Essays on Government Spending

Chapter III

This chapter will review the background of Real Property Law in the Kingdom of Saudi Arabia. In order to lay the foundation for comparisons in subsequent chapters, the elements of the Saudi judicial system and real property law will be reviewed. The background information pertaining to Saudi Arabia will feature the judicial court system, the property rights and real property ownership. A review of the current mortgage law in Saudi Arabia will be analyzed as well as possible reform to include the application of anti-deficiency laws.

Introduction

Saudi Arabia is governed by a monarchy. Its current legal system under the ...

The Recovery Act declared by President Obama’s administration was the reaction to 9 percent of unemployment in the United States indicated during the last decade (“Does Stimulus Spending Work?” 2). One of the possible solutions was to implement stimulus spending equal to the $447 billion bill, which was supposed to be spent on school modernization, improvement of transportation infrastructure, and funding teachers in local communities (“Does Stimulus Spending Work?” 2). Nevertheless, stimulus spending was highly criticized for its doubtful effectiveness to create job places and boost the national economy. According to Robert Barro, a Harvard economist, financial transfers ...

Part one

How has the composition of federal and state and local government spending changed over the past 40 years? What social and economic factors might have contributed to this change in how governments spend their funds? The government has been changing its spending in the last forty years. In 1970’s almost half of federal spending was on defense and around 15% on healthcare and social security. Fast forward, in 2000’s health spending and social security exceeded spending on defense. In 2001 expenditure on defense fell below 20% the total federal budget. Besides, health spending by state and local ...

Abstract

Subsidies mean that the government pays for what would have been paid by consumers thus reducing the overall expenditure. Thus, subsidies have a far-reaching economic implication to the economy since it reduces the overall cost of production, besides stabilizing the prices of commodities within a reasonable limit. Indeed, high subsidy level means a lower cost of production. Moreover, allowing subsidies spurs economic growth since it lowers the operational expenses of production. Other consequential impacts associated with subsidies include improved living standard of the general public due to the overall affordability of commodities. On the other hand, a subsidy to ...

The Autumn Statement is a traditional statement made by the government that serves as a financial report. It is the second made every year, with the first being the Spring Budget. It is given by the Chancellor of the Exchequer, who provides MPs with information about the United Kingdom’s taxation and spending (BBC, 2016). Traditionally, the Budget dealt primarily with taxation while the Statement focuses more on department allocation. The information and data used is compiled by the Office of Budget Responsibility, which publishes its information as soon as the chancellor finishes his/her speech. Last year’s Autumn ...

Question one: What happens when current k increases in closed economy?

In the circular nature of ubiquitous flow of goods and services, via the money market in a closed system, household consumption activities are at the heart of activities. Even when government plays a role in public goods, taxes, and borrowing one simple model of a closed system reflects the domestic economy as consisting of “the product market and money market” (“Macroeconomics Policies in an Open Economy,” 2017). This is illustrated below in ‘The Circular Flow’ [Note: Reprinted from the aforementioned source, 3.A General Model of the Closed Economy]. However, since the real interest rate in a closed economy would ...

Singapore

Detail Economic Facet. From the point of view of a country’s economy, certain freedoms are essential to attract immigrants. Singapore is one of the best countries to emigrate as the country ranks among the best in terms of labor freedom, fiscal freedom and investment freedom. In terms of labor freedom, Singapore match the standards set by the United States of America (both score 80-100 in the 2016 Index of Economic Freedom) (Index of Economic Freedom). But, Singapore provides much better fiscal freedom (Singapore scores 80-100 and US scores 60-69.9 in the 2016 Index of Economic Freedom) and investment ...

Deficit spending refers to the spending of funds more than the income. In government, deficit spending occurs when the government expenditure exceed the revenues collected over a specified fiscal period (Investopedia, 2016b). An important note on government deficit spending is that it begins at the budgeting stage where the government plans to spend more than it expects to get in revenues. The consequence of this is that the government has to borrow even with the achievement of the highest estimates in revenue collection. The government finances the deficit through two main ways. Traditionally, the major method of meeting the ...

Chapter 2

Literature review Russia has a very large number of hospitals, physicians, and health care workers as compared to any other country in the world. In spite of this, the medical care fraternity has failed to offer standard and acceptable health care services to its people. Russia has faced a health care system crisis for an extended period since the collapse of the Soviet Union. Significant transformation in the social, economic, and political environment has adversely affected the health care system (Britnell, 2015). The poor health care system in Russia has been precipitated by the lack of medical and technical ...

1. How were the conditions in 1935 and 2013 similar? What did John Maynard Keynes propose to resolve this crisis in his book? Both 1935 and 2013 are two years during which the world’s economy went through economic crises. Specifically, 1935 experienced the Great Depression, while 2013 faced the global financial crisis. The economists of the time predicted that the economy would come out of the depression without the intervention of the government (Kirshner 315). In 1935, unemployment was extremely high. In 1936, Keynes published his book ‘General Theory of Employment, Theory and Interest.’ While other economists suggested ...

Introduction

The Petrochemical industry in the ministry of energy has been focusing on the oil prices change and how it influences the economy. The oil demand comes from the petrochemical industry whereby energy generation helps in manufacturing and production industries. These industries help in economic transformation through improving country’s GDP. As the source of energy, oil in the petrochemical industry has been influenced by inflation and unemployment, interest rates and exchange rate. These factors influence the government spending, hence affecting the importation of oil from the producing countries such as Saudi Arabia. The oil prices as a result of ...

1. The Financial Crisis: Avoidable but Inevitable Theoretically, the financial crisis could have been avoided as investigation findings revealed . Under the circumstances however, the crisis was an inevitable consequence of everything that was going. The Federal inquiry concluded that the 2008 financial crisis could have been avoided. The crisis was the result of “widespread failures in government regulation, corporate mismanagement and heedless risk-taking by Wall Street”. It was the result of “greed, ineptitude or both” on the part of government and the private sector. Among the persons found responsible for the crisis included Federal Reserve Chairman Alan Greenspan and, ...

Prior to the Great Depression policy makers in the United States generally tended to accept that business cycles happened and in accord with Adam Smith's "invisible hand," tended to be self-correcting. The stock market crash of 1929, and the more general problem of massive unemployment forced a reconsideration. Smiley (2008) and Bernstein (2016) both point out that the human face of the Depression left no choice but for some government intervention. Jahan and Papageorgiou (2014), discussing Keynesian Economics put it plainly: “The central tenet of this school of thought is that government intervention can stabilize the economy.” The centerpiece ...

CAFR Brief

In government spending, each stakeholder needs to be accountable for any financial transactions undertaken. There are departments entrusted with the role of spearheading the government spending to ensure equity and trustworthy in government money spending. The CAFR brief below summarizes the Richland county government spending presented in terms of annual financial statements. This financial statement includes statement of financial position, statement of comprehensive income and statement of cash flow. However, the statement of comprehensive income and statement of financial position shows is the yardstick to which the accountability is ensured. Undeniably, when government money is spent with regard to ...

The journey towards the European Union (EU) integration has experienced several turnings. This section of the essay will detail some of the core turning points in the EU integration. Establishment of a Common Agricultural Policy (CAP) was a major turning point in EU integration. The Treaty of Rome defined the specific objectives of the CAP. The CAP was introduced in 1962 (Folmern.p). The establishment of the CAP was enshrined to the state of food shortages after World War II. The aim of the CAP was to build a common European Community market and to cut off tariffs on agricultural ...

Inflation entails the persistent rise in the general prices of goods and services in a country. This phenomenon has various consequences that touch on individuals and the economy as a whole. Inflation results in reduced real incomes. Rising inflation levels in an economy tend to reduce individuals’ incomes as well as the real GDP of the economy as people spend more on few commodities due increased prices. The cost of obtaining loans and mortgages increases during high inflation regime as people strive to finance increased living costs (Mankiw 53). The demand for loans increases during inflation, resulting in high ...

The Evolution of Economics, Economic Systems and Politics

The science of economics, starting with Adam Smith –the father of economics, is the total efforts for developing an understanding of the economic behaviors of the humans. The science of economics follows a development path in defining the economics. The first definition of the economics was based on the household management. Members of family specialize in completing some specific tasks. The specialization relies on the genders' traditional functions. This definition was developed by the philosophers in the ancient times before the Dark Age in Europe. Adam Smith developed this definition by creating a theoretical economic system which has the ...

The United States Congressional Budget Office (CBO) projected that in 2016, the budget deficit would increase to $544 billion after six years of gradual decrease. The same report stated that American taxpayers were expected to pay a total of $3.38 billion dollars in 2016. Both the deficit and the amount of money coming from taxpayers were projected to increase in the coming years. Given these startling facts, it is fair to wonder where the federal government allocates the billions of dollars in revenue it receives every year. Significant policy areas like the military and the healthcare sector have garnered ...

Introduction

A discussion among the classical economists and the Keynesian economists continues on the government intervention in the free markets. According to the classical economists, the free market mechanism can develop solutions for the crisis in the market if there is no external influence on the markets. The Keynesian economy merely expresses that the free market economy carries the risk of generating crises and undesired deficit or surplus in the economy when the demand cannot clear the supply (Posner 234-252). The discussion on the government intervention is changing direction each time the world economy suffers from a global crisis becomes ...

The prohibition of marijuana has for long been a subject of heated debates, arguments, and counter-arguments regarding the effects of such action around social and political circles. Many argue that the use of marijuana makes an individual intoxicated which results in feelings of anxiety, fear, and panic. Others argue that marijuana-induced intoxication leads to impairment of the memory, negatively affecting coordination and reaction time. Legalization of marijuana is believed to be a good thing since it will lead to the collection of larger amount of tax revenues and lower government spending. In spite of the fact that a large ...

The role of the state in the economy: A historical perspective

The role of the state in the economy has been a subject of discussion for many decades with different views emanating from a broad range of the individuals and institutions in the field of economics. Since the early 1900s, various economists have continued to investigate the various roles of the state in economic development. The investigation led to the distinction of the roles in two broad categories, namely; normative and positive roles. Normative roles refer to what exactly the state should do to maximize the welfare of the people. On the other hand, the positive roles outline what the ...

Introduction

The rationale of the above paper is to outline the difference amid budget deficit and national debt while at the same time indicating their significance. The paper seeks to justify as to whether different governments in the global setting should operate with a balanced budget or not. In the article, budget deficit is defined as the amounts of cash spend in excess by the government over the government income generated from tax revenue during a set time as part of government expenditure (Furgang & Furgang, 2012). The shortfall in tax revenue is therefore compensated through borrowing or currency emission as ...

The Federal Reserve has one of the most unique duties in the world. Tasked with keeping both employment high and inflation low, it is the only central banking authority in the world that performs both functions as its mission. Studies performed by A. Phillips describe the inverse relationship between unemployment and the inflation of real wages. The Federal Reserve and Congress enact policies to counteract the inverse nature of unemployment and inflation. The Fed achieves its goals with manipulation of monetary policy, which is the control of the monetary supply, while Congress controls fiscal policy to help achieve similar ...

Increase Government Spending to Fight Recessions

Introduction Government spending as a recession recovery tool has been the subject of debate numerous times. To date, there is no definitive proof of its success or failure of its application. An active fiscal or a monetary policy is the sum total of the actions taken as a reaction to the current economic conditions; the government chooses to use a specific policy to deal with something in the economy (Mankiw, 2001).

Government spending as a method for lessening recession is a tool that has been proposed and even applied by many governments when they are experiencing a recession. This ...

Introduction

American founding fathers were brave, noble and great as they pioneered the drafting of the America Constitution. America government has over the years suffered from a series of problems that proves the need for a new constitution. There is the urgent need for amending the constitution while maintaining its legal, ethical, and moral structure. Over 224 years since the ratification of the America Constitution, several amendments have emerged, and only 27 of these changes were approved and included in the constitution. Depending on the challenges faced in the 21st century ranging from corruption and poor leadership the constitution should ...

Introduction

Economic management is the most critical function of any government. It requires critical approaches through the adoption of efficient macro-economic policies that lead an economy in the desired direction. Inefficiencies in public policies result in poor economic management, which results in economic problems such as unemployment, inflation, and other forms of economic instabilities (Galí 98). This essay will answer questions that address some of these economic problems.

Government measures to increase the level of aggregate demand in the economy and their effectiveness

The level of aggregate demand is an essential factor in the determination of the economic position of an economy. It determines critical factors such as investment that indicate the GDP of a ...

The dynamics of the economy when the interest rates are at almost zero are a bit complicated, especially because the monetary policies have very little effect on the economy. However, the interplay between the fiscal and monetary policies will bring the economy to stabilization even though with great difficulty. Some of the factors at play bring a tradeoff between the success and failure of the possible policies. For example, the policies that will bring down the level of unemployment will tend to push up inflation. However, factors that will push the GDP upwards will also lower the rate of ...

The IS LM model or the Hicks –Hansen model is the macroeconomic tool that shows the relationship between the interest rates and the real output of goods and services and the money market. The intersection of the investment - saving curve or the IS curve and liquidity preference curve or the money supply curve is the general equilibrium in both the markets .This model explains the changes in the national income when the price level is fixed in the short run and also shows the reason for the shift in the aggregate demand curve. It was first developed by ...

Abstract

In this case, we illustrate the application of multiple regression in economics. We gather data on the unemployment rate (dependent variable) and three independent variables; GDP per capita, maximum weekly unemployment benefit and population estimate for 2015. The data is collected from 39 different states. Regression analysis results show that there is a positive association between the unemployment rate and GDP per capita and population estimate. The relationship between unemployment rate and maximum weekly benefits is inverse. The evaluation of the reliability of the first-order model shows that it has a small coefficient of determination. The first-order model is ...

Implications of Raising the Minimum Wage

Introduction Most states in the United States have already passed laws that aimed at raising the minimum wages for employees. In the 24th of July 2014, the Fair Labor Standards Act (FLSA) ratified the $7.25 federal minimum wage for employees from both public and private companies (United States Department of Labor). Though this news may seem positive to employees, debates on whether wage hikes are necessary and really helpful to both employees and employer.

A very few studies have examined the relation between the Law of Supply and Demand on the wage rates of employees. However, all of these ...

National debts are caused by budget deficits that are as a result of spending more than what is received from taxes. This results in harsh economic times for countries as they strive to adjust to the national debts that occur during the period. Several theories have been put in place to argue and relate to the issue concerning national debt. Keynesian economists bring forth arguments that strive to balance the budgets and appropriate times to increase the deficit. Economist John Keynes was against the idea that the state was in need of a balanced budget (Tobin 1975). His argument ...

Since the onset of the twenty-first century, the immigrant population in the United States has risen by 10.2 million to reach an estimated total of 41.3 million immigrants within American borders (Mass). The exponential upsurge of immigrants within American borders and its publicity has captured the public’s attention and generated opposing and controversial opinions about immigration issues. By the year 2013, legal and illegal immigrants encompassed 13.1 percent of the American population (Mass). While it is important to reform the country’s immigration policies, the contribution of immigrants to the American economy labels them a positive contribution to ...

The GDP refers to the market value of all services and goods a country produces at a given time (Bade, n.d.). It uses four components to measure the country’s economy i.e. consumption (C), investments (I), governments (G), and net exports (X-M) (where M are the imports and X the exports). It follows that the GDP= C+I+G+(X-M). Each of the components plays a role in the economy as described below.

Consumption

Under this category, the GDP focuses on the personal consumption expenditure. It is the most powerful component and can range between 65 to 70% of the ...

Recession refers to short period associated with decline in economic activities such as decrease in stock market business, high unemployment rates, poor housing facilities, high cost of due to low purchasing power of the country’s currency and general failure in the financial institutions. Recession may vary in terms of magnitude and in terms of how long it may persist (Gaston, 1994). Most economists’ belief on this subject is that recession differs from depression only by the degree of their severity. The implication is that depression is more severe form of recession-though with similar consequences. Usually, recession happens after ...

Keynes proposed economic ideas that saved the economy during the great depression of the 1930s. He encouraged government intervention into the economy to rescue it from the excessive recession. His ideas were against previous views held by an economist that the government should allow the economy to adjust back from depression to recovery as per the business cycle. The previous economic ideas were not working during great depression because the economy was showing little signs of recovery. The depression created a huge recession gap. Thus, real GDP was quite below the full potential output (Blinder 1). Keynes believed that ...

The purpose of this essay is to discuss, the pros and cons of the non-renewable energy sources usage; coal and natural gas to be more specific. How does it affect the society and the economy? What are the alternatives? What are the strategies to implement such transition? The most significant reason behind the non-renewable energy sources is its low cost. Coal is relatively cheap to other energy sources and it produces a large amount of relative energy. Moreover, it is easy to combust; therefore its processing procedures are not as complicated as other sources of energy. Natural Gas maybe ...

Introduction

Monetary policy and fiscal policies are important aspects of the analysis of the U.S economy, as they have a significant impact on the growth of the economy. Moreover, the two types of policy issues are always in active use in the country although the media offers much attention on various economic indicators. Nonetheless, both monetary and fiscal policies have a significant role in the development of an economy and must work together as they cannot exclusively work on their own. Fiscal policy works using tax and spending changes to impact on an economy in diverse ways. However, for any ...

How the composition of government spending changed since the 1960’s

Taylor (para 9) notes that a huge percentage of government expenditure is directed to entitlements as opposed to investments. Notably in 1962, the expenditure on investment was 2 ½ times that of entitlements. However, in the 21st century, the spending on entitlement is three times more than on investments (Taylor para 9). This trend attributes to the fact that most of the government spending goes to consumption, and only a few investments are made. In 1960’s the expenditure on entitlements was approximately 15 percent, but now it is more than half of all the federal expenditure. For instance, in ...

Impact of Low Expenditure on Welfare Programs

Abstract The level of expenditure in a particular economy directly affects the provision of welfare programs in that particular country. This paper particularly investigates the impact of a low expenditure on welfare programs in the United States of America. The paper explains in detail both the negative and positive implications of low expenditure in the United States. Specifically, the paper looks into how low expenditure reduces the morale to work and the negative implication of this on income levels. Moreover, the paper shows how low expenditure makes the redistribution role of the government to collapse thereby leading to income ...

PART A- Questions related to ‘The Mystery of the Invisible Hand’

Jevons Marshall is a fictitious pen name used by the true author(s) of the book. Who really wrote the book? What makes ‘Jevons Marshall’ a clever choice for the pen name in this case? Answer. The pseudonym Jevons Marshall is used by two renowned professors of economics who are William Breit and Kenneth G. Elzinga. The pen name is derived from the surnames of two famous economists named Alfred Marshall and William Jevons. The pen name made from the names of these two economists is deliberately used for writing mystery novels based on economics as where the former ( ...

Trump is the leading presidential candidate of the Republican Party, and he is campaigning under the slogan of make America great again. His campaign slogan is based on several extreme economic and social policies. The economic policies of a president are mainly macroeconomics policies that affect all the components of the country’s gross domestic product. His main economic policies touch on taxes, labor supply, investments, and international trade. He looks forward to cutting individual and cooperate taxes, increasing the volume of exports, decreasing imports and increasing private investment (Trump, 1). The most popular and extreme economic policy that ...

For over 47 years, the outbreak of the Cold War between the United States and the Soviet Union alliances has led to several political, economic, and military tensions on various countries around the globe. Immediately after the occurrence of World War II, a huge difference on the political ideologies of both parties triggered another outburst of foreign policies that have conflicting views between the two. Seemingly, the main reason for the outburst of Cold War from 1944 to 1991 is to extend both the opposing parties’ power and dominance around the world. The United States evidently wanted to gain ...

In 1960's the government biggest proportion of its spending went to investment. In 1962, the amount of government expenditure on investments was around two and half times that of transfer payments. Currently, the boat has capsized, and the spending on transfer payments has grown to over three times the spending on investment. . This indicates a drift of government goals. Precisely, transfer payment was mere 15% of the federal budget in 1960’s but currently it is over fifty percent. Transfer payments refer to the money paid by the government to households for no work done. The payments are done ...

Over the years, the government spending has changed drastically. The government which is a representation of the people has been doing more under entitlements than investments. In the 1960s, the government did much for the investments than the entitlements, but the reverse has been happening. Few investments are being developed, and the opportunities reduce because much of the finances are used for benefits. The federal expenditure has grown rapidly as the governments become. Before the 1960s, the government earned more from the tax payers and revenue collection but after the Second World War, they economy boomed, and the government ...

Issues of Economic Crisis

The recent recession and the financial crisis have paved the way to uncommon and hostile actions by policymakers of fiscal and monetary policies. Secular stagnation is for ensuring achievement of full employment, for lowering and stabilizing inflation rate, and for maintaining financial stability. Current macroeconomics failed to analyze financial crisis because of its incapability of envisaging current issues prevailing in the economy. Analysis of these topics is essential because they help in determining and then solving the problems of economy by taking adequate measures in a timely manner. There are several causes of recent Great recession. Major causes include ...

Growth Rate of GDP

The growth rate of GDP is measured in terms of the original level of the GDP. Let us calculate the GDP for the following figures:

GDP in 2013: $13.1 trillion

GDP in 2014: $13.3 trillion Growth in GDP: $0.2trillion Growth rate of GDP =( 0.2/13.1)*100 =1.53% If the growth rate remains the same, let us calculate the number of years that will be required for the GDP to double itself. 13.3(1+ 1.53/100)^t = 2*13.3 Or, (1+1.53/100)^t = 2 Or, (1.0153)^t = 2

Taking log of both sides:

tlog1.0153 = log2 Or, t= log2/log1.0153 Or, t =45.6 Thus it will take almost 46 years to double the GDP ...

Introduction

This paper illustrates in detail on the economy of Saudi Arabia in the ministry of finance and National economy. It shows the current situation of its economy and also details its weaknesses and strengths in the global market. In addition, it illustrates the states GDP state, inflation, unemployment, growth in the international trade, and the composition of their exports and imports (Chai, 2009). It goes to the extent of including recommendations that are entailed to draw a path that can be used to strengthen their current state in the global market. Thus, the recommendations are a guide as to what needs ...

Why do total leakages and total injections have to be equal?

Injections and leakages have to be equal because the total amount of money/income that is coming into a sector of the economy must be equal to the amount that leaves that sector so that a state of equilibrium can be achieved for the economy to function properly (Baumol & Blinder, 2008, p.125).

Discuss the limitations of national income accounting

The major limitation of national income accounting is that there are various economic activities that are not included in the national income accounting. These activities includes income from prostitution and black market. In addition, another limitation is that it ignores quality of life by focusing on how much money is ...

A developed country is known by the growth and the level of its economy. Economy of the United States is the world's largest single national economy. The United States' nominal GDP was estimated to be $17.1 trillion in December 2013. Budget deficit affects the taxpayers to a great extent this is because government spending exceeds all the revenue. This forces United States government to increase taxes on the taxpayers. The deficit affects taxpayers forcing them to dig deep into their pockets to increase government revenue. This will, therefore, enable the government plan for its appropriated financial activities. The government will ...

Introduction

Economics is a field which has its active recognition and association in almost every walk of life. There is no single definition of the term “Economics” exist in the world as every author has had defined the concept in a somewhat different manner. Adam Smith and Alfred Marshal are known as the fathers of economics, as they proposed the most basic and effective definition of this term. According to both of them, Economics is the name of how to earn the money and how to consume it. It is one of the most important definitions from the viewpoint of the ...

Article in business

Abstract The economic depression that was experienced globally affected many financial markets and institutions. In attempting to mitigate the effects of the economic depression, different players used different approaches citing different reasons. This paper will look at a particular theorist in economics and his contributions to some of the approaches used by different countries to deals with the issue of economic depression. In doing so, the paper will analyze the contribution of Keynes while striking relevance to the global economic recession. The dispute between Keynes and what he called orthodoxy was based on the reservations he expressed on the ...

ARTICLE ANALYSIS

The article gives a detailed picture of the level of poverty in the United States. It depicts that almost ninety eight million (97.3) Americans fall in the category where they earn low income. These are in the category of earning from one hundred to two hundred (100-200) percentage of the poverty level. An extra forty nine million find themselves in the category of low-income earners. This gives one hundred and forty six (146.4) million, which is equivalent to forty-eight percent of the total American population. The figure has risen by four million in duration of three years. In the compiling ...

Question 1. Explain why the aggregate demand curve slopes downward?

Answer: The summary of the IS-LM model is depicted by AD curve. AD curve slopes downward because at a lower level of price, the real money balance increases, and interest rate falls, which stimulates the investments. As a result the equilibrium income increases.

Question 2. What is the impact of an increase in taxes on the interest rate, income, consumption, and investment?

Answer: When the tax increases, it will cause the IS curve to shift towards left reaching to IS2 from IS1. As a result of this, the equilibrium point A shifts to B where the interest rate will reach to r2 by falling from r1. The income will also be reduced from Y1 to Y2. The increase in the tax ...

Current macroeconomic situation in the U.S

Macroeconomic factors define those economic factors that affect the economy at a larger scale. As per previous research analysis it’s been established that the U.S economy faces an economic downturn every four to six years (US Economic Outlook). As per the article ‘US Economic Outlook for 2014’, the current bull market is presently driving in its fourth year. Despite the fact that the markets are flourishing in this economic year, an average American is not. The major economic cavity of unemployment that poses a huge dilemma to every American still remains persistently high along with the household debt. Moreover the ...

Increasing government spending will help the economy

Government spending entails all activities undertaken by the governments in the day to day lives. Government spending emphasizes on it procuring the components that the citizens need. The expenses incurred are usually short term. Government spending can either improve or destroy the economy. It depends on the prevailing conditions in the market and the economic state of the country (Driver, Stephanie 97). However, government spending can be kept in check by formulating fiscal laws that limit the expenses. Government expenditure is undertaken for several different reasons. They vary from provision of social amenities like health care services, schools, and ...

THE UNITED STATES FEDERAL RESERVE SYSTEM

The Federal Reserve is the central bank of the United States of America (Federal Reserve System, 2013). It is governed by a board of directors appointed by the president, whose main responsibility is the determination of the monetary policy through the manipulation of the various monetary tools (Federal Reserve Board, 2013). The bank was originally formed in December 23rd 1913 by an act of congress and is currently headquartered in Washington D.C, with twelve other branches located in major cities across the country (Federal Reserve System, 2013).

One of the monetary tools that are used in setting the monetary ...

Introduction

This is a strategy adopted by the government through the Central Bank to control macroeconomic shocks due to fluctuation in wages and prices of goods and services. Stabilization may include monitoring the business cycle and interest rate regulation by the central banks. Moderation of these factors leads to changes in unemployment rate, recovery of an economy from economic shock control borrowing and money supply. In general terms stabilization are used to regulate the fluctuation of business cycle. There are two main elements of stabilization policies, that is, monetary and fiscal policies.

Elements of Stabilization Policies

Monetary policy This is the process through which ...

Question

Assume that the country is in a period of high unemployment, interest rates are at almost zero, inflation is about 2% per year, and GDP growth is less than 2% per year. Suggest how fiscal and monetary policy can move those numbers to an acceptable level keeping inflation the same. What is the first action you would take as the president? As the chairman of the Fed? Why? What would be your subsequent steps?

Answer

Analyzing the given data indicates us that this economy is suffering from the deflation. In another word, we see high unemployment, very low inflation and very ...

Alesina, Alberto. Political Cycles and the Macroeconomy. Cambridge, Mass. [u.a.: MIT Press, 1997. Print.

This book was written by one of the most experienced persons on the field of political influence on businesses. Alesina Alberto is a renowned Italian political economist who has authored several books and articles on the relationship between business and politics. He is a professor of Political Economy at Harvard University and as such speaks authoritatively on the subject. The book addresses the relationship between economic/business cycles and the political cycles. It examines how the timing of elections, electoral laws, the nature of competition between political parties and its influence on employment, the ideological orientation of governments, inflation, monetary policies, inflation ...

Introduction

2008 Nobel Prize winner, Paul Krugman, published a new book “End this depression now” in which he viewed prompt evolution of the economy to be obtained through government spending. As a result, the economy of any given country should not worry about the deficit it is causing to the country as long as the economy is increasing. It is worth noting that planning is an essential part of any successful undertaking. Therefore, the spending of the government should be a planned one.

However, according to Paul, one ought not to worry about the spending. Therefore, the government should spend so as ...