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1. When A War Is Declared, Many Of The Big Contracting

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1. When a war is declared, many of the big contracting companies for the military (AECOM, Boeing, Northup Grumman, etc.) will ramp up production for a large variety of products that the military will need. This increased demand for products will lead in a hiring increase which in turn will reduce the unemployment rate. This temporary job increase will also increase consumer’s confidence in purchasing power resulting in more products bought from retailers. Government hiring will raise the GDP. This is the case because initially, the government expends money upon hiring new employees. But the growth comes into play as the new employees with their newly found confidence buy up more of the private sector because of their new jobs. This is…show more content…
On the contrary, the government can increase spending if a recession is close or already happening and can lead to increased employment nationally. The central bank’s monetary policy can help by varying interest rates. They can lower interest rates to increase spending and raise them to decrease spending. To decrease inflation, the banks can reduce the supply of money, therefore giving citizens the incentive to spend less money and in turn, reducing the inflation.
Both persistent inflation and unemployment are not ideal, however if I had to choose one, I would say unemployment has a worse effect on the economy. This all starts at entry level jobs for teens. If teens cannot get hired to get work experience, it will result in a low skill level work force which will have repercussions in long term productivity. It will also effect the private sector because teens will not have money to spend on retail and therefore not create any revenue for the companies in that age group. Also, families facing unemployment will result largely in the ability to help out their children. If the parents are laid off from a good paying job, they will no longer be able to help their children pay for college which in turn also effects the job skill market. Teens will then have to pay for college all on their own and that will result in deep financial debt that can last for years. I cannot see any positives for unemployment but with inflation there are some upsides. Even though buying power goes
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