Stimulus measures policy forms

Stimulus measures insurance formsPart 1. Some reject stimulation measures in all current policy forms. These economists focus on the damaging activities and decisions of (a) private corporations, (b) commercial banks, and (c) wealthy individuals. How can these three groups that lead our private market system, each in their own way, frustrate and foil the goals of a fiscal stimulus program.The 2009 Stimulus packages that President Obama released were done so with the intentions of trying to fix the recession bound economy. further the question that sur exhibitd was what the long marge results of this stimulus package were. Is it more beneficial or more harmful to our already down moveing economy? A fiscal stimulus package by the government consists of generally three options either the use of tax cuts, increased transfers or increased government spending. All three options tolerate one bother in common it will perk up the government budget to increase. It can only serve as a te mporary boost to the economy, because the government has to acquire a way to fund this package. When the government needs to spend money that they didnt revenue from taxes it is called a budget deficit, they would need to borrow and most likely from unlike reserve banks or through the selling of bonds. In Keyness economic vision the goal of macro policy is not to proportionality the budget but to balance the economy at full employment. This does logically ca-ca sense because a low availability of jobs would mean an increase of transfer payments including unemployment compensation and welf are benefits. But if new jobs can be created it will decrease the burden of transfer payments and increase tax revenue. An increase of jobs would sufficient more taxes to collect and less economic problems when unemployment pass judgment are tear down. But since the recession and fiscal policy both are signs that suggest, the economic state is not currently at its best for investments. clo ak-and-dagger corporations are less eager to invest being that from a business spot their initial intent is to make profit. Without the confidences in future profit rate theres less of an obligation to want to suck in the risk. I accept that from any business stand point, private corporations are interested in how more lucre they can make and maybe secondarily how many jobs a new project or investment can create. Commercial banks on the other afford could result in a crowding out effect because the increase in government borrowing will cause a decrease in private sector borrowing. Crowding out means that theres less progression which is also an opportunity cost for government spending. When the government is fold out of all other options, borrowing money to finance the budget deficits can cause an increase in interest rates. Theres only a plastered about of money available for borrowing and if the government borrows, less money is available for business investments. Wealthy individuals would tend to save more and spend less. They may also invest in foreign counties that stand at a better economy. Therefore private corporations, commercial banks, and wealthy individuals are three military force groups that hold the foundation of our private market system. They have the general ability to effect consumption rates because of investments. Its a circular flow effect, less jobs cause less overall GDP consumption and less taxes, less confidence in economy, which causes less investment. After all Keynes did say that the goal of macro policy is not to balance the budget but to balance the economy at full employment. The main problem here is that there are not full jobs to boast the economy in the long run. The American dream is to do better than the past generation. Its hard to reach that when jobs arent available and a recession at hand. Part 2. Given our currently high unemployment rate and low inflation rate, argue for or against a Supply-Side policy focu s versus a Demand-Side policy emphasis. meld gather up or aggregate supply whats a better a choice when you have high unemployment and low inflation rates? I believe that the demand curve is only going to be a temporary answer to the economic problem. The demand curve will shift in answer to changes in income, changes in expectations (consumer confidence), changes in wealth, changes in credit conditions or changes in tax policy. The whole purpose of aggregate demand is to stimulate consumer spending. If unemployment is high its tall(a) that this will solve the problem. How do you tell someone who is unemployed to buy more? In contrary I think the aggregate supply is a better policy choice to get the economy back and running. The policy options to shift AS rightward include Tax incentives for saving, investment and work, human capital investment, deregulation, plow liberalization and infrastructure development. This works better because the tax cuts will increase consumption bein g that it would result in a higher level of available income. This means that people would be more motivated to work. Lets just say Person A makes $40,000 a year and taxes used to 10% and now they are down to 5%, this means that instead of paying $4000 in taxes it would just be $2000. Person A is able to work the same amount and have $2000 extra for disposable income. This guarantees that (C+G+I+(x-m) = GPD) GDP will go up if consumption goes up. Human capital investment is a long landmark effect people find it worth their benefit to invest in school and training. Our goal is to find a way to both lower unemployment and lower the inflation rates. To do this we have to focus on the supply side or the production part of the market. By producing more (new technology) it would set the platform so that better prices levels are available. The technology is going to be useful for production for a while and the investments in education will increase the standards of living. This means th at cheaper goods equal more consumption. Its a long term answer to the economy because the overall GDP will grow. The economy will grow and the production of output rises while unemployment and inflation falls. If all these aspects are intact theres no way that the next generation couldnt do better. I believe that a lot of the economic problems we face today are because of the actions that the government made without thinking of the long term effects. If we want our province to become stronger and stronger we have to think in long term strategies and I believe that the Aggregate Supply Policy is the right one. Part 3. Upon completing ECO 100, you have been hired by the Obama administration to advise them on distant Exchange Policy. Their concern is that low interest rates and a large trade deficit have led to a depreciating one dollar bill. Accordingly, first pitch an overview of the way such rates and trade conditions can threaten our currency value. Then secondly, advise the P resident whether (or not) steps should be taken to strengthen the dollar in foreign exchange markets. What makes euros worth more than dollars and Chinese Yuan to be below both? The answer is that the currency market determines what the exchange rates are worth. The Foreign exchange market is just like the all markets where theres a demand theres a supply. But if there is a more demand than supply then the exchange rate would go up. Meaning if there was a higher demand for U.S dollars dollar value would increase also cognise as appreciation. But in this example if there was an excess amount of U.S currency that is above the demand needed then our dollar value fall also known as deprecation. But the rule is that where theres a lost there is always a gain. Meaning if one countrys currency value goes up some other countrys money value has to go down. If the value of the U.S dollars improves in the Foreign Exchange Market then it would increase the overall supply of dollars. If our co untry has a trade deficit, meaning we import more and export less, we should find a method that attracts more exports. I think that the best approach to take would be to weaken the dollar. But in companionship for that to happen there had to be a way to alter the supply of U.S currency. In one perspective its a good thing if our dollars are more valuable we would be able to buy more foreign goods with the same dollar. But if theres too much of a supply of dollars the dollar may lose value. As dollars become cheaper, American exports effectively fall in price and demand rises. In order to reduce the amount of our trade deficit we could export more goods. If our dollar rates were low enough to attract foreigners to buy our good and cooperation would still make their profits then it would all work out. A weaken dollar would work until we could close the gap of our trade deficit and after that we would create a strategy that will strengthen the dollar by lowering the supply of it.