Essays on Fiscal Policy

Introduction

Rising costs of health care threaten our future system of health care matters such as sustainability almost every year. However, health care matters have also been threatened by shortages of nurses and doctors, some areas’ low productivity, provided services’ safety and decreasing confidence and trust of people. Any country’s health care matters should be improved and innovated so as to reach the creativity and flexibility levels that allow them to adapt demand changes. Health care matters are complex issues that that can go beyond a country’s affordability. Health care is the improvement or maintenance of one’s ...

Now the most advanced integration Union is the European Union, the main forerunner of which European economic community was created in 1957 by the Task that stands today in the EU during the agenda - formation and strengthening of economic, monetary and political Union of member countries. Integration in the EU affects almost all aspects of relations between member States of the European Union - politics, Economics, social and cultural sphere. The relevance of the study due to the importance and special role of tax harmonization in the framework of deepening European economic integration, the development of the unified ...

Introduction

An organization is regarded as an entity that is made up of people with a collective objective and is connected to the external environment. Hence, a business organization is a group of people collaborating to achieve a commercial objective (Handy, 2005). Toyota Motor Corporation is a Japan based auto manufacturing company with its headquarters in Toyota, Aichi. The company was ranked as the 13th largest in the world in terms of their revenue. It was the largest automotive manufacturer in 2010 ahead of the Volkswagen group and the general motors in terms of their production. The Toyota motor company ...

The Federal government has limited options to address economic issues. These are generally described as “Fiscal policy” and “Monetary Policy.” In the most general terms, fiscal policy involves government tax and spend programs. The underlying theory is that tax cuts increase consumers spending ability by leaving consumers with more money and government spending provides a more direct stimulus by injecting money into the economy. Fiscal policy is generally identified under the popular “Keynesian Economics” label. Monetary policy, on the other hand, involves the central bank (the Federal Reserve Bank system, or “the Fed”) “adjusting” the money supply through interest ...

The main goal of the state at all stages of its development is the stabilization of the economy. At the present time, the state actively uses the tools of intervention in the economy. The main 2 types of state intervention in the market economy include fiscal and monetary policies. Fiscal policy has been a key policy tool in addressing the aggregate demand consequences of the financial crisis in the United States. (Follette & Lutz, 2010)

Objectives of fiscal policy as any stabilization (countercyclical) policies aimed at smoothing cyclical fluctuations in the economy are to ensure:

Stable economic growth; Full employment (primarily a solution to the problem of cyclical unemployment); Stable price level (problem of inflation). (Strauch & Hagen, 2000) Fiscal policy ...

1) GNP is equal to the sum of the values of all consumer and investment goods, government purchases, net exports to other countries. The GNP is used for many purposes, but the most important is that it determines the performance of the entire economy. A sharp decrease in the cost of goods and services produced by the economy, that is, a sharp decrease in GDP entails poverty, bankruptcy, failure of banks, the chaos and political turmoil. Gross national product (or GNP) is the most extensive measure of total national output of goods and services. This is the sum of ...

Money and prices in the long run and open economies dictate the financial market. As such, that is why factors such as domestic variables and foreign monetary policies are over-emphasized. Demand for money is thus affected by the domestic variables, which include interest rates, price expectations, and permanent income, among others. As such, this paper explores the financial market to reveal the viable strategies the US can adapt to secure reliable money and prices in an open economy on a long-term basis.

The state of US Financial Market

Over the years, the economy of the US has been in good shape, especially when compared to ...

Prior to the Great Depression policy makers in the United States generally tended to accept that business cycles happened and in accord with Adam Smith's "invisible hand," tended to be self-correcting. The stock market crash of 1929, and the more general problem of massive unemployment forced a reconsideration. Smiley (2008) and Bernstein (2016) both point out that the human face of the Depression left no choice but for some government intervention. Jahan and Papageorgiou (2014), discussing Keynesian Economics put it plainly: “The central tenet of this school of thought is that government intervention can stabilize the economy.” The centerpiece ...

Introduction

Obama Care aims at extending health care services to all the U.S. citizens, but it impacts the economy positively and negatively. The Affordable Care Act requires that firms should compensate the medical insurance cover of their full-time employees. The specific aspects of the economy that are impacted by this provision include employment, supply, and demand, trickledown economics, GDP, fiscal policy, wage and health care inflation. While Obama care forces firms to hire employees on part time, it results in high demand for medical professionals. As large companies and high-income earners pay their insurance premiums, the trickledown economics becomes real. ...

Finance is a vast area of discussion that requires one's dedication and interest to understand it better. Under finance, there are major issues like corporate financial policy which has a lot to be studied. The corporate fiscal policy is defined as an innovative corporate finance course that mainly touches on equity and debt management, for example, the descriptions of types of debt and equity, distribution policy and security issuance, for instance, the design of capital structure and securities that controls information problems. The sub-topics in securities and financial policy can be discussed in details as below.

Debt and equity management.

Debt and equity ...

Report for McDonalds

Italy and Russia

Figure 1: GDP per Capita at Constant Prices Figure 2: GDP Growth (Annual %) Figure 3: Inflation Rate CPI Figure 4: Unemployment Rates Figure 5: Policy Interest Rate (%) Figure 6: Russia Interest Rate (%) Figure 7: Current Account Balance in Italy (% of GDP) Figure 8: Current Account Balance in Russia (% of GDP) Figure 9: Russia Interest Rate

List of Tables

BUSINESS OVERVIEW McDonald’s Corporation is the world's largest chain of hamburger fast food restaurants, serving around 68 million customers daily in 119 countries across 36,538 outlets. Founded in 1955 by Ray Kroc in Des Plaines, Illinois, 80% of the ...

Article review

Article review

Introduction

Government interference play huge role in the economic processes: by conducting monetary or fiscal policy, policymakers are able to stimulate the economy during the periods of downturn and moderate too fast growth during the periods of economic boom: both these cases have devastating consequences for the general growth and development. Particularly, central banks, that make decisions regarding the monetary policy, are most important players. By using different tools, such as interest rates, open market operations, required reserves etc., central banks might influence on aggregate supply and aggregate demand, thus shifting equilibrium to the desired level (in other ...

Inflation entails the persistent rise in the general prices of goods and services in a country. This phenomenon has various consequences that touch on individuals and the economy as a whole. Inflation results in reduced real incomes. Rising inflation levels in an economy tend to reduce individuals’ incomes as well as the real GDP of the economy as people spend more on few commodities due increased prices. The cost of obtaining loans and mortgages increases during high inflation regime as people strive to finance increased living costs (Mankiw 53). The demand for loans increases during inflation, resulting in high ...

The Evolution of Economics, Economic Systems and Politics

The science of economics, starting with Adam Smith –the father of economics, is the total efforts for developing an understanding of the economic behaviors of the humans. The science of economics follows a development path in defining the economics. The first definition of the economics was based on the household management. Members of family specialize in completing some specific tasks. The specialization relies on the genders' traditional functions. This definition was developed by the philosophers in the ancient times before the Dark Age in Europe. Adam Smith developed this definition by creating a theoretical economic system which has the ...

Introduction

A discussion among the classical economists and the Keynesian economists continues on the government intervention in the free markets. According to the classical economists, the free market mechanism can develop solutions for the crisis in the market if there is no external influence on the markets. The Keynesian economy merely expresses that the free market economy carries the risk of generating crises and undesired deficit or surplus in the economy when the demand cannot clear the supply (Posner 234-252). The discussion on the government intervention is changing direction each time the world economy suffers from a global crisis becomes ...

McDonalds has come to create a network in both Italy and Russia. Italy seems to have better balance of payment and government balance indices, interest rate, trade policy instruments and not needing to lose over currency rates while dealing with Eurozone importers, and even unemployment and GDP growth rates. However, unemployment and the lack of growth indicating poor economic performance and social welfare situation may advantage the brand in Russia through better low-cost labor availability and consumer reorientation on less expensive restaurant offerings. Overall, neither of the country is the ideal market for the brand, yet both have their ...

Introduction

The rationale of the above paper is to outline the difference amid budget deficit and national debt while at the same time indicating their significance. The paper seeks to justify as to whether different governments in the global setting should operate with a balanced budget or not. In the article, budget deficit is defined as the amounts of cash spend in excess by the government over the government income generated from tax revenue during a set time as part of government expenditure (Furgang & Furgang, 2012). The shortfall in tax revenue is therefore compensated through borrowing or currency emission as ...

Increase Government Spending to Fight Recessions

Introduction Government spending as a recession recovery tool has been the subject of debate numerous times. To date, there is no definitive proof of its success or failure of its application. An active fiscal or a monetary policy is the sum total of the actions taken as a reaction to the current economic conditions; the government chooses to use a specific policy to deal with something in the economy (Mankiw, 2001).

Government spending as a method for lessening recession is a tool that has been proposed and even applied by many governments when they are experiencing a recession. This ...

Introduction

The Canadian labor market is abundant with skilled and qualified workers, and hence, the country’s labor market is becoming increasingly competitive. In this context, it is necessary for the government to ensure that all these candidates are employed and getting paid fairly. However, it is identified that Canada’s unemployment rate soared high during the recent recession and it has not yet recovered completely. Since Canada is a well-developed country, it is particularly important for the Canadian federal government to analyze the short-term as well as long-term costs of high unemployment rate to the country’s economy. This ...

Ben Bernanke, the chairman of the US Federal Reserve from 2006 to 2014 stated in the year 2015 on October 4  that for the first time the federal reserve has taken the decision to raise from 'zero interest rate' and the decision was taken after the great depression. When the markets crashed in the year 2008 then the monetary policy of the federal reserve saved the economy to recover from the recession. However there are other criticisms that the 'zero interest rate' policy of the federal reserve was the reason of the Great Depression of 2008. But Bernanke argued ...

Introduction

Practically, a tax is the most important instrument of fiscal policy and arguably, the most important aspect of public policy. For starters, tax influences the amount of money a government has to spend, as well as the amount the government needs to borrow in case of a difference between tax receipts and planned government expenditure (Pragyandeepa, 2015). The scarcity of resources, including the limits on the amount of taxes collected, influences the choices of spending by a government in the provision of services and public goods. In that vein, governments are always under pressure to have a sound prioritization ...

Introduction

Economic management is the most critical function of any government. It requires critical approaches through the adoption of efficient macro-economic policies that lead an economy in the desired direction. Inefficiencies in public policies result in poor economic management, which results in economic problems such as unemployment, inflation, and other forms of economic instabilities (Galí 98). This essay will answer questions that address some of these economic problems.

Government measures to increase the level of aggregate demand in the economy and their effectiveness

The level of aggregate demand is an essential factor in the determination of the economic position of an economy. It determines critical factors such as investment that indicate the GDP of a ...

The dynamics of the economy when the interest rates are at almost zero are a bit complicated, especially because the monetary policies have very little effect on the economy. However, the interplay between the fiscal and monetary policies will bring the economy to stabilization even though with great difficulty. Some of the factors at play bring a tradeoff between the success and failure of the possible policies. For example, the policies that will bring down the level of unemployment will tend to push up inflation. However, factors that will push the GDP upwards will also lower the rate of ...

INDICATORS:

Income level: High Income Population: 35.54 million (“Data” 2014) GDP at market prices (Current US$): $1.785 trillion (“Data” 2014).

GDP per capita (current US$):

$50,230.8 (“Data” 2014). GDP growth (annual %): 2.44 (“Data” 2014). FDI Inflows: $59.6 billion in 2014 (“Trade Policy Review” 5). FDI Outflows: $58.2 billion in 2014 (“Trade Policy Review” 5).

Balance of Payment:

Current account balance (BoP, current US $): (-) $ 37.47 billion (“Data” 2014). Current account balance (% of GDP): (-)2.1% (“Data” 2014). Import of goods and services (BoP, current US$) : $580.7 billion (“Data” 2014). Exports of goods and services (BoP, current US$) : $564.6 billion (“Data” 2014). ...

The IS LM model or the Hicks –Hansen model is the macroeconomic tool that shows the relationship between the interest rates and the real output of goods and services and the money market. The intersection of the investment - saving curve or the IS curve and liquidity preference curve or the money supply curve is the general equilibrium in both the markets .This model explains the changes in the national income when the price level is fixed in the short run and also shows the reason for the shift in the aggregate demand curve. It was first developed by ...

Abstract

The current paper explores the main differences of the Great Recession in 2007-2009 from other economic collapses in the history if the United States. Section I discusses the general features of a recession and describes the main responsibilities of the National Bureau of Economic Research. Section II is devoted to the comparison of the Great Recession with the recession of 1980s. The section is divided into four subsections. Subsection A presents the basic comparison of recessions in the U.S. history and explains the choice of the 1980s period for the further comparison. Subsection B explores differences in unemployment in ...

Abstract / Executive Summary

Summary of Article The minister from the United Arab’s economy reported that it is anticipated that the GDP of UAE will mark Dhs 1.6 trillion in the current year growing over 3.5%. Sultan Saeed Al Mansouri commented in an interview to the WAM (news agency), elevation in the growth rate evidence that the region is capable of maintaining economic competence and has gained sufficient success with the help of diversification. He further clarified that industrial zone of the UAE is continuously advancing and is positioned presently between 10%-14%. Additionally, Sultan Saeed delivered his expectation for the investments ...

What position should Jason Sterling take on European sovereign debt? Why? What are the advantages/disadvantages of using credit default swaps to profit from this crisis? What are the potential risks? Are there any lessons for Jason that can be gleaned from previous crises? The aim of Jason Sterling is to assess novel information so that he has the ability to trade on prior to the trading close for the week period. This was because the growing debt crisis in the sovereignty of the Europe would be the hot topic or the primary notion that the leaders and representatives from ...

Keynes proposed economic ideas that saved the economy during the great depression of the 1930s. He encouraged government intervention into the economy to rescue it from the excessive recession. His ideas were against previous views held by an economist that the government should allow the economy to adjust back from depression to recovery as per the business cycle. The previous economic ideas were not working during great depression because the economy was showing little signs of recovery. The depression created a huge recession gap. Thus, real GDP was quite below the full potential output (Blinder 1). Keynes believed that ...

Introduction

Monetary policy and fiscal policies are important aspects of the analysis of the U.S economy, as they have a significant impact on the growth of the economy. Moreover, the two types of policy issues are always in active use in the country although the media offers much attention on various economic indicators. Nonetheless, both monetary and fiscal policies have a significant role in the development of an economy and must work together as they cannot exclusively work on their own. Fiscal policy works using tax and spending changes to impact on an economy in diverse ways. However, for any ...

Introduction

Governments and nonprofit organizations just like the commercial entities must prepare financial statements, but unlike the commercial entities whose accounting is for measuring profitability, the governments’ and nonprofit organizations’ accounting is for accountability (City of Cambridge Participatory Budgeting, 2016). The nonprofit and government agencies apply an accounting system known as fund accounting, where a fund is made up of several accounts each set apart for a particular purpose in agreement with law and regulations. Unlike the commercial entities which only have a single account called the general ledger for determination of profits, nonprofit and government agencies can have several ...

1-How Was The Economy When Obama Took Office? (Unemployment Rate, Inflation, and GDP)

When Obama took office, the economy of the United States of America was in a great depression, which had not been experienced since the Great Depression of the 1930s. The economy was in a bad shape, and each sector was being faced with various problems. The levels of unemployment had gone up, and the Obamas’ administration was afraid that if they did nothing then, the problem would be much bigger than they thought. The unemployment rates had escalated to levels of even 9%. The situation was worse because the levels of inflation in the economy had risen. The mortgage ...

Q1. Identify two strategies based on the fiscal and monetary policy that would encourage people to spend money in order to create economic growth. Fiscal and monetary policies are demand side policies that can be strategically employed for realizing economic growth by motivating consumers to spend money. It can be made possible by brining an increase in aggregate demand (AD) if the economy is passing through recession or growth is below the expected level (Pettinger, 2012). Monetary policy can be the most randomly used tool for impacting economic activity. To encourage AD, the Central Bank of a country can ...

Introduction

The economy of Japan has seen a downturn with the economic crisis in the year 2008. Every country has been faced with the consequences that resulted in different impacts. The paper will present the economic indicators and overall economic situations in the Japan. The background of the country’s economic policies will be present, with international and regional trade agreements. The focus will be on presenting the specific economic data along with the definitions and interpretations. Further on, the current state of the country’s economy will be examined in the light of trade, fiscal and monetary policy.

Background on the country and recent economic policies

Japan ...

Recently, China has recorded a remarkable growth in its economy of nearly 10% per year. The bulk of this growth comes from the banking sector characterized by poor asset quality, low capitalization, and massive state intervention. For this reason, the government introduced sweeping changes to the financial sector to boost its stability. These changes included transforming the banking sector from a policy-driven, state-owned, non-performing system to a profit-driven, multi-ownership, competitive system. Although the sector has recorded marked improvements in its operation and efficiency, additional efforts is needed to deal with problems revolving around non-performing loans and shadow banking. The ...

Q1. An overview of the selected company (history, financial status, etc.) Chrysler is the recognized as the third largest Detroit’s auto firms around the globe. The invention of the Chrysler can be traced from the Maxwell Motor Company that was formed in 1913. In the early 1920s, the company faced financial constraints, and they sold their rights to Walter P. Chrysler. I think that Walter approach to revitalizing the company was unique, and this is the reason the company bounced back to reign the automobile market. Chrysler is presumed as the pioneer to convince the firms to manufacture ...

The fiscal policy influences aggregate demand, wealth distribution, and the capacity of the economy to produce goods and services by the fiscal policy (Ross). In the short run, changes in taxation or spending can alter the demand pattern for the goods and services. Resources are any productive factors that are needed to accomplish any activity of the business while capital is the financial value of the assets. Therefore, with time, the aggregate demand will influence the allocation of resources, and the production capacity of the economy via its impacts on the returns to production factors, human capital development, capital ...

Introduction

Monetary policy is the endeavor by the federal or state government to control the amount of money circulating within an economy. These control measures are undertaken to cub the instances of inflations or to control the interest rates to sustainable levels. Monetary policies can either be expansionary or contractionary. Expansionary monetary policies are meant to expand the supply of money to the economy thereby boosting the economic activities (Afonso, 2012). Expansionary monetary policies also lead to a reduction in average interest rates. Contractionary monetary policies, on the other hand, are macro-economic tools used by the federal or the state ...