...Explain how an increase in federal budget deficit due to recession can stabilize the economy. A deficit means that the government spends more than it receives in tax revenues in a given year (O’Sullivan, Sheffrin, & Perez 2010, p. 374). The total deficit is spending, plus all the interest payments on top of the original debt, minus the total tax revenue (http://www.blurtit.com). There are three factors, known as automatic stabilizers, that affect and stabilize the economy, they are: 1) government purchases of goods and services, such as public safety, government transfer of payments, and unemployment insurance, 2) Medicaid or Medicare etc.,and 3) the collection of taxes. If the government cut taxes or increases transfer payments such as unemployment insurance and food stamps this helps to offset the decrease in household income. Additionally, when government cuts corporate taxes, it helps prevent businesses from cutting expenses as much as they would during a recession. Therefore, an increased federal budget deficit can help stabilize an economy for as households’ disposable income rises they will spend more. Fortunately, mechanisms such as automatic stabilizers are in place to neutralize the ups and downs of the economy without having to change laws (O’Sullivan, Sheffrin & Perez 2010, p. 375). How do adjustments in wages and prices take the economy from the short-run equilibrium to the long-run equilibrium...
Words: 1054 - Pages: 5
...Introducing Sociology SSCI210 ABSTRACT Unemployment is very well known in today’s economy. It affects millions of people in different ways. Many people lose their homes, cars, and friends when they become unemployed. People often do not realize the effect of unemployment until it happens to them. There have been many studies and articles on unemployment recently. Unemployment in recent years has risen exponentially due to our economic malaise. The findings of these recent studies are disheartening according to an article in The New York Times. (The Enduring Consequences of Unemployment March 28, 2012 The New York Times) It has been found that people who lose their jobs suffer lasting damage to their earning potential, their health and the prospects of their children. The longer it takes to find a job the deeper the damage appears to be. In a article by the Washington Post The-long term impact of unemployment it has been found that people who are unemployed eventually dip into their savings, retirement funds, and in many cases borrow money to pay rent, bills, and buy the basic necessities to survive such as groceries and everyday household products. With the prices of gas, food and many other products on the rise it seems like people who are unemployed will continue to struggle even after finding a job. According to studies nothing has been seen like this since the Great Depression when unemployment was at its highest in American history. Many people will accept...
Words: 569 - Pages: 3
...(distort) the meaning of the unemployment data? Consider an unemployment rate of 4%. This means that of the labor force 4 out of 100 people are actively looking for a job and the other 96 some kind of job. These numbers say nothing about the population outside of the labor force, nor the quantity of work performed by those in the labor force. Consequently, the 4% does not capture the the part of the non-labor force that would migrate to the labor force if getting a job were easier (discouraged workers), nor does it capture the desire of, for example, a part time worker who wants a full time job (under-employed workers). So, the potential amount of labor that workers might like to sell to businesses is not fully captured in the unemployment rate. It is in this sense that the meaning is skewed. 2. Why does full employment never result in 0% unemployment? While the unemployment rate reaches relatively low levels during expansions, it never falls to 0 percent. In principle, full employment is thought of as occurring when ALL resources (especially labor) are engaged in production, in practice, full employment generally corresponds to an unemployment rate of about 5 percent. This 5 percent unemployment rate, often termed the natural unemployment rate, includes both frictional and structural unemployment. 3. Of the types of unemployment noted, which do you believe is the most difficult to solve? Why? Cyclical unemployment may be the most difficult because...
Words: 870 - Pages: 4
...Classical economic:- Classical economic theory is rooted in the concept of a laissez-faire economic market. A laissez-faire--also known as free--market requires little to no government intervention. It also allows individuals to act according to their own self interest regarding economic decisions. This ensures economic resources are allocated according to the desires of individuals and businesses in the marketplace. To classical economists, government spending and involvement can retard economic growth by increasing the public sector and decreasing the private sector. Classical economics also focuses on creating long-term solutions for economic problems. The effects of inflation, government regulation and taxes can all play an important part in developing classical economic theories. Classical economists also take into account the effects of other current policies and how new economic theory will improve or distort the free market environment. Keynesian economics:- Keynesian economics relies on government spending to jumpstart a nation’s economic growth during sluggish economic downturns. It believes the aggregate demand is often influenced by public and private decisions. Public decisions represent government agencies and municipalities. Private decisions include individuals and businesses in the economic marketplace. The theory relies heavily on the fact that a nation’s monetary policy can affect a company & an economy. 1930 Great Depression:-- Causes: 1) Stock Market...
Words: 378 - Pages: 2
...indows 7 which will eliminate any advantage iPhone has at operating system front. World is witnessing recession. USA has entered into deflation era. Economic Scenario is not better elsewhere either. With shrinking economy and job cuts, people will not prefer to spend on costly phones. The iPhone is competing on differentiation. Apple should make iPhone available at lower price to fight competitors at price front. Also, launch of 3G version of iPhone will provide strength to it. As economy is reviving , demand for high end phones will increase. Apple has history of having leading and innovative products and iPhone will remain here for long time. References: 1. Bradford, Robert W., Duncan, Peter J., Tarcy, Brian. “Simplified Strategic Planning: A No-Nonsense Guide for Busy People Who Want Results Fast!” 2. http://en.wikipedia.org/wiki/IPhone 3. http://www.apple.com/iphone/ 4. http://en.wikipedia.org/wiki/Swot_analysis indows 7 which will eliminate any advantage iPhone has at operating system front. World is witnessing recession. USA has entered into deflation era. Economic Scenario is not better elsewhere either. With shrinking economy and job cuts, people will not prefer to spend on costly phones. The iPhone is competing on differentiation. Apple should make iPhone available at lower price to fight competitors at price front. Also, launch of 3G version of iPhone will provide strength to it. As economy is reviving , demand for high end phones will increase....
Words: 1937 - Pages: 8
...(Queen's Printer). URL: http://www.canadiana.org/ECO/ItemRecord/91942 Centre for Social Justice URL:http://www.socialjustice.org/index.php?page=aboriginal-issues Canadian Council on Social Development URL: http://www.ccsd.ca/cpsd/ccsd/c_ab.htm Aboriginal Affairs and Northern Development Canada URL: http://www.aadnc-aandc.gc.ca/eng/ Assembly of First Nations URL: http://www.afn.ca/index.php/en The Indian Residential School Settlement URL:https://my.senecacollege.ca/bbcswebdav/courses/CAN275BA.GENH.20123/summary%20of%20court%20settlement.pdf Aboriginal Issues in Canada Many problems exists in aboriginal communities which include their living conditions, crime rates, suicide rates, lack of education and skill training, unemployment and other issues. The living conditions or quality of life for Aboriginals rank 63rd, or amongst Third World conditions. Health Canada states that as of May 2003, 12% of Aboriginal communities had to boil their drinking water and approximately 1/4 of water treatment systems on-reserve pose a high risk to human health. Almost 25% of Aboriginal water infrastructure are a high risk of contamination. House density is twice that of the general population. Nearly 1 in 4 Aboriginal adults live in crowded homes. 423,000 people live in 89,000 overcrowded, substandard and rapidly deteriorating housing units. Almost half of the existing housing stock requires renovations. 5,486 of the 88,485 houses on-reserve are without sewage service...
Words: 1458 - Pages: 6
...value of final goods and services produced in an economy stated in the prices of a given year, also nominal GDP adjusted for inflation. (Colander, 2008). Unlike nominal GDP, real GDP can account for changes in the price level, and provide a more accurate figure. Inflation is a continual rise in the price level. Often referred to as a “constant-price”, inflation-corrected GDP or constant dollar GDP. (Colander, 2008) Inflation is the change of price levels over time. There are many cause for inflation, one example is when the government prints a large amount of money to help deal with a crisis. When this happens prices are raised to keep up with the amount of surplus spending. Unemployment occurs when people do not have jobs and have been actively looking for work for the past 4 weeks. Unemployment rate is defined as a percentage of those in the labor force that is unemployed. (Colander, 2008) Interest rate is the rate at which...
Words: 658 - Pages: 3
...Larson Inc. must consider the alternative economic futures for their industry. In any market, economic conditions will change over time. The company must be able to adapt and change with the economy to remain successful. The company needs to find solutions for the changing economy to keep increasing their revenue and decreasing their costs. The economy may go through a recession, expansion and peaks over their years in business. Larson, Inc. needs to analyze the difference scenarios and determine the best course of action for each type of economic future. Also, the company must consider the economy’s stage in the business cycle to make well-informed decisions. Economic projections The business cycle will have continual change and fluctuate over time. History has shown us how the economy goes through peaks, recessions, troughs, and expansion. It is important for all businesses to understand the concepts of macroeconomics and how the business cycle is affected. Larson, Inc. can plan for the changes to remain successful and innovative. The business cycle is determined by the changes in GDP or gross domestic product. The change in the GDP can occur from economic reasons such as changes in demand, taxes and interest rates. It can also change from non-economic reasons such as war or natural disasters. The company must be aware and analyze the different indicators of the changing economy. The recession, in which Larson Inc. is currently experiencing, is a normal...
Words: 1580 - Pages: 7
...Wal-Mart: Organization Paper The management function in an organization is usually related to effort, authority, and responsibilities of the management of that firm. Motivation of the workforce within these organizations handles the employees, and other personnel to work within a team environment. These teams will accomplish a goal; management must organize the employees into teams that have work that is related to the final goal. However, the development of an organization must include knowledge of the task, human resources, assets, and monetary allowances. The Wal-Mart organization is a force in the retail industry; there are over 7,000 stores around the country. These stores also include the Sam’s Club, Wal-Mart supercenters and warehouses in Canada and Mexico. Wal-Mart, when measured by its total revenue, is the largest retailer, that is measured by both net sales and income increases from its operating stores. Its primary products and service lines generally lie within the competition of its Discount and Variety Retail, as well as Electronics and Drug stores, Pharmacies, Appliances, and Gasoline sales (Hoovers, 2008). Physical Assets Wal-Mart includes physical assets within its organization that are developed in such a way that allows for utilizing efficient methods in order to manage these assets. Such factors of its environment are quite evident in one example, its retail prices. This is important because in essence, if Wal-Mart was less efficient...
Words: 1145 - Pages: 5
...of Current Macroeconomic Situations Professor J.Kessio December 7, 2011 Analysis of Boeing and Bombardier according to their Stock performance, current and future sales revenue, current and future profits, and labor costs and hiring decisions. I. Introduction In December 2007 the united state of America entered a recession and 1.2 million employees lost their jobs by the end of first 10 months of 2008, many businesses start going out of the market leaving many people without jobs relying on the unemployment compensation. The impact of the recession wasn’t just on U.S economy but it was spread all over the world due the heavy financial relationships and exchange with the potential markets all across the world. The monopolist firms had effected also but not as much as the other firms did but they also faced a hard times. 1.1 The Current Economic Conditions The current economic conditions are picking up due to the fall in unemployment rate by 0.4 percentage point to 8.6% in November 2011 comparing with 9.3% in 2009 and 9.6% in 2010, also the interest rate currently is 0.75%. The GDP growth was -6.8% by the beginning of 2009 and 5% by the beginning of 2010 and 3.1% by the beginning of 2011, overall the economy performance is going in positive direction that will increase consumer and businesses confidence. 1.2 The Firm The firms chosen to be analyze are Boeing and Bombardier because they hold many of the monopoly characteristics such as they...
Words: 1118 - Pages: 5
...Outsourcing Outsourcing has been a consistent problem in the United States for years now. It has always sparked a flare of controversy when Americans now there is a job shipped overseas for cheaper labor. People bash on outsourcing saying that it is bad for or economy, however, businesses love outsourcing. The main reason why it is good for businesses is because it reduces the cost for labor. Businesses are willing to give someone a job overseas because it doesn’t cost the company as much money rather than giving a job in America. Since America has minimum wage and other countries don’t, corporations are willing to ship jobs overseas to save money. Outsourcing is also has disadvantages as well. For businesses, the quality of a product from the result of outsourcing kind of takes a nosedive. Since many firms that provide outsourcing quickly cut the quality of component parts in order to increase their margins. Eventually customers who are accustomed to believing your brand promise begin to notice that your once-great products are suddenly cheap. Also since most of the third party service providers excel at the services they provide, businesses are guaranteed of better quality than an in-house employee would give. Additionally, any service provider will always look to give the best of services since their reputation is at stake. Also another reason why outsourcing is bad is that companies may be supporting slave labor and child labor. Offshoring agreements typically involve...
Words: 663 - Pages: 3
...An account of UK unemployment over the past 5 years Unemployment is a widely discussed problem, especially in recent years when the rate of unemployment has grown rapidly, mainly because of the global financial crisis of 2007-2009. The loss of a job is probably one of the most distressing events that could occur in the overall economy and in a person's life. This is a change not only in an economic sense, but in a psychological too. People inevitably depend on their earnings and a job loss in many cases means that they will not be able to maintain the same standard of living as before. Furthermore, the notion of future hardships has a great impact on the personality, as his or her common habits so far have to be somehow modified to suit the new lifestyle, based on the new income. This often leads to a psychological instability, triggered by a lowered self-esteem, and moreover, a decrease in morality levels which is the main reason why crime rates among young people are higher in the past five years. Apart from the impact on a personal level, there are some inevitable issues from an economic point of view, which derive from high unemployment and which inevitably affect the national economy. As we all know, the economic conditions of the country are absolutely vital to the ratio of unemployment. Every single event that has had an impact on the overall economy has affected the employment rates, whether positively or negatively orientated. It is of great importance...
Words: 1827 - Pages: 8
...Erik Casimir Lindholm Professor: Will English 1 Essay #4 May 13 2012 Unemployment today The unemployment rate today is less than it has been before, but it is still more than a year ago. This is a problem that always is an issue, and wherever you go in the world, there are almost always some people without a job. Today’s unemployment rate is a problem not just for the people without a job, but for the government and the state’s economic status. But how does unemployment affect our economy? Because with a lot of jobs, there is a good quality of life, and the money in the society is divided into all families instead as it is today, when some have too much and others have nothing. With a job to earn money from, a parent can take care of its family by providing with food and shelter, and this is one of the basic ideas of survival today. ------------------------------------------------- Unemployment rates by age today in the United States of America* ------------------------------------------------- Teenagers – 24.9% Whites – 7.4% ------------------------------------------------- Adult Women – 7.5% Hispanics – 10.3% ------------------------------------------------- Adult Men – 7.4% Blacks - 13.05 ------------------------------------------------- *Statistics taken from The Bureau of labor statistics; http://bls.gov/news.release/empsit.nr0.htm There are many factors contributing to the difference between African Americans and Whites. Fewer black people...
Words: 1123 - Pages: 5
...Wal-Mart: Strategic Initiatives for a Changing Market MGT 521 Wal-Mart: Strategic Initiatives for a Changing Market Local, state, and national economic trends play a large part in the success and failure of businesses. When the economy experiences a downturn, consumers spend less and seek more for the money they do choose to spend; this puts companies in a unique situation. Many companies must choose between increasing prices and letting employees go in order to keep themselves in business. The United States recession of 2008 put employers in the same situation; in fact, this recession put employers in an even more difficult position. The recession saw a decrease in employment of over 6 percent—double that of all previous postwar recessions (Auguste, Lund, & Manyika, 2011). The retail sector lost 1 million jobs during the most recent economic recession. Since then the industry has added over 90,000 jobs, but this still results in job losses offsetting job gains due to this rough economic time (McCall, 2011). Wal-Mart, like any other retail business, feels the effects of recent economic trends. Unfortunately, Wal-Mart has had to resort to eliminating health insurance coverage for part-time employees and increasing premiums for other workers in an effort to cut costs (Wright, 2011). This strategy, though unfortunate, allowed the company to cut costs during the recession without eliminating positions or increasing prices. Wal-Mart also implemented...
Words: 1233 - Pages: 5
...demand of supplies for the military it created jobs and decreased the number of unemployed citizens. The production and expansion of military products did not seize even after the war was over. It opened up factories to create more powerful and sophisticated weapons to defeat our enemies. As we see today we are still seeing changes in our military and defense system. Another aspect about the post war that changed the way the U.S. functions today was the changes in the American workforce. The amount of jobs during WWII was scarce especially following the great depression. The government wanted to make sure this would not be a continuing dilemma post-war to ensure that the economy would not be stuck at a stand still. The unemployment percentage decreased dramatically during those years. It also led to the start of the income tax due to the increase of minimum wage. Also large businesses and firms merged to become large sectors in the economy. As well, farming became a popular trade so much that smaller farms had a difficult time competing. Allowing employment to grow aided as a beneficial aspect to America’s prosperity, but incidentally allowed for smaller businesses and private sectors to fall apart as they were being bought out from the bigger companies. Looking at today’s society, small businesses still struggle along with the...
Words: 442 - Pages: 2
