The unemployment peaked after the stock market crash of 2008, reaching 9.6% point. By 2017, this figure decreased to 4.4, according to Statista. Nevertheless, millions of people still struggle to find a new job that would allow them to pay bills. To get these new jobs, we need small businesses to create them. Potentially, a capitalist economy puts healthy conditions for small businesses and encourages them to compete. In fact, however, the free market economy can be limited by the government regulation.
Reducing interest rates is one of the ways to stimulate job formation. If the Federal Reserve lowers federal funds rate, it will give banks more money to lend. Cheaper credits are the first thing that allows business to expand and hire new people. Another option the government can take is to cut payroll taxes. Businesses can keep more of the money they earn to themselves and reinvest them in business. Reducing interest rates and cutting taxes are parts of the expansionary fiscal policy. Once the recession is approaching, the expansionary fiscal policy is the way to go.