Right from the day I heard about the Economic Stimulus Plan of President Obama, a question was popping up in my mind – is it going to help Americans? How?

To understand the efficacy of the Obama Economic Stimulus Plan, we have to understand the rationale behind it.

Economic stimulus – what is it? Is it necessary?

According to Congressional Budget Office,

During economic recessions, it has been observed, that people don’t have the money to buy goods and services. If they don’t buy then demand for these products fall. Thus supply of goods and services, already produced, increases in relation to demand leading to excess supply. From the demand-supply theory of economics we know that price falls when there is excess supply of goods and services in the market. In this situation corporations make less profit. Thus, they resort to cost-curtailment through layoff of workers leading to less money in the hands of common people.

In this abnormal market situation, the only thing that can save the economy is to boost up demand. It means, give more money to people so that they can spend it to buy necessities and luxuries. Once they buy, demand for goods and services increase. Corporations try to produce more such items to meet demand. More and more workers get employed and thus they get more money in their hands to spend. Hence, the market expands. The only way through which this can be done is through economic stimulus plan.

Obama Economic Stimulus Plan – how can it help you?
Senate has approved an economic stimulus of $789 billion which is expected to generate demand in our economy to bring it back to normality. Here are some points that can help us to improve our lives.

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