...Over the last, decade, the federal government has been spending more money than it has raised through revenues, creating huge annual deficits and adding to an already large national debt. There are several ways that I would try to balance the federal budget. First, I would try to cut the federal spending on Foreign Economic Aid are. The United States is a wealthy and powerful country, we have enough the ability to make our own economy. Second, I would try to decrease the expenditures. Medicare and Social Security are the first two ares of federal spending I would try to cut. Today, people are living and working longer than previous generations in the United States, so I would raise the Medicare eligibility age women to sixty-five and men to...
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...available, it is important to understand which one are necessary for a particular study; indicators are only helpful if they are used or interpreted correctly. This paper will list some ofthe top reports used in a business analyst, discuss its relevance in decision-making and the economy. GDP One of the most common indicators is the Gross Domestic Product (GDP). It is the primary measure of a nation’s performance; peruses annual total outputs of goods and services (McConnell, Brue & Flynn, 2009).To measure GDP all of the spending on final goods and services are summed upevery quarter or year. The items include personal consumption, gross private domestic investments, government purchases, and net exports (McConnell, Brue & Flynn, 2009).GDP is a goodestimator for profit growth and in determining the expected rate of return on capital.The Federal Reserve uses the data to adjust monetary policies. For example,the Federal Reserve reduced the federal fund rates to nearly zero percent, and implemented different programs to support the liquidity of banks to aid in improving...
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...Fiscal Policy 1. Meaning of Fiscal policy Fiscal policy refers to the way government utilizes taxation and spending with the aim of influencing the overall economy. Usually, the government use fiscal policy to ensure strong and sustainable economic growth and reduce poverty (Horton & El-Ganainy, 2009). The function and objectives of fiscal policy have increasingly gained popularity in the current financial crisis as most governments have stepped in to promote financial systems, jump-start growth, and solve the implications of the crisis on vulnerable groups. The main goals of fiscal policy include * Maintain low rate of inflation * Stimulate economic growth especially during economic recession * Typically, fiscal policy works to stabilize economic growth, bust economic cycle and avoid a boom 1. Responsibility for fiscal policy The executive (the president) and the Congress are responsible for fiscal policy 2. Difference between fiscal policy and monetary policy Fiscal policy is concerned with changes in taxation and changes in federal government purchases while monetary tool is involve shifts in supply of money and in the interest rates. Both the monetary and fiscal instruments are aimed to achieve favorable macroeconomic policy goals. When policymakers aim to affect the economy, they manipulate the fiscal policy and the monetary policy. The central of bank any country indirectly influences activity by changing the quantity of money under circulation...
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...Fiscal Policy and ExxonMobil Introduction Government spending has been an instrumental component and reflection for the United States economy. As an integral part of the business cycle, the last several years have been through the trough since the recession in 2008. While government spending has been increasing, for a couple years it did reduce in addition to maintaining a steady quantity of spending up until the past few years of recovering and growth. As a result, there has been a steady increase of spending in the past three, with anticipation of greater spending in the years ahead. While the overall amount of spending has been increasing as a result of a stronger economy, there has been a surplus of oil and petroleum drilling. Given the lower demand for drilling, the oil and petroleum industry has been greatly affected with Exxon Mobil reporting lower profits, and BP has been reporting a loss, with anticipation of mass layoffs ahead. (Krauss, 2016) Fiscal Policy, Tax Rates, and the Economy Roughly 35-36% of our total government spending accounts for the gross domestic product (GDP). After the government bailout funding for banking and stimulating the economy with an additional $700B after 2008, over 42% of the annual GDP was of government spending. Federal income tax hovering between 16.8-17.2% for median class income has been consistent for the past several years. “Today's government spending levels are indeed too high, at least relative to the average level of tax...
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...Measuring Economic Health Paper ECO/212 January 24, 2011 Nelson Lima Measuring Economic Health Paper It is important to take a look at the trend of the Gross Domestic Product when determining whether the economy is healthy or not. Production and employment rates can also help determine whether the economy is healthy. Understanding how fiscal policies tie in with these can also help determine the health of the economy. This paper will describe how the Gross Domestic Product is used to measure the business cycle. Also this paper will describe the roles of the government concerning fiscal policies. Finally, this paper will explain the effects of fiscal policies on the economy’s production and employment. GDP and the Business Cycle Economic growth is not a steady event. It tends to exhibit a pattern. There is first an expansion of above-average growth. Then there is a peak. Next there is a contraction of below-average growth. Finally, there is a low-point. The low-points are generally followed by periods of expansion. Then the cycle repeats itself. Although the cycle repeats, it does not repeat in a regular manner. These fluctuations in economic growth are known as the business cycle. Because the business cycle is related to economic activity, the Gross Domestic Product (GDP) is a strong indicator of economic contractions. “GDP is a monetary measure of the economy’s production, valued using the prices from a selected base year” (Rummery, PhD, 2002). The health...
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...Actions taken by the government can slow growth if things are moving too fast or stimulate growth if the economy is in a lull. Walmart, a major retailer in the United States, is one of the many organizations that are influenced by fiscal policies. Tax rates and spending can affect the organization’s ability to sell goods and services as well as create jobs for the economy. Based on fiscal policies implemented and economic predictions, there are a few recommendations that can be made to Walmart in order to positively influence the economy and their business. Federal Government Spending Fiscal policy is changes in government spending and taxes in order to influence the economy in some way. It works by changing the level or composition of aggregate demand (AD). Government spending in the United States has steadily increased from 7% of GDP in 1902 to almost 40% today (Chantrill, 2015). A decent amount of federal spending has gone for health care, education, pensions, and welfare programs. Defense spending in the United States has fluctuated in the last century, rising from 1% of GDP, peaking at 41% in World War II, declining from 10 percent in the Cold War to five percent today (Chantrill, 2015). Government spending on education has expanded from about one percent of GDP in 1900 to peak at 6 percent in the second decade of the 21st century. Government did not intervene significantly in the provision of health care until the passage of Medicare and Medicaid in the mid-1960s...
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...Fundamentals of Macroeconomics Paper Brainard C. Simpson II ECO 372 September 29, 2014 Paul Updike Fundamentals of Macroeconomics Paper Every country measures its overall economic health by measuring GDP (Gross Domestic Product). It represents the total dollar value of all goods and services produced over a specific time period. The income approach, which is sometimes referred to as GDP (I), is calculated by adding up total compensation to employees, gross profits for incorporated and non incorporated firms, and taxes minus any subsidies. The expenditure method is the more common approach and is calculated by adding total consumption, investment, government spending and net exports. This paper will focus on this approach highlighting the three specific variables that effect GDP, households (buying groceries), business (massive layoffs), and government (decrease in taxes). All of these inputs have an effect on a nation GDP. I will illustrate how all these inputs affect GDP directly, and how they are interrelated. Households Every household plays a role in the measure of GDP. A household represents the purchasing power of the individual. The more disposable income in a household, the more they can spend, which in turn stimulates the economy. Buying groceries is the simplest measure of disposable income. Grocery purchasing is important to GDP because the state of the economy will determine how much a family would be able to purchase from the local grocery store. If there...
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...principal by a lender to a borrower for the use of borrowed goods. Interest rates are typically registered on an annual basis, also known as the annual percentage rate (APR). Borrowed assets may include cash, consumer goods, vehicles, or buildings. Certain economic activities such as the purchasing of groceries, massive layoff of employees, and the decrease in taxes can have an effect on the government, households, and businesses. The government measures the size of the nation’s economy by its gross domestic product (GDP). The GDP is made up of four parts; consumption, investment, government spending, and net exports. ("Gross Domestic Product (gdp)", 2010). Consumption is the aggregated amount of all spending done by consumers in the country. Investment is the amount that businesses in the country spend on capital. Government spending is the aggregated amount of all spending done by the government. Net exports are the variation between gross imports and exports. Farmers produce products such as fresh produce, meats, organic materials used in the...
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...understanding of the terms, the description will change to several scenarios, and how the result of a seemingly innocuous event has a ripple effect throughout the economy, affecting households, businesses, and government. Macroeconomic Terms There are a few very basic terms and concepts that one must understand when embarking on a discussion of macroeconomics. These building blocks will help one to understand why and how the economy works, and what effects of investment decisions, unemployment, and inflation have on the economy. Gross Domestic Product The Gross Domestic Product (GDP) is the value of goods and services produced in a country during a given year. To calculate GDP, it is necessary to add the total of all consumer spending, government spending, investing and net exports. Real GDP The Real Gross Domestic Product is the value of goods and services produced in a country for a given year once inflation has been taken into account. Nominal GDP The Nominal Gross Domestic Product is the value of goods and services produced in a country for a given year using existing prices. Unemployment Rate The unemployment rate is the percentage of the workforce that is currently not working. However, those that are in this category are willing to work and are currently looking for employment. Inflation Rate Inflation rate is the rate at which the prices for goods and services is increasing. This value comes from the Consumer Price Index, which is essentially a “basket”...
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...produced by labor and property located in the United States -- increased at an annual rate of 1.8 percent in the first quarter of 2011 (that is, from the fourth quarter to the first quarter) according to the "advance" estimate released by the Bureau of Economic Analysis. In the fourth quarter, real GDP increased 3.1 percent. The increase in real GDP in the first quarter primarily reflected positive contributions from personal consumption expenditures (PCE), private inventory investment, exports, and nonresidential fixed investment that were partly offset by negative contributions from federal government spending and state and local government spending. Imports, which are a subtraction in the calculation of GDP, increased. The deceleration in real GDP in the first quarter primarily reflected a sharp upturn in imports, a deceleration in PCE, a larger decrease in federal government spending, and decelerations in nonresidential fixed investment and in exports that were partly offset by a sharp upturn in private inventory investment. Reference...
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...Did the Stimulus Work? Mehrdad Namazi Angela Agboli Ph.D Pad520 Apr 9, 2012 The Stimulus Analysis In this research I am trying to explain why the stimulus packages did not stimulate the economy that much, where the money is gone and also evaluate some alternatives. Congress has enacted two huge stimulus programs since the recent recession started in 2008. The first one was under President Bush for $152 billion and the second one was under President Obama totaled $863 billion. After more than three years since the recession emerged, still the unemployment is through the roof and the economic growth is sluggish. Why? In order to shed a light on this problem, first we have to know where the billions have gone and how they have been used. There are three kinds of Keynesian stimulus packages (1) the government gives money to people directly, in hopes that they would buy more stuffs and services. (2) The government directly buys goods and services (3) the government sends the check to state and local governments to spend it. In either one, the philosophy is that the increase in buying would result more activity and eventually will boost the economy. The 2008 stimulus was the first kind and the 2009 was almost a mix of all three. In 2008 the U.S Treasury started sending checks to households in the summer. It was supposed to put more money into the hands of people to buy additional goods and services and thereby stimulate production...
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...This policy drives the budget by controlling government spending as well as the collection of revenues in order to directly influence the country's economy. The government implements this policy through various programs in order to produce expected results on the nation’s income, stabilize economic growth, and maintain high levels of employment. The fundamental purpose of the fiscal policy is to minimize fluctuations in the economy by reducing inflation and recession. In order to achieve its objectives, the Fiscal Policy relies mainly on two tools: government spending and taxation (Weil, 2008). The Federal Government spends money on a large volume of staff and services for society. For example, make available military equipment for its armed forces, support the police, provide healthcare and education, assist with welfare benefits, implement public transport infrastructures, and invest on the public sector. The main source of government’s revenue is through tax collection. Changing tax rates increases government revenues so that it can provide public goods which can not be provided by the market alone. Taxes apply to both personal and businesses income. Moreover, the government applies taxes to specific sets of goods, known as sales taxes. Taxation has been one of the most debatable and polemic topics in economic policy (Minarik, 2008). Fiscal policy seems appealing in that changes made by government at the spending and taxation composition level, may directly affect variables...
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...Part II Go to the Bureau of Economic Analysis at this Web site (http://bea.gov/newsreleases/national/gdp/gdpnewsrelease.htm), and look up the latest new release for real GDP. Address the following questions after reading the latest release: 1. What is the real GDP today? 3.9% 2. What is the largest component of GDP? Consumption 3.What is the smallest component of GDP? Net Exports 4. What is the fastest growing component of GDP, and why? The fastest growing component of GDP is the exports of goods and services. According to the BEA, “the increase reflects growth in personal consumption expenditures, exports and fixed investment outside residential, as well as inventory investments from the private sector and local government spending”...
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...ECN400 CSU Global Dr. Ryman 1/31/15 GDP Gross Domestic Product, or GDP, is broken into four components: consumption, investment, government purchases, and net exports of goods and services. Personal consumption is the spending on goods and services by consumers, excluding the purchases of new homes. Investment is the spending towards goods or services that can produce a profit, such as homes and structures. Government purchases are made by local, state, and federal governments, and include goods and services like highway and building construction. Net exports is the value of a country’s domestic goods and services sold abroad, minus the value of imports from other countries. Consumption affects me as a consumer every day. Everything I purchase, such as food, clothes, or a car, falls under the GDP component of consumption. Additionally, the bills I pay for services, such as apartment renting, cellular service, and insurance, fall under this umbrella as well. Inflation can directly affect how I spend my money on consuming goods and services, since my dollar can have more or less buying power as the rate of the dollar changes in value. Also, an increase or decrease in my income can affect how much I consume in the market, contributing to the GDP. Spending also depends on how I view the market, and my optimism of its future. I am more likely to purchase things if I predict that the market, as well as my income, will remain stable. Investment does not affect me as much as consumption...
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...the war period. By 1945 $140 billion was held in private savings. These savings were used after the war to boost consumer spending. After the war the US economy grew as there was little damage to mainland USA and thus no money was spent on reconstructing factories, houses and public infrastructure as had to be done across the UK and mainland Europe. Due to the damage caused to Europe there was a large increase in US exports to Europe as European countries were unable to manufacture goods whilst they rebuilt their factories and infrastructure. The Marshall Plan was a programme for European recovery which gave European countries money to their economies. It is widely thought that the US did this partly for their own benefit. They knew that with this money European countries would buy goods from US factories as they needed to rebuild their factories, this would mean that jobs would be created as there was higher demand for goods. Investment in advancing technology would occur and more tax could be collected from those employed. This all contributed to the increase in the economy. Finally, after World War II the US increased their spending on defence out of fear of communism spreading from Russia. There were large amounts of money spent by the US government on research and development on new weapons and technological advancement. Around 60% of federal spending between 1945 and 1970 was on the...
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