...Have you ever wondered how the world does not just keep repeating economic failure over and over again? Well there's always somebody pulling the strings behind it to make sure that it does not in fact capsize. This is called economic policy. Economic policy is the economic decisions that a government decides on . Out of all the economic policies available today, a few stick out. That being supply side economics, demand side economics, and monetary policy. These Policies ensure the security and well being of the nations economy. First, there is supply side economics. Supply side economics say that economic growth is most easily made when barriers are lowered for people to invest in capital, to produce, and supply goods and services. Supply...
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...Arthur Laffer: An Economic Genius When you take the time and look at all of the people who have been involved with economics over the years, Arthur Laffer is a man that you will hear a lot about. Laffer had a large affect on the United States economic policy throughout the 1980’s due to his theory on taxes (Arthur, 2010). However, his tax theories did not only affect the United States, but the whole world (Economist, 2010). Arthur Laffer is an economic genius and he is recognized as one of the greatest economists in the recent history of the United States. Arthur Betz Laffer was born on August 14, 1940 in Youngstown, Ohio (Arthur, 2010). He was very intelligent as he was growing up. Laffer did well in school and eventually went on to attend Yale University (Economist, 2010). He graduated in 1963 and received a Bachelor’s degree in economics (Biography, 2010). After he received his Bachelor’s degree, he enrolled in Stanford, where he graduated with his Master’s degree in economics (Biography, 2010). However, a Master’s degree was not enough for Laffer. He continued his education at Stanford until he received his Ph.D. in economics (Arthur, 2010). After receiving his degree, Laffer began to draw attention to himself. He proposed supply-side economic theories, and they became popular at very quick rates (Arthur, 2010). This theory stated that held that reductions in federal taxes on businesses and individuals would lead to increased economic growth and in the long...
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...Without determined economic policies and strong political will, the United States may have never recovered from the many economic crises it has faced. Economic policies encompass a wide range of government measures to change the economy, and are extremely important for reversing downturns in the economy. The goals of economic policy are economic growth, stable prices, and full employment of the workforce. In general, an economic policy is successful if it reduces unemployment, reduces inflation, and encourages economic growth although these are not the only metrics. There is debate among economists over whether supply-side or demand-side are best for economic growth, coupling these with monetary policy are key for maintaining a healthy economy....
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...How Reaganomics Will Affect My Life Reaganomics was economics policies which were propelled by United States President, Ronald Reagan during 1980s. These policies were based on fours pillars namely; reduction of the growth of government spending, reduction of income and capital gains marginal tax rates, reduction of government regulation of economy, and controlling of the money in supply so as to reduce inflation. Their basic aims were to lower taxes and create a leaner government. According to Reagan his decision was informed on stimulation of the economy taxes, financed by borrowing. Lowering taxes was aimed at reviving the economy, which in turn would see the increased tax revenues being used to offset the debts incurred (Niskanen 1988). By excluding military, Reagan argued for the broad slicing in government spending which to him were the main drains of the economy. Reagan went further to raise military spending which he considered an integral part of the government undertakings, especially in relation to the cold war. Although there was great taxes cut, a neoclassical theory, the enormous spending in the Reagan era created an enormous budget deficit. This kind of deficit spending defied neoclassic economic theory which emphasized on a balanced budget (Niskanen 1988). Reaganomics comes in two types; actual historical experience, and two the theory. Historical experience is based on an increased defense spending and large federal deficits. For the theory part,...
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...his abilities to expand his business? * Discussion SITUATION (OVERVIEW): Bill Norwalk is an entrepreneur in his 50’s that has a background in marketing and wants to launch a new industry that satisfies homeowner customer needs. BACKGROUND (OVERVIEW OF CASE): Norwalk’s construction experience taught him that traditional home improvement was an iffy proposition for both contactors and home owners. YHGP was attended by homeowners, contractors, and other service providers in the “one stop” environment that emphasized convenience as a marketing strategy. Norwalk knew he could bring together: 1. The designers and architects 2. The contractors and the labor supply 3. The financiers, insurers, and other project resources Norwalk acted as an intermediary between the supply side and the demand side so that all parties had the entire mess simplified. HOW YHGP DIFFERS: * One-stop shop * In concept- different from the DIY approach of...
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...beyond simply offering a low price.” Every firm has opportunities for differentiating its offering to customers, although the range of differentiation opportunities depends on the characteristics of the product. An automobile or a restaurant offers greater potential for differentiation than standardized products such as cement, wheat, or computer memory chips. These latter products are called “commodities” precisely because they lack physical differentiation. Yet, even commodity products can be differentiated in ways that create customer value: “Anything can be turned into a value-added product or service for a well-defined or newly created market,” Analyzing differentiation requires looking at both the firm (the supply side) and its customers (the demand side). While supply-side analysis identifies the firm’s potential to create uniqueness, the critical issue is whether such differentiation creates value for customers, and whether the value created exceeds the cost of the differentiation. By understanding what customers want, how they choose, and what motivates them, we can identify opportunities for profitable differentiation. Differentiation strategies are not about pursuing uniqueness for the sake of being different. Differentiation is about understanding customers and how our product can meet their needs. To this extent, the quest for differentiation advantage takes us to the heart of business strategy. The fundamental issues of differentiation are also the fundamental issues of...
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...Economic policy is the government attempting to stabilize the economy for the good of all people. Ways in which the government attempts to reach their goals is by being in charge of setting the right levels of taxation, government budgets, money supply and interest rates in the economy. All of these actions that the government takes influence the economy in some way. “Some types of economic policy actions can include setting interest rates through a federal reserve, regulating the level of government expenditures, creating private property rights and setting tax rates” (economic policy). Economic policy has many goals. Economic growth is one goal. If incomes of consumers and businesses are increasing over time then economic policy is working well for the economy and its people. Full employment is another goal. This goal for economic policy is to ensure that every member of the labor force who wants to work will find work. The last goal to mention is price stability. The goal of price stability is to stop both deflation and inflation from occurring. If inflation is set too high then prices of goods in the economy will be too high and not sold as much because consumers will not be able to afford them. “In an effort to eliminate uncertainty, the Fed has set a target rate of a steady 2% inflation rate” (McMahon). The Federal Government has an involved role in maintaining America's economy; they need to find the right balance working with numbers and economic expertise. When...
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...Teresa VanLoke Eco -111 October 17, 2013 Aggregate supply is a type of economics that tries to improve the productive capacity of the economy. A.S (aggregate supply) usually associated with monetarist or free market economics. These type of economics try to pinpoint the benefits of making markets, such as labor markets more flexible then they already are. Some supply side policies involve more government intervention to overcome failures. Benefits of the supply side include: lower inflation, lower unemployment, improved economic growth, and improved trade and balance of payments.in supply side to receive lower inflation you must first find a way to make prices lower, to achieve this you must shift everything to the right. The next benefit to the supply side is lower unemployment. For lower unemployment the supply side policies need to reduce frictional, structural, and real wage unemployment.it would then help reduce the rate of unemployment. Another benefit to supply side is improved economic growth. The supply side policies will increase the rate of economic growth by increase with the increase of aggregated supply. The last benefit of the supply side is improved trade and balance. To improve trade and balance and trade you must make companies more productive and competitive. When they become more competitive they will in turn export more. The weaknesses of the supply side include violating people’s morals, it’s only for the short run, and it doesn’t always work the way...
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...Title: Economics Name: Professor’s name: Course title: Date: Economics Suggest how an economist would approach the problem of alcohol abuse. Provide two (2) possible solutions to this problem. Include the four (4) elements of the economic way of thinking in your analysis. It is a genuine case of negative externalities both in production and consumption. Alcohol production also causes pollution of the environment especially due to the large CO2 emissions produced by factories and some of the byproducts. Two possible solutions to these problems proposed by economists are: • Coase theorem. Negotiating for compensation with no any government intervention on condition that the cost of negotiation is not high and the property rights are secured. • Pigouvian regulations or taxes: Drunk driving is incorporated. An economist would raise cost through reduced availability and added taxes Analyze how prescription drugs affect the demand and supply of other products and services in this country. According to Garrod and Willis (2007), in economics, the law of supply and demand is regard as one of the fundamental principles running an economy. It is illustrated as the situation where as supply raises the price will likely drop or vice versa. As demand raises the price will likely increase or vice versa. Essentially this is a standard that nearly all people intuitively understand concerning the relationship of services and goods against the demand for...
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...When supply and demand are in balance, the economy is said to be in equilibrium between price and quantity. This is a very simple principle but is it actually a “law” and is it completely true? When we examine specific instances of goods and services against a particular demand, we see that this behavior seems to hold true and so where could there be a problem with this model? Let’s examine the supply side first. This is the component that provides the goods and services, so effectively this is the element that brings things to “market” for which the consumer or demand side reacts. One of the big items considered on the supply side is the cost of labor. “…as wages rise, the supply of goods and services is reduced, because wages are the input price of labor. Labor accounts for about two-thirds of all input costs, and thus wage increases create supply reductions …” (Introduction to Economic Analysis, McAfee) No doubt, this all makes sense and probably sounds like a statement of the obvious. However, let’s examine the demand side of this relationship. What is it? Where is it? How does it manifest? Here’s where we encounter the problem with this model. There is no independent demand side of the equation. Demand is based on the consumption of the goods and services provided by the supply side, but the means by which this demand is met requires trade in exchange for the item(s) involved. In modern times that trade is through the use of money (or credit). So...
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...on inflation and unemployment and a steady rate of economic growth along with a current account stability. Fiscal policy involves the use of government spending and tax receipts to influence the level and pattern of economic activity, whilst monetary policy uses interest rates to achieve the same. Fiscal and monetary policy can be used to influence short term Aggregate Demand with the aim of promoting a steady rate of economic growth, low unemployment and low inflation. In a recession there will be a loosening of monetary policy when interest rates are cut and a budget deficit run with the aim of boosting Aggregate Demand throughout the economy. This is what is happening at the moment in the UK as the economy slowly comes of out recession. Interest rates are down to 0.5% and income tax rates are slowly being cut to act as an incentive to workers to work harder and boost productivity. However, as we see in the UK economy these policies are having a very slow impact on growth. Consumer confidence and business confidence is very low and when this happens cuts in interest rates and taxes will not encourage household and consumers to spend more. They may be tempted to use the extra money to save more and pay off debt rather than spend and this could hinder economic recovery. Inflation in the UK economy was very low between 1992 and 2008 and this allowed interest rates to fall to a low level which helped boost economic growth and living standards in the economy. Now with...
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...Key Assignment (2) – Economic Growth and Supply Side Policy 1. Evaluate the use of supply side policies to achieve economic growth Supply side policies are polices designed to improves an economy’s productive potential and its ability to produce, which contributes to a faster rate of growth of real national output. Governments believe achieving sustained growth without causing a rise in inflation is dependant on improving supply-side performances. The perks of supply side policies are that it helps economies to develop labour productivity, reduce unemployment, and improve trading to help achieve economic growth. A key aim for supply-side policies is to decrease the level of unemployment in an economy. The policy is designed to improve the quality and quantity of the supply of labour available to the economy. A growth in labour supply increases the productive potential of an economy. Increased quality will improve the productivity of labour. A reduction in unemployment can be achieved through cuts in Income tax, providing an incentive to work. As income tax is paid directly from an individuals earned income, a lower income tax will act as an incentive for unemployed workers to join the labour market, or for existing workers to work harder. This is as result of them being able to keep a high proportion of the money they earn. An increase in national output can be accomplished as lower corporation tax provides an incentive for entrepreneurs to start a business or organization...
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...Principles of Macroeconomics, 9e - TB1 (Case/Fair/Oster) Chapter 18 Debates in Macroeconomics: Monetarism, New Classical Theory, and Supply-Side Economics 18.1 Keynesian Economics 1 Multiple Choice 1) Who wrote the General Theory of Employment, Interest, and Money? A) Adam Smith B) David Ricardo C) Milton Friedman D) John Maynard Keynes Answer: D Diff: 1 Topic: Keynesian Economics Skill: Fact 2) Keynesian economics includes the idea that A) economic policies are ineffective. B) the economy is basically stable. C) prices adjust to clear the markets. D) labor markets don't always clear due to wage rigidities. Answer: D Diff: 1 Topic: Keynesian Economics Skill: Fact 3) Among the propositions of the Keynesian school of thought is A) economic policies are ineffective. B) aggregate supply management is the key to a stable economy. C) aggregate demand determines equilibrium output. D) rational expectations. Answer: C Diff: 1 Topic: Keynesian Economics Skill: Fact 4) Keynes believed which of the following? A) The government has a role to play in fighting inflation, but not in fighting unemployment. B) The government has a role to play in fighting unemployment, but not in fighting inflation. ...
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...During the time of Ronald Reagan’s presidency was almost like a time of a roller coaster; a lot of up and downs. While admired by most some deeply despised Reagan, so much that there was an attempt of assassinating the 40th president. Many would agree that he benefited the United States significantly by the actions he put in to place. It is still widely practiced today it shows how beneficiary Reagan was to the country. Now was President Reagan a good or bad president? By looking at Reagan’s Economic Policies, Supply-side economics, and the attempted assassination of Reagan will determine to be called a good president. The policies that Reagan implemented in to our government had so many significant changes to the tax system of the United States. On January 28, 1981 President Reagan had lifted the remaining domestic petroleum price and allocation controls. Not only that but Reagan also lowered the oil windfall profits tax in 1988 which proved to be significant in prices. Then he followed with ending the oil windfall profits tax in 1988 proving to be a persistent president with taxes. Early in President Reagan’s presidency he followed his 1981 tax cuts with the tax reform act of 1986. What President Reagan was looking for through that act was to eliminate deductions, lower marginal rates for the wealthy, and significantly raise taxes on people earning less than $50,000. Through the tax reform act democrats Bill Bradley and Dick Gephardt offered a proposal. It was supposed to...
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...which uses a variety of sources to analyse the main causes of unemployment. Identify strategies that governments can use to reduce each of these causes. Assess which of these strategies might be most useful in reducing unemployment. Governments often regard reducing unemployment as one of the main economic objectives. Unemployment is the existence that there is labour force able and willing to work but is unable to be employed (Bannock, Baxter, 2011). It tends to follow a cyclical pattern. In the early 1990s, the unemployment began to rise as economies around the world went into recession. On the other hand, in the mid-1990s, unemployment fell as the world was in the period of expansion. The UK is now in a very low level of unemployment. The causes of unemployment can be categorized into equilibrium unemployment and disequilibrium unemployment. It can be classical, cyclical, frictional and structural. This essay will first describe the main causes of unemployment. Then, it will survey the possible policies that can be adopted by the government to reduce these causes. Finally, it will evaluate the most useful policy. Disequilibrium unemployment is the condition that the supply of labour exceeds the demand of labour and the wages remain relatively unchanged (Gillespie, 2011). Classical (real wage) unemployment and cyclical (demand-deficient) unemployment are two possible causes of disequilibrium unemployment. Classical or real wage unemployment will happen when the real wage...
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