...eight guideposts of economic thinking to government spending and taxation has been especially persuasive, both because of improvements in statistical research techniques and because more data become available with each passing year. As the Organization for Economic Co-operation and Development explains, The empirical growth literature has developed substantially over the past two decades, drawing on larger and richer databases and exploiting better econometric tools to explain cross the country differences in growth performance Isolating the precise effects of one type of government policy-such as government spending-on aggregate economic performance is probably impossible. Moreover, the relationship between government spending and economic growth quite possibly depends on factors that can change over time. Another important element of the academic research is methodology. When scholars attempt to measure a relationship between government spending and economic performance, they can pursue this research in a number of ways. They can conduct a statistical test to ascertain a relationship between two or more variables, but this still leaves many questions. Are they testing to find a relationship over a period of time? Are they testing to find a relationship using cross-country data? Academics can also build complete economic models and then try to determine whether the evidence supports that model. But what kind of model? What are the assumptions in that model? Will the model...
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...politically expedient method’’. Amendments have been made to the existing tax systems, usually when the government required more funds. Little if any planned or integrated thinking seems to have taken place. According to the Adam Smith Institute, Great Britain has the most complex tax system in the world, which is largely believed that is roughly five times as long as the German tax code (Geraint Jones, 2011) Currently, governments request to use taxation in some situations for purposes which is different than raising funds to cover up its expenditure. To begin with, the economic resources, which are accessible for the nation are limited, thus a raise in government spending usually leads to a decrease in private expenditure. In addition to this, one technique of transferring recourses from the private to the public sector is the use of taxation, but there are also further methods. One of these alternative methods is the degradation of the currency through the creation of additional money, but the main problem of this method is that it leads to inflation. Moreover, an additional alternative option is for the government to charge the goods and services it offers. However, it is not possible to charge individuals directly on the basis of their utilization of many government services (James and Nobes, 2011). According to Musgrave (1959), the economic function of government may be separated into three major categories. First, is to overcome...
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...In reading and reviewing this research topic one on Governing Spending and Taxation, one will find that four of the eight guideposts to economics thinking are included. In recent studies one does not have to waste time knowing that there is a way of thinking which the economic way is. The economic theory has a common ground in which a human being can developed it from the basic principles of their behavior. The economic theory is the road map to finding out the points that are established of what to look for and how economics relates to the present and future. The list of guideposts to economic thinking can be incorporated into your own thought process. Below is information that has being prepared for one viewing of thinking in an economic way? Title of Essay The opportunity cost beginning with World War I soared to $11,194 as of 2010 this was almost 80 times the level in 1916. However, the dramatic change for federal spending is above it level during the 1920s.The shift of federal spending has change rapidly. In 1960 the defense of spending has fallen from both the share and budget in the economy. However health care and transfer payments, and subsides has risen high. In 2000 defense spending was only 16.5 percent of the federal budget. Because of the wars in Iraq and Afghanistan defense spending has succeed in the past decades at its highest of 20.1 percent...
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...1. Definition: Fiscal policy in economics is to use the government revenue collection and the expenditure to have an impact on economy. The policy is based on John Maynard Keynes, the British economist, who stated the increase or decrease in the aggregate demand and expenditures will influence the economic system factors. (Sullivan,A.&Steven M,S 2005,p387) The changes in tax and government expenditure are regarded as the major fiscal policy instruments. Government revenue collection (taxes) plays the role in how much government and individuals have to spend. For instance, the government could stimulate the consumers’ spending by cutting taxes. The effect of fiscal policy: The variables will influence the economy in the aggregate demand so that the policy will achieve the objectives including the price stability, the economic growth and the employment. Keynesian economics indicates that the changes efficiently stimulate the aggregate demand at the economy boom’s beginning. (Blinder 2012) It is argued that Keynesian economics model can be used to establish the framework for strong economic growth. However, economists also debate the fiscal policy effectiveness. The arguments concentrate on crowding out effect whether the interest rate increase, which may offset the spending stimulation, is led by the government borrowing. (Fiscal policy of Cliff Notes 2013) Once the government faces the deficit, the public fund will be important, the interest rate will improve. 2....
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...J.S. Mill’s Economic Philosophy and Political Corruption in 21st Century Australia Carly Sandler Z5088638 University of New South Wales Introduction John Stuart Mill was an influential economic thinker and reformer, whose novel ideals of economic social proved to have a lasting impact on future reformative programs endowed in moral value. Mill’s economic contributions has been characterized into the classical system of economics: production, the distribution of goods, rents and wages, and the economic role of government, which leaves many to critique its practical implications to modern day issues like political corruption in Australia. Today’s political environment in Australia is pigeonholed by a lack of transparency in government contracting and enforcement of regulations, greedy politicians extorting taxpayer money, and power of lobbyists on influencing government policy. Though these concepts were of no concern during Mill’s life, the fundamental theme of institutional power and constraints on societal development can be utilized to weave abstract thinking into realistic interpretations. Thus, the aim of this paper is to ascertain the extent to which Mill’s 19th century economic ideas can be applied to issues of political corruption in 21st century Australia and possible reform. The Economic Philosophy of John Stuart Mill J.S. Mill was born in 1806 in Pentonville, France. He was the eldest son of James Mill, who was a major constituent of Jeremy Bentham’s radical...
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...HOW TAXES AFFECT THE ECONOMY ECO 100 SURVEY OF CONTEMPORARY ECONOMIC ISSUES GREGORY WEINKAM MELISSA FUTRELL 8/9/14 INTRODUCTION How Taxes Affect the Economy For as long as I can remember taxes has always been a part of our daily lives. Taxes can often be a burden for most people, taxes are used for many functions. If it was not for taxes, our roads, public buildings would be a mess. Taxes are what thrives our emergency services such as, law enforcement, EMT, and fire/rescue, many of our healthcare offices also use tax payers’ money to stay open. The taxing process from distribution to collecting them has people on the fence with different point of views. I believe that if the government would lower taxes than our economy would have a positive effect on everyone which makes for a positive economy. In my paper, I will be discussing the affect that taxes have on our economy and what happens when the government raises and or lowers taxes. HOW TAXES AFFECT THE ECONOMY Taxes are a sum of money demanded by a government for its support or for specific facilities or services, levied upon incomes, property, sales, etc. (Brue, 2010) When thinking about taxes, if the government had 100% tax this would have a negative effect on the amount of taxes the government would get; and if you had to pay 100% tax, you would not work because you would be working for no income. If this was to occur then people would probably spend more time growing their foods and using the batter...
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...ministry of finance undersecretary Wang Jun made a speech in the fourth international taxation dialogue system plenary session. He pointed out that, “from now on, China government will keep put into effect on positive fiscal policy and stable monetary policy, which are aimed at improving the pertinences, flexibility and foresight of fiscal policy.” (Wang, 2011) The policy and target Review back to 2010, China government insists in implementing positive fiscal policy, especially in stimulating the economic growth, transferring the way of economic growth and applying flexible in fiscal policy. As the figure 1 shows, in 2010, China positive fiscal policy facilitate in mainly four aspects: advancing the local fiscal reformation, strengthen the medium-sized and small enterprises and rural construction, promoting the economic development and supporting the social undertaking. Figure 1: Year 2010 China important fiscal policy content Coming out date | Fiscal policy | 4.30 | Treasury department sets fiscal policy: central budget provides specialized fund for helping to expand the minor firms ‘guarantee operations, which can improve the financing environment of minor firms. | 5.13 | Treasury department and SAT (State Administration of Taxation) make an announcement; government will solve the problem that farmers are hard to get loan, by diminishing the sales tax and income tax. | 5.31 | Government will start the trial allowance work in 5 cities for buying new energy cars in personal...
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...1883. His father was an economics professor at Cambridge. son of a Cambridge economics professor If ever there was a rock star of economics, it would be John Maynard Keynes. Keynes shares his birthday, June 5th, with Adam Smith and he was born in 1883, the year communist founder Karl Marx died. With these auspicious signs, Keynes seemed to be destined to become a powerful free market force when the world was facing a serious choice between communism or capitalism. Instead, he offered a third way, which turned the world of economics upside down. In this article, we'll examine Keynes' doctrine and its impact. (To read about Adam Smith, be sure to check out Adam Smith: The Father Of Economics.) Keynes was ultimately a successful investor, building up a private fortune. His assets were nearly wiped out following the Stock Market Crash of 1929, which he failed to foresee, but he soon recouped. At Keynes's death, in 1946, his worth stood just short of £500,000 – equivalent to about £11 million ($16.5 million) in 2009. His first prediction was a critique of the reparation payments that were levied against the defeated Germany after WWI. Keynes rightly pointed out that having to pay out the cost of the entire war would force Germany into hyperinflation and have negative consequences all over Europe. He followed this up by predicting that a return to the prewar fixed exchange rate sought by the chancellor of the exchequer, Winston Churchill, would choke off economic growth and reduce real...
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...Unit 3: Thinking Report ‘Scottish independence’ Lauren Pratt – 1200370 As the SNP came to authority four years ago there has been a surge of interest across the country. Becoming independent will mean the people who care most about Scotland will be taken the decision about our future. A debate was presented by Stewart Hosie, a Member of Parliament for Dundee East, who was in favour of the motion besides Jenny Marra, who was the second presenter, who is a member of the Scottish Parliament for Dundee North East, Scottish Labour, was in opposition to the motion. Stewart Hosie gave an analytical, quantitative and fact driven argument. Jenny Marra gave a biographical, personal and historical argument. Both played a conception of their audience as largely conservative. In the debate ‘It is time for Scotland to become independent,’ presented on the 17th of September at University of Abertay, Stewart Hosie stated that for many countries, independence is taken for granted, and Scotland should be given that opportunity also. The biggest part of his argument was a number of statistics which he used to show the sustainability and competency to succeed of an independent Scottish nation by use of taxation, and by exploitation of the North Sea. He encouraged that large manufacturing plants should be returned to Scotland, and through these opportunities, this nation would thrive if no longer dependent on the rest of the UK. On the other hand Jenny Marra took a less statistical approach...
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...1. Executive Summary This report, targeted at senior Government officials considers the current issue of the EU treaty and the impact the outcome will have on Ireland. A referendum will be held to decide this outcome but it is noted that the political parties will have a strong influence on the public’s decision. As with all the EU countries, Ireland’s economy retracted sharply with the global financial crisis in 2008. They have recovered better than most of the EU but the major economic issue still facing Ireland is the unemployment rate which currently sits at over 14 per cent. Signing this EU treaty will impose tighter fiscal discipline on members by entrenching tougher tax regulations and limiting government spending (Halpin 2012). The overall aim of the treaty is based on the Keynesian theory of using monetary policy to create budget surplus. EU countries will reduce their budget deficits by the strict spending regulations outlined in the treaty. The downside to signing the treaty is the lack of control Ireland will have over the country. The primary avenue for government spending will be limited to tax increases. Ireland has been criticised for having one of the lowest personal and company tax rates in the EU. The benefit of the low corporate tax rate is the large foreign multinational corporations that create employment in Ireland. Increasing taxes could have a negative effect on the economy. If Ireland do not sign the treaty, although they will still be a member...
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...their unemployment, their expectations, consumer income, and interest rates. In addition to identifying these four factors and their economic effects, there will be identified what fiscal policies have been put in place by the United States government in order to aid the economy and finally, there will be an evaluation of these fiscal policies regarding their effectiveness from both a Keynesian economic perspective and that of a classical economist. Unemployment A nation’s unemployment rate, as can be expected, is calculated by dividing the total sum unemployed persons by the number of total persons available for within the nation. This formula yields the number that is considered the unemployment rate for whichever nation is in question, in this case though, the nation that is the focus of our investigation is the United States. According to the Bureau of Labor and Statistics website (2015), “the unemployment situation in the United States has been reduced to 5.5 percent. This decrease as reported in February of 2015 signifies an overall decrease of 1.2 percent in the United States unemployment rate just within the last year alone” (Bureau of Labor and Statistics, 2015), but the question is then asked, “What allowed these changes to take effect?” This leads into the identification of specific fiscal policies put in place by the government that may have helped decrease the...
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...society lives and survives. If careless and inattentive, serious damage can be done to the economy that adversely affects many sectors of society. Every action, from purchasing groceries to massive layoffs and decreases in taxes, has a consequence. The purchasing of groceries can have positive and negative effects on government, households, and businesses. For government, depending on the locality, there might not be an imposed sales tax on groceries of a certain type, so there is no revenue generated. There is also the cost of regulation of goods provided and the importation of certain scarce goods. For households, the fact that groceries can be provided is a good thing, considering there are households that do not have the ability to do so, so they have some kind of income. That does follow that the income is leaving their pockets when they purchase those goods. The exchange of income for goods helps businesses put income in their pockets also. Money isn’t created, it is just exchanged, and in a fair transaction, it goes from one set of hands to another reasonably. Massive layoffs will almost always affect each one of these sectors negatively. For governments, the unemployment rates rises, the GDP falls, and the state of the economy looks to be suffering. Granted, this has to happen on a large scale to really see the effects really reflect, but to a...
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...“Hyper inflation is both a monetary and fiscal phenomenon” In economics, hyperinflation occurs when a country experiences very high and usually accelerating rates of monetary and price inflation, causing the population to minimize their holdings of money. Under such conditions, the general price level within an economy increases rapidly as the official currency quickly loses real value. Meanwhile, the real value of economic items generally stays the same with respect to one another, and remains relatively stable in terms of foreign currencies. This includes the economic items that generally constitute the government's expenses. There is no precise numerical definition to hyperinflation. Hyperinflation is a situation where the price increases are so out of control that the concept of inflation is meaningless. Hyperinflation is often associated with wars, their aftermath, socio-political upheavals, or other crises that make it difficult for the government to tax the population, as a sudden and sharp decrease in tax revenue coupled with a strong effort to maintain the status quo can be a direct trigger of hyperinflation. When associated with depressions, hyperinflation often occurs when there is a large increase in the money supply not supported by gross domestic product (GDP) growth, resulting in an imbalance in the supply and demand for the money. Left unchecked this causes prices to increase, as the currency loses its...
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...analyses how political, legal and social factors have impacted on the two contrasting organizations For Hinckley and Bosworth council is public Leicestershire local county council and Jenkins Building. SOCIAL CHALLENGES One of the social problems that Hinckley council and Jenkins Building they will need to think about their services this means that both business have had to change the way of thinking of how to gain more profit and try to introduce more products to encourage the customer to buy it as well they have to look the way they are approaching with customer. RECESSION With recession this means that it may be a period on time in which the economical growth may slow down, and the level of output may actually decrease rather than increase or rise. This therefore means that with the unemployed that it may have the chance on increasing. If this happens then it will be bad for businesses from the fact that they may lose confidence and it also may have to experience the reduce on investment. This would be bad however because it would mean that their customers may save up instead of spending their money buying products from the company. During a recession period, the actual economical activities actually slow down. But when demands starts falling down then the overproduction and future investment plans are also later on given up. There is also a steady decline in the output, income and also employment, prices and also profits. The business then loses their confidence and even...
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...Economic policy refers to the actions that governments take in the economic field. It covers the systems for setting interest rates and government budget as well as the labor market, national ownership, and many other areas of government interventions into the economy. Nature of Economic Policy The ideal economic policy, both for today and tomorrow, is very simple. Government should protect and defend against domestic and foreign aggression the lives and property of the persons under its jurisdiction, settle disputes that arise, and leave the people otherwise free to pursue their various goals and ends in life. This is a radical idea in our interventionist age. Governments today are often asked to lower the prices of others, to fix wages, to help some businesses get started and to keep others from failing, to encourage or hamper imports and exports, to take care for the sick and elderly, to support the profligate, and so on. Ideally government should be a sort of caretaker, not of the people themselves, but of the conditions which will allow individuals, producers, traders, workers, entrepreneurs, savers, and consumers to pursue their own goals in peace. If government does that, and no more, the people will be able to provide for themselves much better that the government possibly could. Concepts of Economic Policy: * Economic policy seeks to achieve objectives such a high rate of growth, a low and stable rate of inflation and high levels of employment * Government...
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