Recession in the economy Essay Example | Topics and Well Written Essays - 500 words

Recession in the economy - Essay Example Hence, countries are expected to come up with various macro and microeconomic policies that spur positive growth so that their economies can recover from the menace. Such is the case in Poland if they want to redeem the situation. Consumption forms a critical development criterion in any economy and the state must find measures to spur the vice. The government should first reduce taxes on the basic goods and services as it would reduce the prices of the commodities. Consumers will increase the number of consumption bundles and have an extra income that they can spend on other goods. As a result, the consumption patterns increases that bring more money to manufacturers that they can invest and spur growth in the country. Another measure is by the Poland government to provide subsidies to the producers. The manufacturer's cost of operations will be reduced hence making cheaper commodities (Auerbach, Alan and Yuriy, pg 15). This policy will translate into low prices of goods and service s in the market that will reduce inflation. High consumption results in more sales that lead to high revenues. The firms can hence invest the excess income making them expand and, as a result, hire more workers that reduce unemployment in the economy. Through the central bank of the country, the benchmark lending interest for loans should be reduced to commercial banks. The reduced mortgage rates would be passed to consumers and investments in the form of reduced lending by the commercial bank. More persons and firms would acquire the loan services that they invest in major parts of the country. The policy is necessary because the interest rate is inversely related to investments levels. The higher the interest rate, the lower the investment and the opposite are right (Auerbach, Alan and Yuriy, pg 18). Therefore, due to low rates, investors will expand their production that increases the level of output within the economy. The increased production makes the gross domestic products t o raise that makes the country have a favorable trade balance with her business partners increasing economic growth in the country.