Status Report on Pollyannas Economy - Term Paper Example

 When compared to the United States, Pollyanna does not match up. The following chart shows money GPD, unemployment, inflation, and money supply. Pollyanna’s national currency, the Ping Pong, has collapsed because of rampant inflation rate of 200% annually in the last 12 months. Against the US dollar the exchange rate is 500 Ping Pongs to the US dollar. Despite the advantages of natural resources, the rival gangs are disrupting exports. Unemployment is at a record high of 40%. All of this bodes ill for Pollyanna.

Something has to be done now. My first suggestion would to look toward the Russian Economy. Like Pollyanna’s Economy the Russian Economy looked very grim. Then a strong leader took control. Vladimir Putin guided his country into a market economy. A market economy can be defined as an economy is based on the power of division of labor where the prices of goods and services are determined by the free price system controlled by supply and demand. Russia has a corruption problem, but it does not adversely impact the economy.

By implementing the Russian model, plus opening up the natural resources available to Pollyanna, the economy could pull out of this recession. My plan will work on a variety of levels. When using the Russian market economy, the following issues will be resolved: a. Money Supply-By opening raw resources that will be exported to other countries, the Money Supply should rise. b. Inflation-If real products are leaving the country, inflation should drop. The more American dollars, Euros, and Pounds that is pumped into our country.

Inflation will go down. c. Unemployment-It is going to take people to chop trees, work for oil companies, and to harvest other natural resources. Also with more money in the country, more business will flourish. d. The gross domestic product-the GDP will rise with the exporting of goods. e. Natural resource comparative advantage-Since we have oil and teak wood, the Western countries will want to invest in our country. f. Political and social stability-If the economy stabilizes, then political and social stability will follow. g. Tax policy-More taxes can be collected from a prosperous economy.

The following chart shows expectations of Pollyanna’s Economy after six months: All of the figures in the chart go up, except for inflation which will go down. These recommendations are the best I can give. The only other option is a revolution or socialism. Thank you for your time.