The world financial market is in great turmoil today, as shown by the wild fluctuations in the major stock markets during the past few weeks. There is a lot happening today that can be confusing to some people and this paper tries to explain the reasons behind these major events. …
Download file to see previous pages...
The following paragraphs take a close look at the connections between economic actions and the results it bring to ordinary citizens; these try to help explain the reasons behind them too.
Federal Budget Deficits – the recession that started sometime in 2007 still has lingering effects on the economy even now. The current administration of President Barack Obama has the worst of it, much of the problems with the deficit and debt being merely inherited and yet it gets blamed for these continuing fiscal and financial problems. Many people see these twin problems for their negative effects on the nation's economy by depriving people of their employment that had also reduced consumer confidence to their lowest levels in recent memory. The deficit in the nation's budget is seen as purely a negative event, caused by profligacy and ill-advised policies. However, deficit spending can also help stabilize the economy and here's how that happens.
Deficit spending by the Federal government is the money being spent that is over that of any expected revenues (a negative budget); this type of fiscal policy is designed to counteract all the negative effects of a shortfall in the aggregate economic demand. This is where government can do its part of stimulating the economy whenever the private sector fails the duties of leading the economy by increasing overall demand. The approach using deficit spending had been used to a marked effect before, during the Great Depression of the 1930s. When Big Business failed during those turbulent times, the government stepped in by providing a needed shot in the arm to the economy by undertaking massive public infrastructure projects. A failure of capitalism allows the government to take up the slack by its deficit spending. It is vital the Fed does not monetize these deficits; otherwise, it can lead to inflation because the tendency is to make the interest rates rise if deficits are large and persistent (Baumol & Blinder, 2011, p. 712). However, there must be a distinction between having a large budget deficit and having an intentional deficit spending policy. The first situation can lead to a deterioration in government's finances over the long term; while the second event (deficit spending) should only be temporary. Persistent budget deficits had led to the credit rating downgrade recently and has serious negative consequences. The country cannot just continually borrow money forever and keep spending the money it does not have. On the other hand, deficit spending is a temporary measure designed to revive the economy when it falls into a slump or recession. The New Deal economic programs of Franklin Delano Roosevelt were intended to achieve the three Rs, namely: relief for the millions of jobless people, revive the economy and reforms (political, social and financial). The financial stimulus package of Pres. Obama was designed almost the same way with the same objectives. Adjustments in Prices and Wages – market equilibrium (balance) is achieved whenever the demand and supply forces are equal to each other. The tendency is to maintain this balance unless external forces disrupt it. In classical
...Download file to see next pagesRead More
Cite this document
(“Markets and the Economy Admission/Application Essay”, n.d.)
Retrieved de https://studentshare.org/macro-microeconomics/1390800-markets-and-the-economy
(Markets and the Economy Admission/Application Essay)
“Markets and the Economy Admission/Application Essay”, n.d. https://studentshare.org/macro-microeconomics/1390800-markets-and-the-economy.
Fig. 2. Shift of demand In Fig. 2, we see a new demand curve that is a result of substitute of soya milk. Here we see that the original demand for milk is DA, and a shift to substitute milk leads to a new demand curve which is DB. This means that the demand for milk will be reduced.
The rate of unemployment is indeed a measure of the unemployment prevalence and is calculated as a percentage which is by dividing the unemployed individuals by the number of employed people within the working labor force. The effects on the economy when it comes to unemployment are severe.
The US is experiencing weak economic growth, unemployment, and stock market instability, which are raising serious concerns about the state of US economy. The continuing challenges in the labor market and the account of the debt limit emphasize the problem faced by the state; unsustainable debt mount for the future.
The basic arguments therefore are based upon the notion that markets have their limits and the economic tasks performed by the government cannot be replicated by private markets. He also argues that private markets fail to engage into pure research and it’s the responsibility of the government to actually finance such research in order to allow private markets to conduct such research.
As such, these undocumented people living in America contributes to the US economy as consumers, taxpayers, and workers (Jayne 43). Their economic impact to the United States is, say economic and political analysts, a debatable issue and a matter of study.
Foreign direct investments have been developed to avoid regulations on insurances and reserve that also prove to be beneficial for businesses. Facilities for production have also become flexible with FDIs, leading to the growth of MNCs (Levi, 2009). Some of the issues encountered by MNCs include juridical problems related with laws, and taxation; status problems; problems as a legal entity; problems with its characteristics, management and transfer pricing; problems with international economy and politics, these involving factors like risks with exchange rates; and differences in the historical backgrounds of different countries thus creating cultural and ethical differences and problems for
Since ‘origination’, humans have been showing activeness both mentally and physically, which have transformed our world from a primitive one to an advanced one. The activities are normally carried out by the humans, organizing themselves into
cess that involves methodologies for organizational design, strategic planning, leadership development, diversity, coaching and balance between work and life. However, in the wake of increased globalization of the economy, organizational development has felt the impact. The
The impact of NAFTA on Mexico and its economy have important implications for the American economic and political interests. Some critical factors in revisiting NAFTA, as was recommended by several policy makers, include its consequences for Mexico and how
The country population exceeds 10 million people in which the governing method is a parliamentary democracy. The citizen through a voting system elects Three hundred people. Those elected individuals from the parliament
7 Pages(1750 words)Admission/Application Essay
GOT A TRICKY QUESTION? RECEIVE AN ANSWER FROM STUDENTS LIKE YOU!
Let us find you another Admission/Application Essay on topic Markets and the Economy for FREE!