The author of this paper under the title "Government Impact on Economy" comments on the reasons for the rise of unemployment. It is mentioned here that unemployment is one of the serious economic problems that any economy tries to deal with…
Download file to see previous pages...
Some economists, such as William McChesney Martin, view the economy as inherently unstable while others, such as Milton Friedman, argue that it is naturally stable (Mankiw, 1997). Due to this argument, policymakers view economic stabilization as one of their primary responsibilities. So they make laws that will try to stabilize the economy. These lawmakers, together with many economists, believed that in the absence of an active government role in the economy, events like the Great Depression could occur regularly (Mankiw, 1997). Recessions are periods wherein the economy experiences high unemployment rate, as a result, there will be lower income and reduced economic well-being. Monetary and fiscal policies can prevent recessions by responding to the shocks in the aggregate demand and supply. Economists also view it wasteful if the policy instruments were not used to stabilize the economy. However, the economic stabilization would be easy if the impacts of both monetary and fiscal policies were immediate because sometimes the lags between the implementation and effects of policies make stabilizing the economy more difficult. Then, the need for automatic stabilizers comes in. These are the policies designed to reduce the lags associated with stabilization policy.
It is very clear that the government should and must take a hands-on approach to macroeconomic policy to affect the employment environment. They should take full control over the policies that would have impacts on the economy, especially in the employment environment.
...Download file to see next pagesRead More
The same difference will also exist between a modernists and a psychologist. With regards to The Wealth of the Nations, there have been so many interpretations and analysis. People have understood this document in varying ways and analyzed it differently.
Laissez-faire doctrine was generally accepted by all the political leaders of that time and the role of the government was limited to the maintenance of law and order in economic affairs. The concept of regulatory authorities was introduced much later and the government’s involvement was kept at a minimum during the early years of independence.
Several factors dictate government spending, and whether it rises or falls is dependant on certain dynamics that may include government policy, state of economy, military expenditure, private sector and politics (Leboeuf 56). Government spending has decreased in the initial three years of the current administration, which is very strange and historical in essence.
U.S. government policies on economy
This paper will look at four policies developed by the US government to influence economic growth and productivity. Also, it will assess whether each item has improved or reduced life quality, and make fitting recommendations that may enhance the policies.
One of the solutions would be to make marijuana legal in order to increase demand in the economy for both marijuana and other products, this will increase tax revenue, increase the level of GDP and increase employment in the economy.
Economists state that the major problem in a recession is a decline in aggregate demand, he also states that the government role will be to increase demand through increased spending and lowering of interest rates in order to increase investment.
Rather than allow this bubble to fully unwind, the Fed created more asset bubbles, especially in housing, leveraged finance, private equity and asset-backed securities from 2006 till now. In 2007, the American economy began to slow significantly, mostly because
nment decides on what to produce, how much to produce, techniques to be used in the production process as well as the means of production to be applied (Kennedy, 2008).
One of the roles that the government plays in the economy is to ensure stability and growth. The government
ends up by cutting on the amount of tax it charges, people will tend to increase their rate of spending hence allowing them to buy more imported goods and service, hence increasing the rate at which the government borrows funds from financial institutions in other countries as
1 Pages(250 words)Assignment
GOT A TRICKY QUESTION? RECEIVE AN ANSWER FROM STUDENTS LIKE YOU!
Let us find you another Research Paper on topic Government Impact on Economy for FREE!