In 20132014 the nation was struggling with a persistent high

In 2013-2014, the nation was struggling with a persistent high level of unemployment, low rates of economic growth, and high federal budget deficits. Explain how solutions to these economic problems conflict with one another. If you were economic dictator, how would you proceed against this set of problems?

Solution

High level of unemployment takes place due to lower level of production activity. Solution to this problem is to offer tax benefits, subsidies and other incentives to business houses / firms. It will improve the productivity level as well as the employment level. But, it will further increase the federal budget deficit. Thus, solution to one problem can aggravate other economic problems.

Also, federal budget deficit can be reduced by following solutions:

Above solutions can improve the situation of budget deficit but it will cause reduction in demand as negative multiplier sets in. it will reduce the GDP of the economy and unemployment level will again rise. Thus, solution to one problem can again aggravate the other economic problems.

To resolve such economic problems / issues, we have to do the following:

Regular revision of above measures will gradually resolve the conflicting economic problems and sustainable growth will be achieved.