When there is a demand driven economy under which due to any reason the private sector fails to spend, the government needs to come up and provide support to the economy through fiscal measures (Kindleberger…
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1447- 1448)1. Keynes’s theory advocates that higher government spending and curtailment in taxes could be helpful in counteracting the depression (Kindleberger 1986, p. 24)3.
There is no mutual agreement on the idea of what were the main causes of the Great Depression of the USA. Reviewing its core nature, many believe that the severe contraction in early 1930s and later its slow recovery represent that fiscal policy had a minor role in this phenomena. Thinkers have come to this conclusion through theoretical and empirical studies of that period. Theorists say that even though federal government spending had risen considerably, it was not high enough to have a greater impact on the overall economy (Brown 1956, pp. 860 - 861). On the contrary, few economists believe that fiscal policy played a vital role in the emergence of the Great Depression (McGrattan 2011, p 1)4.
One of the most prominent changes in fiscal policy at that time was a sharp surge in taxes rates on the incomes of individuals which encompass corporate dividends. Hovering taxes is one of the worst measures that government take to overcome crisis which makes the situation even worse. Increasing tax rates leave less money for consumers to spend and hence under this situation Federal Reserve suggests the government to refrain from this approach (Taylor 2002, p. 3).
The Great Depression which left many people out of pocket and discontented, ended up with the idea of social security that called for the government to take up the responsibility of economic security of its citizens. The New Deal provided people with the Social Security system in which employees give their contribution through taxes while they are on job to secure their future in economic term.
The statistics displayed in this particular representative form specifically imply that during the great depression i.e. around 1932 Private sector investments were the lowest hence taxation
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This is so since citizens are taxed on just about everything to do with income. There are three different types of taxes that the government collects on. Income taxes are collected through tax returns like federal or individual states. Sales tax is collected on everyday purchases.
The answer to this question is largely dependent on a country, as different countries have different methods of computing what is to be subjected to taxation from the security funds. The conventional knowledge would argue that as one grows older, the burden of taxation should reduce, this is not particularly the case in some cases when one has some of the income generation activities while at the same time having security funds; thus, security funds will be subjected to limited taxation.
The Great Depression
The Great Depression was a severe depression of the economy on a global scale that occurred in the 1930s decade and preceded the Second World War. The Great Depression served as the longest and broadest depression of the economy with the most significant effect in the 20th century.
The measure of trend of these periodic fluctuations is measured in terms of the levels of employment and production. When the measure indicates a down trend, then it is referred to as recession. This downward trend causes a decline in the spending of households.
Although it had its origin in the United States of America, it spread to the other parts of the globe. It began in the month of September 1929 in the US, after a devastating fall in the stock market prices. In the first six months of 1930, government and businesses spent more than they had in the previous six months.
During the decade long economic depression, many people lost their businesses, jobs, homes, savings and, in many cases, hope. The positive and negative effects of government programs and policies put in place during this period in order to try to solve the economic meltdown
The lingering ravages of Great Depression are still visible in terms of the economic crises it created to successive generation of families. According to economists, this damaging phenomenon was directly
Although some countries like Germany were experiencing the economic depression by 1928, the economic slump that hit U.S economy in October 1929 marked the beginning of the great depression (Smiley 1). The