Car Corporation

How can demand and supply side policy help Jorgenson

William Jorgenson sent us a letter concerning about the rising cost of production associated with the increase in oil price, which effects his automobiles company. As a result, the company’s profit has fallen and fewer cars are being sold.

To improve this situation, there are two policies that can help Jorgenson. The first policy is the supply side policy. The policy is designed to improve the supply side potential of the economy, make markets and industries operate more efficiency. It is the key to achieving sustained economic growth without a rise in inflation, which, in this case, supports Jorgenson to…

The second policy is the demand side policy. Low tax should also encourage entrepreneurs as they will not lose much of the profit in taxation. Using tax in this way to encourage enterprise and hard work is a supply-side policy. To improve this policy, we have to convince Jorgenson to increase employment. Also, we should reduce the cost of transportation and give high incentive to the employers to increase their working confident and boost them to work harder.

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4 Comments »

  1. Peter Anthony said

    You have some good ideas here. This is your best post so far. You might have to consider opportunity costs and way to ensure that business do what you hope they will do.

  2. 12congwi said

    You make a good analysis of how business tax can be lowered to encourage economic competition and it’s effects. Perhaps we can incorporate this idea into our plan for solving the economic crisis.

  3. Bridget said

    This is your best post so far Pat! You were very succinct and clear with your ideas and I think with our combined ideas we can make a great presentation. Good job.

  4. […] Dilemma: 1, 2 and […]

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