Macroeconomic Objectives Essay
explanatory Essay
1754 words
The economy tend to move from boom to recession, it is difficult for government to maintain and achieve macroeconomics objectives. At this time, there are “conflicts between government macroeconomic objectives”, which is this extended essay main theme. This essay will look at the government macroeconomic objectives, the conflicts between macroeconomics objectives, the best policy or mixture of policies to minimize the conflicts between macroeconomics objectives and recommendations, which are classified as main objectives and additional objectives.
Macroeconomics is the study of the economy as a whole, which looks at economic growth, unemployment and inflation. (Dobson and Palfreman, 1999) Government macroeconomics objectives can dividend into
…show more content…
In this essay, the author
- Explains that the economy tends to move from boom to recession, and it is difficult for government to maintain and achieve macroeconomic objectives.
- Explains that macroeconomics is the study of the economy as a whole, which looks at economic growth, unemployment, and inflation.
- Explains the four main objectives of macroeconomic policy: long-term growth of the economy, low and stable inflation, a low level of unemployment rate, and balance the current account.
- Explains the four objectives of government macroeconomics objectives: raise standard of living, protect the environment, improve productivity, and ensure sound government finances.
- Explains that it is difficult for government to achieve all the macroeconomics objectives at the same time. a policy irritating aggregate demand may reduce unemployment in the short term but launch a period of higher inflation
- Explains that a health economic growth and low rate of inflation are important to achieve.
- Explains that in a growing economy, consumers spend more on foreign goods than domestic goods, which leads to deteriorating trade deficit and disequilibrium in the balance of payments.
- Opines that a health economic growth and equal distribution of income and wealth is one of the conflicts between macroeconomic objectives.
- Opines that healthy economic growth and a good environment require infrastructure, which may construct roads, public transport, airports, etc. there are also costs associated with growth.
- Explains the trade-off between a low rate of inflation and low unemployment.
- Explains that a balance in the current account may lead to high inflation, which will reduce the competitiveness of the economy.
- Describes the benefits of higher employment and a good and sustainable environment.
- Explains that government cannot achieve all these main and additional objectives at the same time. fiscal policy, monetary policy and supply-side policy solve the conflicts between macroeconomic objectives.
- Explains that the government's fiscal stance indicates whether it is trying to expand the economy that is to increase employment or to reduce the likely level of inflation.
- Explains that government can influence the economy by using monetary policy to control inflation and unemployment. if there is a rise in interest rates, it reduces inflationary pressure, but it leads to lower growth in output.
- Explains supply-side policy, which aims at improving the efficient supply of goods and services. it can effect on the rate of economic growth, inflation, unemployment and current account.
- Opines that supply-side policy minimizes the conflicts between economic growth and low inflation by allowing a higher level of aggregate demand, but will not affect the general price level.
- Explains that fiscal and monetary policies can help to minimize the conflicts between low unemployment and low inflation. fiscal policy has its initial impact in the goods markets, then
- Explains that in every economy, there are 4 main and 4 additional objectives of government macroeconomics objectives. they point out that the objectives have their own conflicts which difficult to carry out at the same time.
- Opines that government should consider the importance of the government macroeconomic objectives goals and which governments should priority first. this will be an easier way for government to allocate resources.
A rise in standard of living can lead to a fall in relative poverty. For example, reducing child poverty and pensioner poverty. Protect the environment means care for the environment from misuse and overuse. Government also wants to improve their productivity which improve their own competitiveness and global trade performance. More or enough government spending could appropriately compensate for private consumer and capital spending. Therefore, there are four main objectives and four additional objectives of government macroeconomics objectives.
It is difficult for government to achieve all the macroeconomics objectives at the same time. Conflicts between macroeconomics objectives means a policy irritating aggregate demand may reduce unemployment in the short term but launch a period of higher inflation and exacerbate the current account of the balance of payments which can also dividend into main objectives and additional objectives (N. T. Macdonald,
…show more content…
These two policies use to try to shorten recessions. Fiscal policy has its initial impact in the goods markets, then monetary policy has its initial impact mainly in the assets markets, which both effect on both level of output and interest rates. (R. Dornbusch et al., 2008)
In every economy, there are 4 main and 4 additional objectives of government macroeconomics objectives. We can point out that the objectives have their own conflicts which difficult to carry it out at the same time between government macroeconomic objectives. Therefore, government use different policies to minimize the conflict.
In my opinion, the most important aspect is that government should consider the importance of the government macroeconomic objectives goals and which government should priority first. This will be an easier way for government to allocate the resources and help to focus the government macroeconomic objectives
Related
- explanatory
- comparative
- analytical
- U.S. Federal Government and Economic Issuesexplanatory essayThis paper relates to what I have learned in the Macroeconomics class. For this final term paper; I will write about the U.S. federal government operations and how government leaders handle macroeconomic issues in our economy. We will discuss a couple of current economic issues and what the federal government is doing to reach solutions. I will also address U.S. unemployment issues, international trade, fiscal and monetary policies, and methods of alternative energy, along with the Federal Reserve’s role to confidently curb recession and avoid inflation The U.S. federal government is actively involved in assuring national security through counterterrorism techniques. They perform strategic planning to give surety of macroeconomic financial stability, and economic development. Government provides financial, political, and social stability in our economy and controls macroeconomic aggregate demand and aggregate supply. Congress and the President control fiscal policy. The Federal Reserve has complete control of the monetary policy. “Fiscal policy is the changes that Congress and or the President make in taxes and public spending that has an impact on the national Gross Domestic Product (GDP) data.” (O’Sullivan, p.212) The GDP (commerce) data is the total market value of domestic goods and services produced only within the geographic area of a country on an annual basis. In accordance to an eHow Contributor, Shane Hall, 2011, reports that, “the burden of various types of taxes distorts funds in the marketplace because the expenses affect the cost and income of goods and services. In the supply side of economics, an increasing tax rate will affect the economic activity and hinder the growth of the economy. (Hall, 2011) In connection ...
In this essay, the author
- Explains that they will write about the u.s. federal government operations and how government leaders handle macroeconomic issues in our economy.
- Explains that monetary policy is the regulation of money supply and interest rates to stabilize currency and control inflation.
- Explains that the u.s. federal reserve monitors and controls monetary policy, national income, price stability, recession, and inflation. top leaders are working better at applying inside time lags in economic policy.
- Explains that the monetary system conducts ‘trustworthy’ international trades with foreign countries to assure the value of the u.s. dollar.
- Cites anthony, p., ib economics: (section 3. 1-3.2) macroeconomics: national income and introduction to development, and (gdp image), 2011.
- Cites ensinger, d., "bill to repeal nafta stalled in the house," copyright 2007 economy in crisis.
- Explains that heffner, t., “unethical predatory practices,” copyright 2007 economy in crisis.
- Opines that more fed stimulus? - don’t count on it!
1227 wordsRead More - The Pros And Cons Of Macropolandcomparative essayIn conclusion, regardless of Macropoland’s current economic condition, it is fair to say that it is all part of the business cycle. The business cycle has three parts: peak, trough, and peak. The peak is the date that the recession starts. In Macropoland’s case, the peak would be at the beginning of 1973, its trough somewhere between 1973 and 1974, and then its peak again at 1974. In the second scenario, Macropoland is either at its trough, where it is about to head up again because of its low inflation rate, or it is at its expansion, on its way to heading to its next peak.
In this essay, the author
- Explains that macropoland, a natural gas and oil importer, has an unemployment rate of about 4.5% and an inflation rate. however, these rates fell below their potential during two specific time periods.
- Explains that unemployment and inflation rates are higher than normal, so we can assume that the aggregate-demand curve is downward-sloping. when the economy's demand has slowed down, businesses have to raise prices and lay off workers to preserve profits.
- Explains that the aggregate demand curve slopes downward due to the wealth effect and the interest-rate effect.
- Explains the four main causes of recessions: problems in the financial markets, negative supply shifts, and inflation fighting.
- Explains that a negative supply shift causes recessions, stagflation, and inflation fighting. if output runs above potential for too long, the economy overheats.
- Explains that macropoland's unemployment rate has edged up to 9% and the inflation rate is low at 0.4%. deflation means that demand is so low that businesses cannot raise their prices.
- Concludes that macropoland's current economic condition is part of the business cycle, which has three parts: peak, trough, and peak.
719 wordsRead More - Uk Economic Policyanalytical essayDevelopments in macroeconomic policy are generally as a result of critical analysis over time and each of the Macroeconomists reviewed in this essay have provided this for their predecessors. In our current framework it is evident that the policies applied are all influenced, in part, by these economists.
In this essay, the author
- Analyzes how lucas defined equations that represented the economy, taking account of rational expectations and business cycle variables.
- Analyzes how kydland and prescott introduced the idea of time inconsistency by analyzing the rational expectations of voters and discretionary policy makers.
- Analyzes how the theoretical and empirical work of macroeconomists has influenced the current monetary policy framework.
- Analyzes how friedman's work forced keynesians to restate and remake their case for policy-activism even before that case was further undermined by the penetrating theoretical critiques of robert lucas.
- Analyzes how lucas introduced the aggregate supply hypothesis model, which is based on the continually optimizing behavior of firms and economic agents, with the supply of labour determined by relative prices.
- Analyzes nordhaus and alesina's argument that a rules-based system should be in place for macroeconomic management, given that discretionary policy will not result in the social objective function being maximized.
1470 wordsRead More - Essay On Fiscal Policyexplanatory essayFiscal Policy Paper Although they are related topics, budget deficits, budget surpluses, and the national debt have varying effects on different groups of participants in the U.S. economy. To exemplify some of these effects, this paper will discuss how specific groups, individuals, the United States’ international financial reputation, and the gross domestic product (GDP) are affected by Congress’ fiscal policies and the mounting national debt. Affected groups and individuals are taxpayers, future Social Security beneficiaries, Medicare users, unemployed individuals, university students, exporters of domestically manufactured automobiles, and importers of foreign-made clothing. Taxpayers
In this essay, the author
- Explains that budget deficits, budget surpluses and the national debt have varying effects on different groups of participants in the u.s. economy.
- Opines that while social security and medicare have protected funding, they are not unaffected by budget deficits, surpluses and the national debt.
- Explains that unemployment benefits, like most other welfare programs, are affected by budget deficits and surpluses.
- Explains that the u.s. deficit and debt has an effect on university of phoenix students because there may not be enough funding available for grants or scholarships.
- Explains that the deficit and debt has made the united states' financial reputation look bad on an international level. a surplus stimulates foreign investments in u.s. companies.
- Explains that the u.s. deficit, surplus, and debt affect the automotive industry especially when the government spends more money than receiving money.
- Explains that italian clothing company can benefit from the goods that are being imported by the united states because of italy's economy being in a stable condition during the time of trading.
- Explains that the gross domestic product is what economists use to measure the size of an economy. it can be used to analyze economic growth and size.
- Explains that fiscal policy's influence during times of deficit, debt, and surplus has a larger effect on the economy as it can impact nearly every financial aspect in the world.
- Explains that congress is less likely to fine-tune the u.s. tax structure when running a budget surplus.
1385 wordsRead More - Roles of the US Government in the US Economyexplanatory essayFiscal responsibility is an important part of stability and the government must focus on maintaining the economic stability. As we all know, Government dept can quickly become a burden on the economy and weaken it. Macroeconomic policies change credibility of the government and strengthen political institutions. It is very important that our economy has credibility and stability because it’s vital to us Americans long term investment decisions that allow the US economy to grow. Government provide stability by ensuring to maintain stability of currency, enforce-defend property rights, and provide oversight that assures private citizens that their transaction partners in marketplaces are accountable.
In this essay, the author
- Explains that fiscal responsibility is an important part of stability and the government must focus on maintaining economic stability. macroeconomic policies change credibility and strengthen political institutions.
- Explains that president obama's fiscal responsibility summit indicated that he understood the urgent need for fiscal discipline. congress' enactment of the american recovery and reinvestment act and president’s proposed budget makes the goals of a sustainable budget and addressing nations longer-term fiscal priorities even more elusive.
- Explains that government spending and deficits automatically increase during economic downturns due to more demand on social safety net provisions and falling tax revenues. borrowing and spending to stimulate the economy using legislative discretion is more difficult to time for right moment and is much risky.
- Explains that a weak fiscal position can cause weak government ability to provide security for property rights, and makes it harder to borrow in the face of security crisis’s.
- Explains that the federal government guides the pace of economic activity, attempting to maintain steady growth, high levels of employment, and price stability.
- Explains that high inflation, unemployment, and huge government deficits weakened the confidence of the fiscal policy as a tool to regulate over all pace of economic activity.
- Explains that franklin d roosevelt's response to the great depression was the "new deal". the united states endured the worst business crisis and highest unemployment rate in history.
- Explains that roosevelt and congress enacted a host of new laws that gave the power to intervene in the us economy.
- Explains that economic liberalism promoted freedom of action for individuals and firms through doctrines of free trade, self interest, private property, laissez-faire, and competition.
- Explains that people seeking personal gain promoted the welfare of the whole community. competition was a regulator of our economy under economic liberalism.
- Explains that government intervention was necessary to remedy the inequities that evolved from economic liberalism. antitrust laws were deemed to prevent undermining competition of monopolies and cartels.
- Opines that government regulation, restriction, and intervention in the economy is substantial. no free markets, rapid innovations in technology and communications, the need for government intervention is necessary to correct abuses or promote general welfare.
1146 wordsRead More - Monetary and Fiscal policy and The Great Recessionexplanatory essayThe goal of monetary and fiscal policy is to create and maintain a growing stable economy. While both policies deal with manipulating the economy, which entity uses them and the tools they use are what differentiate them from each other. When it comes to monetary and fiscal policy, the details and timing matter because they can save a country, or they can destroy a country.
In this essay, the author
- Explains that the goal of monetary and fiscal policy is to create and maintain a growing stable economy, while both policies deal with manipulating the economy.
- Explains that monetary policy is about controlling the supply of money in attempts to create stable growth in a country.
- Explains that the federal reserve was created at the end of 1913 after the financial panic in 1907. the board of governors is appointed by the president of the united states and the senate confirms them.
- Explains that the fed has a number of tools to influence the economy using monetary policy, such as interest rates, open market operations, and reserve requirements.
- Explains that fiscal policy is how the government influences the economy by using taxation and spending.
- Explains how the government influences the economy using taxation, spending, and debt. the government can increase fiscal deficit by issuing bonds.
639 wordsRead More - America´s Neoliberal Capitalism and the Economic Expansionexplanatory essay(3) The government is no longer actively control of macro economy, and to a certain extent, reduce the macroscopic intervention with the purpose to ensure low inflation, rather than low unemployment.
In this essay, the author
- Explains that neoliberalism was proposed in the late 70s and early 80s of last century under the background of economic globalization.
- Explains that after the crisis of government regulation capitalism about six years from 1973 to 1979, a new layout liberal capitalism started to appear in britain and the united states.
- Explains how capitalism promotes economic expansions of long-term, but also lay the potential for the final a systemic crisis.
- Explains that in the process of the american new liberal capitalism, a series of long-term expansion led to unsustainable trend.
- Explains that america's economy and the world economy will be reconstructed in the future. the third possibility is to realize socialism.
2238 wordsRead More - Keynesian Golden Age Essayanalytical essayEconomic Changes The era of the Keynesian Golden Age is marked by the stable economic growth from 1946 to 1973. After World War II, many people expected the economy to witness periods of high inflation but this did not occur until after 1970. Keynes’s, “General Theory”, is a demand side approach to under consumption. He advocated that government spending could be used to stimulate spending.
In this essay, the author
- Explains keynes' "general theory", a demand side approach to under consumption, and his theory of countercyclical fiscal and monetary policy.
- Describes the changing economy and economics from 1970 to 2000 that saw inflation, oil, money, trade and unemployment issues. the vietnam war likely contributed to inflation and nixon refused to raise taxes or spending.
- Analyzes how nixon left the gold standard for a floating exchange rate and reagan was willing to adopt monetarist policy, influenced by milton freedman.
- Explains that reagan's first act was to eliminate price controls. the effect was that in 1988 oil prices were lower than they were in 1973.
- Explains how the free market brought the economy back and led to a decade of greed. clinton attacked the debt as robert rubin held they affected saving, raise interest rates, and slowed growth.
- Explains that the internet and dotcom bubble shows that bubbles can occur with both tangible and intangible goods. the fed cut federal fund rates to 1 percent so effectively money was free for bankers.
- Analyzes the effect of a housing boom that robert shiller pronounced as the largest in history. interest rates can be damaging to housing prices because they are highly leveraged on debt.
- Explains that by 2003, lenders were running out of borrowers and to keep the fire burning, they would make loans to high risk. subprime lending jumped from $145 billion to $625 billion in 2005.
- Explains the rise and fall of enron during the 1990's and early 2000’s as an example of fraud and accounting scandals.
- Explains that reaganomics brought the economy soaring back during the clinton years. the new tech bubble and housing market bubble burst in 2007 with a crash in housing prices.
1114 wordsRead More - As a result of the Great Recession of 2007 to 2009, the United States government implemented various fiscal policies in an effort to stimulate the economy. How the government responded as well as how those responses will affect the U.S. economy into the future are the focus of a proposed research study. In order to ensure an appropriate focus for the proposed research study, problems in existing literature must be evaluated.
In this essay, the author
- Explains that the united states government implemented various fiscal policies to stimulate the economy during the great recession of 2007-2009. how the government responded and how those responses will affect the u.s. economy into the future are the focus of a proposed research study.
- Explains the structure of the paper to better understand the great recession.
- Explains that the new millennium brought with it a housing boom which had reached an unsustainable level.
- Explains that the housing bubble created the illusion of prosperity, but when the bubble burst during the great recession, homeowners lost nearly $7 trillion in perceived equity, resulting in bank failures or demands for rescuing.
- Explains that the u.s. government implemented various fiscal policies aimed at economic stimulation in response to the housing crisis, economic vulnerabilities, and the great recession.
- Explains that fiscal stimulus efforts began in early 2008 with temporary tax cuts, a tax credit for first-time home buyers, and the american recovery and reinvestment tax act. government intervention in the recession was broad and significant.
- Analyzes the literature relative to the great recession, but the focus of the proposed research project is on fiscal policy implemented and the effects of same.
- Explains that research has also investigated the effect of various tax adjustments on government spending. their findings are contradictory.
- Explains that the proposed research project will focus on the specific tax policies implemented following the great recession of 2007 to 2009. testing of each variable will be conducted consistently using data published by a single, reliable source.
- Analyzes the lack of research regarding the estimated long-term effectiveness of only the fiscal policy implemented following the great recession.
- Suggests that additional research be completed isolating fiscal stimulus policies implemented from monetary stimulus, and estimates will consider projected data for another 5-10 years based on an analysis of trends and reasonable expectations.
- Explains that the great recession was not the first economic downturn, nor is it likely to be the last.
- Opines that the various stimulus efforts were a success and that unemployment rates are lower than they were during the great recession. however, questions remain as to how effective the stimulus package will be in the future.
- Cites adkisson, v., & mohammed, m. (2014). tax structure and state economic growth during the great recession.
- Describes auerbach, gale, and harris' views on activist fiscal policy in the journal of economic perspectives.
- Explains the bureau of labor statistics' local area unemployment statistics: current unemployment rates for states and historical highs/lows.
- Cites cebula, r. j., and hickman, b. g.
- States karagianni, pempetzoglou, & saraidaris, a. tax burden distribution and gdp growth: non-linear causality considerations in the usa.
- Explains kneller, bleaney, and gemmell's views on fiscal policy and growth in oecd countries.
- Explains the case against the fiscal stimulus in the harvard journal of law and public policy.
1416 wordsRead More - Fiscal Policyexplanatory essayOften when one thinks of the scope of business, running a country rarely enters into an individual’s mind. However; that is what the country is, a large business conglomerate for an entire country. Citizens entrust their government to maintain this feat. There are many intricate details in maintaining the nation’s financial and economic health. In the United States, the President and Congress govern the financial and economic health of the nation. The United States employs the fiscal policy to monitor and make deliberate changes to escalate or slow down the country’s economy. The fiscal policy process occurs via changing government expenditures and taxes that have a direct impact on the nation’s Gross Domestic Product (GDP).
In this essay, the author
- Explains that the united states employs fiscal policy to monitor and make deliberate changes to escalate or slow down the country's economy.
- Explains that debt, deficits, and surpluses related to the government budget have a direct impact on tax payers in the united states.
- Explains that deficits, surpluses and debts affect social security and medicare users because the government draws on the funds available from these programs.
- Explains that the u.s. deficit, surplus, and debt have a large effect on the unemployed.
- Explains that with a surplus, there is more production than demand, which forces organizations to lower their selling prices to get rid of surplus stock.
- Opines that paying back a loan should be the least of our worries, but the average student stresses about how they will pay the loan off.
- Opines that the u.s. is the world's largest economy and remains a good credit risk. while governments attempt to control fiscal activity, they must remember to promote fiscal liberty.
- Explains that surplus in trade is when a country's exports exceed its imports, thereby avoiding deficits and paying down debt. exports increase demand for u.s. goods to expand income and wealth abroad.
- Explains that the united states government has a continual history of operating with budgets that create more deficits than surpluses.
- Opines that fiscal policy affects every aspect of the nation's communities from individual household to the federal government for managing gdp to sustain the country’s economic health
- Explains that government debt, deficit, and surplus affect businesses who import goods into the united states.
1098 wordsRead More