| Problem | Components |
|---|---|
| Policy issue area: | Economics |
| Policy issue: | Monetary system |
| Description: | Significant interest rate changes interfere with proper functioning of the economy. |
| Symptoms: | With high interest rates domestic business investments are becoming too costly; investments and jobs are exported to foreign countries; housing is becoming too costly to first-time buyers; difficulties of financing budget deficits. |
| Causes: | Lenders' expectations that future budget deficits will trigger inflation; Federal Reserve Bank's policies. |
| Cost of problem: | - |
| Solution | Components |
| Resources: | Universities and research institutes; Federal government (Congress and regulatory agencies); financial institutions. |
| Goal: | Reduce real interest rates to an acceptable, reasonably steady level (not more than 2% over inflation rate). |
| Program area: | Financial resources development |
| Program-remedy: | 1. Cut the Federal budget deficit 2. Require the Federal Reserve Board to follow policies that lead to reasonably low interest rates. |
| Program-prevent: | National policy of balanced economic development and matching monetary policies. |
| Cost of program: | - |
| Beneficiaries: | All who need to borrow money. |