We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.

Government intervention - Essay Example

Comments (0)
This paper focuses on government intervention in times of economic down turn, the government has mechanisms to improve the current situation, and this involves the use of appropriate fiscal and monetary policies. Classical economists state that government intervention will only make things worse…
Download full paper
Government intervention
Read TextPreview

Extract of sample
Government intervention

Download file to see previous pages... Many factors are said to be the cause of the depression which include the stock market that crashed in 1929, banks failure whereby consumers lost their savings and the failure by banks to provide new loans to stimulate expenditure and investment, reduction in spending as more people became unemployed, policies that were aimed at protecting local firms from international competition by imposing high tariffs on imports and the draught condition at the time.
This paper focuses on the importance of government intervention in a recession. The paper draws largely on Keynes theory which explains the causes of recession and policy measure that are appropriate in a recession, the following is an analysis of the characteristics of a recession.
In the analysis of government intervention in a crisis it is important to first understand what are the causes and characteristics of a recession, recessions are not detected immediately and require observation of appropriate data for a given period of time, an economy has periods of contraction and expansion referred to as business cycles, there are periods when the economy output reaches a peak and periods when the economy contracts and this is referred to as a trough, after the peak the economy is said to be undergoing a recession. A recession may lead to a depression which is much worse, Marichal (1989) states that characteristics of a recession include:
i. Crisis in the stock market
ii. Increased unemployment
iii. Reduced customer spending
iv. Reduced income
v. Reduced production
Given the above characteristics of a recession it is evident that the governments have tools that can be used to improve the above situation; this will involve the use of appropriate measure to improve economic performance, unemployment, income and production.

Government intervention:
Fisher (1990) states that fiscal and monetary policies are used by policy makers to fine tune the economy, fiscal policies involves the use of government spending and taxation while monetary policies involves the use of interest rates, reserve ratio and money supply. As discussed above it is evident that the 1930 depression effects could have been reduced if policy makers applied appropriate policies at the time.
An economy experiences business cycles whereby there are periods of economic expansion and periods of economic contraction, this means that production and output will expand in some years while contract in others, in the US for example business cycles are said to last for six to ten years, this means that during this period will be a period of prosperity and periods of economic downturn.
Policies are used to ensure that a recession do not result into depression which much worse than a recession, fiscal policies used will be aimed at increasing aggregate demand which will result into increased output and employment, the following is an analysis of Keynes theory on stimulating aggregate demand.

Keynes theory on government intervention:
According to Keynes (2007) a recession is as a result of a reduction of aggregate demand in the economy, this results into an increase in unemployment and reduced output levels, he therefore advocates for policy measures aimed at increasing aggregate demand, the following is ...Download file to see next pagesRead More
Comments (0)
Click to create a comment
Government intervention in the market for various agricultural products
This is because in an environment of free competition, the consumers end up gaining from lower prices as entrepreneurs fight to gain their favour (Patselas, 2001, 2). However, when it comes to the market for agricultural products, there is a real fear that people might go hungry when prices are high or there can be a lot of waste when the highly perishable products are produced in surplus thus resulting in losses for farmers and entrepreneurs.
6 Pages(1500 words)Essay
What makes a run on bank When is the government intervention necessary
What makes a run on bank? When is the government intervention necessary? A bank run which is also known as a run on the bank occurs when a lots of people take their deposits back as somehow they have lost the faith upon that bank and insecure about their money.
8 Pages(2000 words)Essay
Government Intervention (Bailout)
There are several reasons that have made the investment banks convert to be holding banks and some of them are discussed below. This paper will therefore analyze the reasons why investment banks have converted to holding banks in response to the US Government Bailout Plan, and how this is, in turn, affecting the economy.
5 Pages(1250 words)Term Paper
Methodology Proposal about Government intervention in Global Economy
The global economy in a broad perspective represents the overall economic performances of the countries and states in sum. Therefore, though individual government’s intervention to the world economy may be negligible, the summation of these effects dictates the shape that the world economy takes.
11 Pages(2750 words)Essay
Microeconomics: Government Intervention and Failure
 Scarce resources where there exists a free economic system are allocated using price mechanisms. In this case, consumer spending decisions and preferences, as well as business decisions on supply, combine in the determination of equilibrium prices. 
7 Pages(1750 words)Essay
Government Intervention in Business
Through obligations and contracts, relationships are formalized and professionalized. As a regulative body, government institutions provide procedures, standards that ensure the quality of business activities and outputs. It gives accreditation for processes, sanitation and safety- in which in this writer's opinion make business functions more efficient and economical.
8 Pages(2000 words)Essay
Government Intervention (Microeconomics)
omypedia.com>.Microeconomics examines the decision making process of individuals, firms, Governments and the impact of the decisions on demand and supply of goods and services and how it in turn affects the prices and the effect of relative prices on the
5 Pages(1250 words)Essay
Review of Literature: Government intervention in relation to Singapore SMEs survivability during the recession in Singapore
According to the release from the Singapore’s Prime Minister’s Office, most of the categories of Singapore’s SMEs have been seriously bashed by recession, but which is mainly felt in its nascent furniture business (PMO 2009). The small furniture
4 Pages(1000 words)Essay
Market Intervention
In market economics (specifically that of perfect competition), market determines the wage of an employee through the factors of demand and supply as described by the ‘invisible hand’ of Adam Smith. But in case of
5 Pages(1250 words)Essay
The new deal and government intervention
Nevertheless, this changed with the election of Franklin Roosevelt. He involved himself overly to create several programs through his New Deal to
2 Pages(500 words)Essay
Let us find you another Essay on topic Government intervention for FREE!
Contact us:
Contact Us Now
FREE Mobile Apps:
  • About StudentShare
  • Testimonials
  • FAQ
  • Blog
  • Free Essays
  • New Essays
  • Essays
  • The Newest Essay Topics
  • Index samples by all dates
Join us:
Contact Us