Throughout this five week class I have learned a lot regarding macroeconomics. One important topic that I have learned about and evaluated is the topic of increasing government spending to fight recession. I believe this is a good idea and I stand for it. I feel this way because it means that while we are in a recession, the government can try and increase employment and stimulate the economy with several forms of fiscal tools. To start you have to decide where recession is most significant. For example it could be on our trade partners, business incentives, or federal spending cuts. There could be more than one of those things that the country may be slacking on and there could be many options on how to fix the problems. Which leads us to …show more content…
They would want this because then the manufacturing that is happening in the US would increase. This would result in more jobs and also more money into the businesses and at a consumer level it would increase investment. Increasing global trade would also have many other benefits such as reducing poverty. Countries with a strong global trade relationship have been shown to have a more prosperous economy versus those who did not. Another way is by reducing taxes or creating tax credits for businesses. This would provide an incentive for businesses to continue or increase their production and investment. An example of this would be the WOTC (Work Opportunity Tax Credit). This incentive drives employers to hire individuals from certain target groups these target groups are individuals who have faced barriers when trying to become employed. Some examples of these target groups would be ex-felons, unemployed veterans, food-stamp recipients, and supplemental security income recipients. When employers hire individuals out of these groups they will then receive a tax credit. Another example of an incentive would be with a big business like Verizon, their goal is to sell phone line contracts to as many people as possible using their communication towers. So the government could say to them by the end of 2018, we would like to set a goal of 500,000,000 people using your service. They could give an incentive and say if you do this we will give you 1,000,000 to go toward your business. The incentive doesn’t always have to be a money amount. So if that were the case Verizon would want to do whatever they could to reach that goal to get the incentive. This would open up more jobs and provide an infusion of money into the economy. Another way is by cutting federal spending. By reducing our deficit it would increase the confidence of our allies and
Max: Hi I’m Max Lessins. This is Crash Course for economics and today we’ll be discussing the Great Recession, focusing on the fiscal and monetary policies used to recover from the 2008 economic meltdown.
1. If an economy produces final output worth $5 trillion, then the amount of gross
Today the United States Americans more than ever; there is a constant fear of an awaiting recession due to the economy. The recession in the later 2000’s has been known as the greatest economic decline since the Great Depression. The United States of America, the banks and businesses are not able to succeed and are failing due to the market. Many people across America cannot afford their homes or bills due to the unemployment rate that seems to keep increasing. Many people blame this on the higher oil or gas prices, and the wars that the United States acts on. The recession has overall declined our economic activity in business profits, employment, and investment. This is all due to our falling market, and the rise of prices that so many Americans cannot afford.
A macroeconomic policy is known at the government’s regulations to control or stimulate aggregate indicators for the economy. In other words, these are policies that focus on providing solutions to help stimulate economic growth and fight financial situations; in this case the recession. The macroeconomic policy that would be a legitimate solution to the recession would be Fiscal Policy, but more specifically, Expansionary Fiscal Policy. The reason why this would be a legitimate solution is because unlike Expansionary Monetary Policy, it has a more direct effect on aggregate demand. In other words, the government will aim to increase how much money is spent in order to stimulate aggregate demand. Furthermore, potential tax cuts will serve as a catalyst for spiking aggregate demand by granting people the capability to consume and invest (Forsythe, 2012). As an ultimate effect, the recession that America is going through will show more direct signs of economic growth, and will not have much of an influence in sparking inflation in the long
If the United States were to enter another recession, like the one that occurred in 2009, there would be two main option to help us recover. These options would be on two different sides of our economy, the supply-side and the demand-side. If our country were to use the supply-side method for recovery we would tend to use tax cuts and deregulation. On the other side if our country used the demand-side method of recovery we would then tend to use aggregate demand to mitigate the government's impact by spending more. So in other words the United States
The economic recession that occurred in 2008 great impacted higher education in areas such as tuition increases, financial aid funds and college graduates decreasing. The large budget state cuts mainly affected state universities as their main form of funding comes from the state. But the university where I work and am attending, National University, was also impacted. Our main form of funding comes from endowment and public tax exemptions for which were greatly affected by the economic downturn.
A budgetary stimulus is a necessity to help avoid recessions. Fiscal policy is when a government adjusts its’ spending levels and tax rates in order to impact the nation’s economic status. It is linked to the monetary policy which involves a bank and affects the nation’s money source. When there is an increase in unemployment and the economy is soon reaching a recession, the fiscal policy will help maintain the economy. The fiscal policy will decrease taxes and widely promote government spending. On the other hand, when unemployment is declining and prices are escalating, the policy will reduce government spending and raise the prices on taxes. The Great Recession was a horrific economic crisis that led businesses and buyers to drastically
The 2008 Great Recession helped in restoring economic growth and lowered unemployment. Both fiscal and monetary policies are related ways use to increase the aggregate demand and aggregate supply. So, a shift in the aggregate demand curve to the right is expansionary fiscal policy meaning government spending has to exceed (2012). The G- component aggregate demand help to spend, allowing the C- component of aggregate demand to increase. On the other hand, the monetary policy promotes spending, investments, and lending increasing aggregate demand. During the downturn, the systems concentrate on growing demand total while the supply strategy looked for long-term growth in productivity and efficiency (Pettinger, 2012).
From December 2007 to June 2009 the United States economy was confronted with its greatest challenge since the Great Depression. The financial crisis was so great that it was coined the term the Great Recession. Many factors contributed to the collapse of the U.S economy; such as, the financial crisis (2007–08), U.S. subprime mortgage crisis (2007–09), a shrinking Gross Domestic Product (GDP) growth rate and unpresented unemployment rates. A recent (2016) article in the Wall Street Journal entitled “Post-Recession Rethink: Growth Potential Dimmed Before Downturn” examines the economic aftermath of the Great Recession.
Sixthly, let’s talk about the government control of the economy. The government this past decade has done a very poor job at controlling the economy. Like I said earlier we as a nation are over seventeen trillion dollars in debt. Yet the government thinks spending will solve the problem. This just does not make sense to me. If the government wants to gain control over the economy again we have to stop spending so much
After I got the assignment and read what the topics were, I started doing research on all the topics you gave us. After doing the research I decided I was most interested in the United states recession in 2008. It also interested me in finding out what we have done, in the middle of doing, and what we are going to do to get out of the recession. I decided to choose this topic about the US economy and what we were and are doing to get out of the recession because I wanted to learn more about why we went into a recession and how we are now working on how to get out of one. I wanted to write about all the things that led up to the recession and write about what we are doing and going to do to fix the recession. I started off by finding a lot
The Great Recession has been one of the largest fiscal crises of the current generation and the economic downturn that resulted has been recorded as the longest and most severe since the Great Depression ("The Impact of the Recovery Act on Economic Growth"). Although the economy has reached a stage of recovery, the effects of the recession to real GDP can be seen in business cycle figures for the period. Shown in Table1, the change to real GDP was measured at -3.9% for the recessionary period. This step into recovery was brought about by an aggressive stimulus package based on the principles of Keynesian economic theory
The economic meaning of a recession is that the gross Domestic Product (GDP) has declined for two or more consecutive quarters. Unemployment rises, housing falls, stocks fall and the economy is in trouble. Whenever the government sees that the economy is entering a recession it is important for it to act. The U.S acted in two ways during the Great recession of 2008 through fiscal and monetary policies. Renaud Fillieule identifies that “ Monetary and credit expansions have been the main tools used by the U.S. government and central bank to try and recover economically from the Great Recession of 2008” (Fillieule r, Pg. 99 2016). These Keynesian policies are debatable among economist, none the less they were implemented and put the U.S on the road to recovery.
The Great Recession, beginning in 2007 and ending around 2009, caused some serious repercussions on the United States economic system and left millions of jobs and housing at a stand still. Though a couple big business and stockholding companies caused this decline in the U.S., those businesses were the ones experiencing little to no cost for their actions.
Part 8 - A recession is typically defined as at least two consecutive quarters of economic decline in GDP. When this happens, unemployment tends to rise, personal income may drop, and the price of goods and services become volatile. Most agree that it is impossible to eliminate recession in a capitalistic economy, since it is so cyclic. Recessions may trim weak business and allow stronger ones to survive by employing techniques that improve quality and service. Recession does not mean depression; it simply means that there are peaks and valleys within the overall economic system. Now that economies are more global though, these dips have a far more reaching set of consequences. In most firms, however, recession may result in some lay-offs, but it also may mean greater attention to sustainability, cost-cutting, and a more lean and strategic approach to the individual product or service (Moffatt, 2009).