Midterm Intermediate Macroeconomics 1. How are presidential election outcomes related to the performance of the economy? Presidential elections and the economy have a very close relationship and they go together hand and hand. Usually when the economy is good and opinion of the government is positive, the incumbent or the party of the last president wins the election. People tend the lean towards why change a good thing. A couple of theories exist in the relationship of the economy and presidents. The first one is that voters will vote for whichever president they feel shares the same economic vales that they have. Usually the poor vote liberal or for bigger government because they think they will provide more economic relief them and …show more content…
We have also encountered another recession in 2007 because of risky trading/investment tactics on Wall Street that caused the housing market to crash. This put unemployment at an all-time high since the depression era, and destroyed faith in America’s economic system. Firms were reluctant to investment in the American public because they were afraid we would lose our jobs. Also, we have fought in two wars. One of the wars has been the longest in American history. This dries up resources and ups government spending. The government has less money to investment its citizens and firms have fewer resources to produce products for consumers to buy. 5. Briefly explain how the following would shift the IS function to the right. a. A change to lump-sum taxation (Specify whether increase or decrease is needed to shift IS curve to the right.) Decreasing a lump sum tax will shift the IS curve to the right. Decreasing the lump sum tax will increase consumer income, which will cause aggregate demand to go up. b. A change to government spending (Specify whether increase or decrease is needed to shift IS curve to the right.) Increasing government spending will shift the IS curve to the right. Increasing government spending will cause aggregate demand to go up, and shift the IS curve to the right. 6. Explain briefly how a change to the following MS, MD, or P
However, there are also some drawbacks associated with raising taxes. Tax is a form of leakage from the circular flow of income leading to negative multiplier effect. If the government increases income tax rates, it might create disincentives to work. It is because when income tax increases, the opportunity cost for leisure time decreases; and people will have to work longer
If the US economy were experiencing a market failure like under provision of public transport or education, the government would be advised to increase expenditure on these areas. In the end, this may lead to a rise in productivity, which in future, it will cause a high economic growth rate and increased tax revenues. Nevertheless, government spending does not necessarily cause a rise in productivity. The US government has promised to increase expenditure on NHS that is expected to orchestrate a rise in the economy. However, this sort of extended spending is uncertain to increase the rate of economic growth (Boyes & Melvin, 2008).
All through time The United States of America and the people running have had the debate regarding “economic Freedom.” Each President of the United States has handled the situation differently and a lot of that has to do with their parties. The Republican Party has believed that the only way to success is by achieving it, therefore their hard work should reflect towards their economic life and freedom. On the other side of things are the beliefs of the Democrats, their views in favor equal opportunity for the working class. Through time Liberal President, Franklin D. Roosevelt and his “New Deal” as well as Conservative Republican Ronald Regan and his “Trickle Down Economics”, have both made the biggest economic impacts regarding the debate.
Tax decreases can stimulate economic growth because if people are paying less in taxes, they have more money to spend. It has been proven over the years that tax decreases generate economic growth and federal revenue will always rise. From a personal standpoint I always spend more during tax season because I usually get a good return; since I am a single parent and full-time student, therefore, I qualify for various tax breaks. These obviously affect my household because I am more disposable income. Tax decreases can help a business if their taxes are decreased the organization will payout less and have more income.
First, let us remember that when the government sells bonds with bigger yields, everyone will be interested in taking advantage of that opportunity, not only Americans. In fact, foreigners can and will buy those American bonds, and they will need American dollars to do so. The sudden demand for American dollars will make the dollar value spike up, and with an expensive currency, U.S. products will become more expensive and less attractive to foreigners – which will finally decrease X and AD. This is the open economy effect. Lastly, the government relies in the fact that the most part of the population are “economically ignorant”. However, some households and companies are aware of the economy situation, and will not react as the government expects. They will actually start saving as soon as they realize that the federal administration is borrowing money to increase spending; that happens because the government eventually will have to increase federal taxes to pay that bill. Because C and I play the major role in the AD curve, this will also compromise the economic goals of the
Presidency changes every four years allowing Americans to see new and different results. From 1929 until 1939 the Great Depression shocked all of America. The Great Depression occurred after the stock market crashed revealing underlying problems in the United States’ economy. The banks were giving out risky loans and the farmers were overstocking on crops. The previous president, Herbert Hoover, did not try much to solve this major economic downfall. He was worried about too much government interference. He resulted in violence when protests arose and people even built shanty towns and called them Hoovervilles to mock him for not helping the poor. The nation really needed the government’s help. When Roosevelt beat Hoover in the following election,
The Great Depression and the Great Recession were two financial crises that ruined the economy for a great number of people. Not only was the U.S. significantly impacted, but the world was affected as well. Although many years set them apart, Franklin Delano Roosevelt and Barack Obama both responded to dire situations in a similar manner by implementing acts that prompted government involvement, created jobs for the unemployed, and promoted pump priming.
Furthermore, ticket splitting became commonplace so the President became the center of attention. In addition, the economy was being affected so people began to rely more so on the Presidency as seen by Keynesian economics.
(7 points) What are government’s fiscal policy options for ending severe demand-pull inflation? Use the aggregate demand-aggregate supply model to show the impact of these policies on the price level. Which of these fiscal policy options do you think might be favored by a person who wants to preserve the size of government? A person who thinks the public sector is too large?
He also raised the taxes and lowered the taxes to try to get the economy back where it was. Inflation and deflation worsen in the United States (History hub). Unemployment rates are going up rapidly as well because businesses are going bankrupt, along with everyone else for the most part in that time. President
Franklin D. Roosevelt was elected and brought the economy back from the dead so to say. FDR
The income growth by income level under Democratic and Republican Presidents chart is a bit confusing and misleading, but it looks as if with the Democratic presidents, economic inequality declines somewhat. Also with the Republican presidents, economic inequality rises quickly, but the Democratic presidents made higher annual income than the Republicans did. This chart basically shows that throughout the years of 1948-2005 the levels of income fluctuate up and down with both Republican and Democratic presidents this is why is it very important for everyone to vote and know who and what their vote for. We the people can’t expect change if we are not willing to put in the work it takes to make the changes with something as simple as voting, the outcomes of election are and can only be determined by those who participate. Elected officials make very important and often
Different people have different outlooks on how the nation should be ran and how our economy should produce our money. For instance two great presidents have two different outlooks on how our economy and our politics should work. Thomas Jefferson wanted an economy based on small family owned farms, while Hamilton on the other hand wanted to manufacturer and produce as much as possible in factories. Both of their plans for the economy have many strong points, but they also have some weak points.
Whenever economic turbulence increases, the policy makers adjust the taxation rates in an effort to stabilize it. When it comes to income
If the shift of D2 were to the extent whereby it coincides with D1 (implying no actual net shift), the actual consumption in that event would have been Q3 at P2 price level. This would imply a higher level of consumption and a larger shift in the supply curve towards the right passing through the point (P2, Q3) rather than the point (P2, Q2). It should be noted that the framework provides an indirect way of measuring the extent of supply shift caused by technological progress in milk production.