficient cars from foreign manufacturers are introduced into the American marketplace. The cars are so popular that it hurts traditional U.S. automakers, forcing them to lay off hundreds of thousands of workers and contributing to a recession. In the table, describe how the federal government might plausibly respond to this situation through a fiscal policy, a monetary policy, and a foreign policy. Your response should demonstrate an understanding of the typical options available to the government in each policy category. (20 points)
Fiscal policy

















Monetary policy

















Foreign policy

Answer 1

Fiscal policy that the government might use to respond would be to reduce taxes and increase spending.

Monetary policy that might be used would be to increase money supply and reduce interest rates.

Foreign policy that the government might use would be the imposition of import tariffs or quotas to reduce the import of the cheap cars.

How would the government respond to the recession?

The government's fiscal policy would focus on getting the nation out of recession and so they would increase government spending while reducing taxes to put more money into people's pockets.

This will also be the goal of the monetary policy which would increase money supply and reduce rates. The lower rates will allow automobile companies to access loans that they can use to produce cheaper cars.

Foreign policy would try to reduce the number of those inexpensive cars coming into the country and so import restrictions like quotas and tariffs would be applied.

Find out more on import restrictions at brainly.com/question/12273928.

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