Economics is a subject that has its recognition in almost every walk of life. Inevitably, there is no single definition of the term “Economics” exist in the world, because every author has had defined the concept in somewhat different manner. Adam Smith is known as the Father of Economics (FOE) and according to his concept, “Economics is the study of wealth that deals with the buying and selling of products in total”
There are basically two types of economics predominantly comprised on microeconomics and macroeconomics and both of these provisions are important. According to the specifications, microeconomics is the type of economics that deals with the economy of individuals, while the economics deals with the country as a whole is known as macroeconomics. With the help of both of these provisions, economy of a country would be effective in total. There are important provisions in total as a whole and according to these concepts public finance is an important thing. When it comes to economics and finance, then the name of public finance is one of them by having its own recognition and importance. Inevitably, there are number of concepts that specifically come under the ambit of economics and finance. Social Welfare technique and equity based efficacy tradeoff are some of the important concepts that are of public finance and resources allocation (Rodrigo, 2010). The main perspective of this assignment is all about analyzing two of the important concepts of economics and finance that predominantly are, social welfare and equity efficacy trade off.
There are certain questions, that have to be answered in this particular analysis in total, relates to both of these concepts in total and it is required to complete the same in a perfect and well organized manner in total. Both of the concepts have to be completed in a perfect manner for the completion of this particular paper in an effective and well organized manner in total. There are two different points that have been discussed like social welfare and equity welfare model. With the help of these two models and theories, it is required to analyze their effectiveness and how they are worthwhile for the economists particularly in today’s world. The core emphasize of this paper would be on effective resources allocation among the people of a country.
Concept of Social Welfare
Social Welfare specifically associated with the well being of the society. It is not the same as the other standard of living, but it is specifically associated with quality of the life in total, that include factors such as the quality of the environment, air, soil, crime and water along with the utilization of drugs and its availability to have the social well being. Unemployment is one of the most important provisions from the standpoint of an economy and an economy could not be in the field of economic prosperity without having the stance of social based welfare.
This is basically a sort of theory according to that it is analyzed that government should play their role as far as enhancing the productivity and efficiency of an economy is concerned. When it comes to economic base of a country, then there are certain things come under the same ambit. Social welfare is basically a type of economics, according to that it is analyzed to the income should be move in such direction that it would be received by every single person found in the society. It is also found with the help of this particular provision, the demand of money should be spread in the society according should be in line with the supply or the money based supply should be according to the demand of money and with the consumers in total. The organizations are very important for economies and economic development, while some economists said “organizations are the life blood of any economy”. This is because organizations do business in economy that provides number of benefits like job opportunity.
Payment of handsome amount of a region`s tax and utilizes the domestic resources. This process continues as the employed people of these businesses contribute to the economy by spending the money from their earning, and resources needed by organizations further contribute to the economy by providing employment and capital to the vendors of the resources. There are two types of organizations profit and non-profit in the economy. The nonprofit organizations provide service to public for social cause. These organizations are comparable to profit organizations where they employ people, fuel the economy by purchasing goods and services, delivers goods and services to the public of country, and make investment in the community. Another side of similarity of nonprofit and profit organizations is that they both require capital, expertise in particular areas, and stable economy in that to prosper
Social Welfare is basically a type of economics with the functions of different things would have been recorded publicly and voluntarily that used to diminish the level of poverty from the society (Chui, 2008). This particular concept deems extremely beneficial as far as enhancing and maintaining the social functioning if the human being is concerned. The importance of social welfare lies with the fact that it generally denotes the full range of organized based activities predominantly of voluntary and governmental agencies, in order to prevent alleviate distress and poverty from a society or from an economy. The significance of the social welfare lies in the fact that every person in a certain society must have access of the same amount of money and resources as the other person is having as it is the best way to alleviate the level of poverty from the society. According to the concept of this particular theory, it is analyzed that productivity of an economy depends upon number of things and every aspect is effective from different standpoints. This particular mode is been used by every economy or in almost every part of the world. The efficacy of this particular model lies in the fact that how the distribution of money has been done. Economists used this particular method in order to enhance the productivity of the economy as a whole. This model will analyze the importance of this aspect and found that economic consequences could be extremely vital for an economy to be prospering and perfect enough for the competitiveness. If this particular model would have been analyzed and implemented accordingly, then the proportion of economic downturn would never be encountered by an economy. Social welfare policies provide benefits to individuals, especially those in need.
There are two kinds of programs. Rights Plan includes a number of eligible persons are entitled under the law, regardless of need benefits. Social Security and Medicare are the largest welfare programs. The programs of means-tested are available exclusively to individuals below the level of poverty. They are predominantly the notorious campaigns. See the poor, is irresponsible and often opposed to these plans, and those who see poverty largely beyond the control of people tend to support them. Welfare state may not be considered as a free lunch tables. Welfare state attempts to fine-tune their welfare work incentives programs, including social spending programs to make people more productive, a number of decades and generations cumulative return: such as public education, care and support, making it possible for women to work in public health programs and to a lesser extent revitalization program for the unemployed (the result is not so bad for women). When it comes to unemployment benefits and unemployment rates, the real problem in some European countries do not have so many generous benefits, because it is an issue of labor market rigidity and anxiety. Unemployment compensation plan has little effect on GDP. They help lower the most productive employment to leave the labor market, but their average productivity increases those remaining work. More generous unemployment compensation has higher productivity per worker or per hour worked.
As per Lindert's point of view, to explain why no damage to the welfare state per capita GDP generally have two principles. Democratic choice of high-budget taxes and transfer payments designed to avoid damage to growth showed more care. The second is to promote economic growth taxes and quotas, broad universality superior low-budget countries tend to rigorous testing methods and complex tax compromise. Political democracies take additional economic costs into the account of political costs and the greater the budgets of a state the greater chances of political risk occurred. Tax mistakes are punished by the voters.
The economist believes that this particular model is effective in terms of allocating the funds and resources of an economy in total. Social Welfare model analyzes the proportion of social based care of an economy in total, therefore it deems extremely important for the economies to pursue (Chui, 2008). The usefulness of this particular model analyzes whenever a company is having the things done accordingly, the more chance and economy has to enhance its economical well being. Developed countries are very much familiar with the importance of this particular model in total and analyze the importance for them in total. In all of the developed and emerging countries, the value and proposition of this particular aspect has been identified to be equally beneficial for the economy as a whole.
Effects of Social Welfare over Poverty:
There are number of scientist dealing in social aspects, different makers of social welfare policies and diverse citizens who have a firm believe on the programs activities and programs of related to social welfare is a core element that greatly helps in trim down the frequency of poverty in every state. However, a growing number of critics assert that such programs do not actually do so because of too small a share of the transfer actually reach the poor, because such a program will create a welfare / poverty trap, or because they weaken the economy. Every major industrialized country has a set of procedures, the transfer between 20% to 40% of the country's total gross domestic product (GDP) between populations, in that the key is to improve the well, or near the bottom of those income distribution
Poverty elevation is one of the most effective strategies from the viewpoint of an economy and it is one of the most integral economic indicators that are extremely important from the viewpoint of an economy. When it comes to countries, then there are certain things that could not be neglected from any standpoint. Countries and companies are always strive hard for the economic based prosperity and propensity and in order to vitalize the growth, they have to consider numerous and effective strategies in total.
Inevitably, the essence of strategies is extremely vital from the viewpoint of an economy and from an organization as a whole as it has the propensity to enhance the growth of the country from different aspects. During the current economic crisis, there were number of countries in the world, that went bankrupt and most of them went on the verge of bankruptcy. Investment is essential from every part of the state as it could be done either in the share analysis or in the country analysis as well. When it comes to analyzing the sustainability factor of a country, then there are certain things that have to be in line with efficacy as a whole. The strategies of vitalizing the equity and efficacy tradeoffs is extremely important and vital from the viewpoint of an economy and it would be effective as far as eradicating the problems pertain to poverty is concerned. In this way the concept of Social Welfare and Equity Efficacy Trade off certainly play its part and economies should consider them for their astounding economic growth.
Concept of Equity Efficacy Trade off
Equity Efficacy Trade off, also known as Equity Efficiency Trade off, is yet another important theory of Economics and Finance that has its own recognition and importance. It is defined, as a situation where there is a perceived tradeoff between the efficiency and equity of a given economy in total. This particular tradeoff is commonly viewed within the entire context of the possible production frontier of the company.
In the production of goods and services the efficiency based to the future efficiency because in this equity and efficiency tradeoff, equity refers to the economy’s financial capital (Pettinger, 2010). It is necessary to save its equity in order to become wealthier. This theory asserts however in future this additional savings will hurt the development of more efficient production.
Theoretically, trade off means the level of equality among the equity and efficiency trade of an economy. It is stated that if the level of equality would be in a perfect situation and it is also important to have their recognition in all over the economy as far as enhancing its power is concerned. The equity and efficacy trade off an economy is basically a form of prove that the economy is moving with a perfect pace with having equality in it. The proportion of equity and efficiency should be at a perfect place of the trade off in order to recognize the things all along (Pettinger, 2010). Economic crisis is one of the major results that have been increased due to the theory of Equity and Efficacy in total. If the concept of of Equity and Efficacy could have been applied effectively, then the problems of financial and economic crisis would not hit any country ever. There are number of countries around the globe having a perfect collaboration in terms of equity and efficacy based trade offs. Countries like United States (US), United Kingdom (UK) and other economically foster countries are having perfect recognition and initiation in the equity and efficacy based trade offs, in that the rich people are contributing effectively to prosper and fulfill the needs of the poor.
This is one of the most important and effective theories that come under the ambit of economics and according to this particular theory it is analyzed how much efficiency is there in the utilization and distribution of money among different individuals of an economy. If the money would have been distributed effectively among every individual, then problems like financial crisis and inefficient distribution of money among the individuals is a common thing that have to be in line in order to enhance the financial based competitiveness of an economy in total. Therefore, it is important to have a fair trade among equity and efficiency as both of the things are essential for an economy to consider effective.
An economy with an equal proportion of equity and efficiency in it are always be productive and the chance of bankruptcy and economic off being would be on a lower level in total. According to the economist and authors, the concept of equity and efficiency theory cannot be denied and its importance could not be derailed from any standpoint. If the stance of equity and efficiency would be treated equally then the chance of economic based expansion would become possible and the importance of this particular theory initialize that the effects of this theory states that every individual is important from the viewpoint of an economy and the amount of equity and efficiency should be distributed among them perfectly.
Economics is broad field that has number of concepts under its net, and among them, the name of social welfare and equity and efficiency is one of them that are extremely important from different viewpoints in total. According to the main perspective of this assignment, the provision of efficiency and social welfare interest is extremely important from the standpoint of an economy and the theories associated with the above mentioned things could be extremely beneficial for the economies as a whole. From the entire analysis, it is found that the provision of efficiency and efficacy relate to an economy lies on the fact that money and other facilities would have been distributed among the people of an economy in total. If the concept of the same would have been used and analyzed accordingly, then problems like financial crunch would eradicate completely.
Rodrigo, G. C. (2010, November 3). Micro and Macro: The Economic Divide. Retrieved October 16, 2013, from IMF: http://www.imf.org/external/pubs/ft/fandd/basics/bigsmall.htm
Chui, E. (2008, May 20). BASIC CONCEPTS OF SOCIAL WELFARE. Retrieved October 16, 2013, from Education website: http://web.hku.hk/~hrnwlck/introsocwelfare/welfareconcepts.htm
Pettinger, T. (2010, November 30). Efficiency vs Equity. Retrieved october 16, 2013, from economicshelp: http://www.economicshelp.org/blog/2473/economics/efficiency-vs-equity/
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