Econ Questions - Assignment Example

Answer the Questions 1st Part Question 2 The Atlantic economy was observed to experience profound alterations prior to American Independence. As a consequence, the English pronouncements and the English capital started getting progressively more subjugated by the manipulation of colonial economy. The liberty with regard to the affluent colonists, planters and merchants and similar professionals, to conduct their respective selected business, was limited. The scope or level of profits was trimmed down and the potential in relation to the local progress was given up. These wide, structural alterations along with the associated economic catastrophes in the short period proved to be disturbing those colonially privileged. These fresh British measures were attributed to be the one apparent economic reason for the revolt. The economic cause which was the wish to break free from the British trade guidelines along with other causes led to the American Revolution (Stanley, 2012; Rockoff & Walton, 2009). The American Revolution was caused as a result of two common movements. The movements entailed the fight back for self national independence as well as self government along with the fight back between the people of America for the desire of an increased democratic order. However, the revolution had a profound economic cause which was the unequal allocation of soaring levels related to the material welfare of the colonial Americans among the regions. The South was then considered to be the most affluent region as it surpassed the per capita earnings and wealth of the Middle colonies and also in New England. It was believed in his context that the income as well as the wealth witnessed a just and equal allocation till the early period of nineteenth century which marked the commencement of industrialization. However, it was observed that the prevalent disparities related to the income as well as wealth subsisted since long. For instance, 20 percent of the most affluent New Englanders had possession of about 66 percent of the entire wealth. In case of the South, the top most fifth affluent individuals possessed wealth of around 70 percent. In other words, South was referred to be the region which had the highest concentration of wealth whereas the least distribution of wealth was observed to be in the Middle colonies. The thick concentration of wealth in the South was principally attributed to the reason of domination and control with regard to the wealthy plantations which benefitted greatly owing to the ‘economies of scale’ associated with production (Warren, 2008). The Stamp Act which was passed in the year 1965 along with the Townshend Acts were developed by the British with the intention of augmenting their revenues which further gave rise to income as well as wealth inequalities. These Acts were made binding on the Colonists without the need of adequate depiction in the Parliament which deeply disappointed them. This particular disappointment made them revolt against the British finally resulting in the American Revolution (Fiske, 2009). The Articles of Confederation were officially approved in the year 1781 and the flaws related to the Articles became noticeable even prior to its approval. The Articles lacked certain elements which were considered to be quite essential. According to the Articles, no authority was provided to the central government to charge or even collect taxes. In the absence of such a factor the government had to depend for monetary support on the other states in the form of annual donations. However, most of the times these assured donations were not even paid by the states. This particular condition made it quite complicated and hard to have access to monetary considerations by the central government. The congresses were given no authority by the Articles to control the commerce. This provided the states the liberty to levy duties as well as taxes on those goods which were exported and imported from the other states. The major problems identified with regard to the Articles were that they did not provide any condition of implementing the law by any chief executive and there existed no scope for any form of a national judiciary. It also did not offer any kind of authority to the legislative branch for the reason of making it mandatory for the states to abide by the stated laws. The Articles even eliminated the need for a structure of a national court which meant that the states had the complete liberty to implement along with interpreting the laws in harmony with their respective comprehension and need. All these problems or weaknesses made the Articles appear quite incompetent and frail (Bruce & Yarbrough, 2009). The mentioned problems with regard to the Articles of Confederation were solved with the help of constitution. A convention was held at Philadelphia which has been referred as the Constitutional Convention. This was held to come to a solution for the problems faced in the Articles. The chief rationale of the convention was decided to be the assessment of the Articles but the result turned out to be the United States Constitution. The constitution provided appropriate solution for the shortcomings of the Articles by setting up the national court and even recognized the need of a President. The constitution made it permissible and delegated the authority to the government to accumulate or gather taxes. The constitution also documented the requirement of a currency to be recognized nationally and which was referred as money (Vile, 2005; Dougherty, 2006). 2nd Part The Financial System The United States (US) is believed to have an extraordinary place in the World Bank as well as in International Monetary Fund (IMF). At the time of the inception of these institutions, their location, system and term of office were to a great extent decided and ascertained by the US. The government of the US is supposed to possess quite a major portion of the voting authority in each of the mentioned institutions. The drawings with regard to the IMF were only accepted on the compliance of the US in the initial stage. Therefore, these instances evidently focus on the central role of the US with regard to these institutions (Woods, 2003). The disaster that took place in the year 1780 paved the way towards the ‘Federalist financial revolution’. However, the disaster in the early period of 1930 allowed to run free an immense wave related to the financial reorganizations. Majority of the reorganizations aided in reinstating the trust in relation to the financial structure. The initial monetary reform was made in the year 1970 when the US currency i.e. the Dollar was stated to be the standard fixed weight with regard to the gold and the silver. Since then, till the year of 1930, the level of price in spite of displaying minimum variations in the short run still represented steadiness in the long run. Money was thus understood to be inclined towards restoring its value. The Bretton Woods System is considered to hold a significant place in this regard as in this conference the currencies of the other countries were pegged to the US Dollar and the majority of the reserves of the world related to the monetary gold was believed to be in the possession of the US (Fishback, Higgs, Libecap, Wallis, Engerman, Humel, Croix & Margo, 2007). The central banking structure was set up by the US in the year 1913 under the Act of Federal Reserve. The Federal Reserve was created by the Congress with the view of an autonomous body in order to cater to the monetary as well as credit requirements of the nation. This autonomous body was expected to function without any unnecessary interference or manipulation with regard to any kind of political demands. Presently, the functions related to the monetary guidelines of the Federal Reserve are planned to facilitate steadiness in the economy of the nation (Smale, 2010). Therefore, from the above discussion, the heavy influence of the US government on the financial system could be apparently ascertained. Foreign Trade The structure of the British colonial system was believed to hold on to the set of guidelines related to the mercantilism with the help of its intimately regulated trade, limited economic progress and the adverse ‘balance of payments’ with regard to American colonists. After gaining independence, the Americans mended the guidelines associated with the free trade. The ‘federal constitution’ got rid of the trade obstructions in between the states while offering for the combination of the guiding principles related to the trade. Integrating the national interests with the commercial significance, made the Americans suppose that the commercial as well as the territorial wars that took place in the previous years would help to give way to free economic swaps in between the different nations. Therefore, significant degree of importance was provided to the aspect of foreign trade by the government of the US. The country facilitated the exchange of goods among the different nations. This, however, enhanced the manufactured as well as the agricultural exports leading to domination of the world trade by 27 percent by the US. It needs to be mentioned in this context that in spite of the strong command over exports with regard to the world trade, the exports of the US only accounted for 6 percent of the entire Gross Domestic Product (GDP) of the country. The disagreements related to the tariffs made the government unsuccessful in identifying the deep insinuations related to the irregular trade as well as credit balances. This called for the requirement of making required corrections in the tariffs by bringing the rates down by the US government and supporting the aspect of private overseas lending (Boyer & Dubofsky, 2001). Transportation The manipulation on the urban progress structure by the federal government with the help of transportation guidelines as well as programs is considered to be less confusing, however, the extent of manipulation and course of causation continues in dispute. The federal government is believed to be a main underwriter along with being a straight contributor with regard to the construction associated with the other as well as interstate highways. Highways are learnt to augment the factor of accessibility. The greater degree of accessibility would trim down the benefits related to the core city locations in terms of the residents as well as the firms, supporting the transfer towards the suburban areas. The other manipulative actions embarked on by the government in this regard have even been considered to be beyond doubt. The government was learnt to use up less resources or capital on the factor of public transportation compared to the highways. It levies taxes to a minimum extent on the gasoline compared to the other different nations. The government is also learnt to use up or spend substantial amounts for the reason of keeping up the oil pour coming from the nations of Middle East. This ensures economic progress along with facilitating community vitality (Knapp, Talen, Olshansky, & Forrest, 2012). References Boyer, P. S., & Dubofsky, M. (2001). The Oxford companion to United States history. United Kingdom: Oxford University Press. Bruce, C., & Yarbrough, K. (2009). Weaknesses of the Articles of Confederation. Virginia Tech. Dougherty, K. L. (2006). Collective action under the Articles of Confederation. England: Cambridge University Press. Fishback, P., Higgs, R., Libecap, G. D., Wallis, J. J., Engerman, S. L., Hummel, J. R., Criox, S. J. L., & Margo, R. A. (2007). Government & the American economy: A new history. United States: University of Chicago Press. Fiske, J. (2009). The American revolution. Boston: Houghton, Mifflin and Company. Knapp, G., Talen, E., Olshansky, R, & Forrest, C. (2012). Government policy and urban sprawl. Department of Urban and Regional Planning pp. 1-15. Rockoff, H., & Walton, G. M. (2009). History of the American economy. United States: Cengage Learning. Smale, P. (2010). Structure and functions of the Federal Reserve System. Congressional Research Service, pp. 1-7. Stanley, U. (2012). The causes of the American Revolution. Center for history and media. Vile, J. R. (2005). The Constitutional Convention of 1787: A comprehensive encyclopedia of Americas founding. California: ABC-CLIO. Warren, M. O. (2008). History of the rise, progress, and termination of the American Revolution. Boston: Manning and Loring. Woods, N. (2003). The United States and the International Financial Institutions: Power and influence within the World Bank and the IMF. Oxford University Press pp. 1-27. Bibliography Atack, J., Passell, P., & Lee, S. (1994). A new economic view of American history: from colonial times to 1940. New York: Norton. Read More