...The diagram shows the outline of Government spending within 2014, whereby the highest percentage of government spending was towards health, and pensions. However, comparing the 2013, and 2014 graph, it is evident that there is a 2% increase in health care spending, and a 1% decrease in welfare. The federal deficit for 2014 was $483.35 billion, which shows a drastic decrease in the federal deficit between the two years. The federal deficit therefore shows that the importation of goods were higher in 2013, than 2014. Within the federal budget of 2014, it is evident that Washington spent almost $3.5 trillion in 2014 whilst receiving around $3 trillion in revenues, which therefore shows that the deficit was around half a trillion (Boccia, R....
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...Overview: The US government currently has over $16.4 trillion in debt and spends 40% more than the revenue it collects per year. This continues to be a highly debated topic within our legislative and executive branches of government. One reason the Federal Government’s major entitlement programs are difficult to control is the way they are designed. A second is that current budgeting process ignores long-term impacts of short-term expansions. A third is that these programs are not subject to regular review, like the other annual discretionary programs are. The means that Congress rarely evaluates the costs and effectiveness of entitlements except when it is proposing to expand them. Costs of healthcare continuing to rise, funding numerous war campaigns, and a broken tax system are all contributing to the widening deficit in the budget. It is quite clear that sacrifices must be made. The question remains: where do we begin? Background: Alexander Hamilton, the first Treasury Secretary, set up federal debt to pay off debt incurred by the Revolutionary War. Until the Great Depression in 1933, federal debt was used only to fund wars. In 1933, President Roosevelt began spending and raised the federal debt to around 40% of the GDP. From that point on, the federal debt has ranged from 122% of the GPD following WWII, to 50% of the GDP during the Cold War to the current value of 99.4% as presidential policies and goals changed (see Figure 1). During the end of the Clinton administration...
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...2744 Government Spending & Budget As many Federal departments and agencies lurch into an era of running without funds, the leaders of both parties of Congress are spending less and less time searching for a compromise to balance the budget, and more and more time deciding how to use it to their advantage on the campaign trail. Meanwhile money is easily borrowed to pay for government overhead. In an attempt to change this, on June 29, Congress voted in favor of HConRes67 that called for a 7 year plan to balance the Federal Budget by the year 2002 (Hager 1899). This would be done by incorporating $894 billion in spending cuts by 2002, with a projected 7 year tax cut of $245 billion. If this plan were implemented, in the year 2002, the U.S. Government would have the first balanced budget since 1969. There is doubt by citizens that a balanced budget will become reality. A recent Gallop Poll from January, 1996 showed the budget as the #1 concern among taxpayers, but 4/5 of those interviewed said they doubt the GOP will do the job (Holding 14). Meanwhile, an ABC poll from November reported that over 70% of those polled disapprove of the current performance by Congress, and most blamed politicians for failure to take action (Cloud 3709). These accusations of failure to follow through come with historical proof that Congress and Clinton have failed to compromise and resolve the issue. After all, current budget plans are dependent on somewhat unrealistic predictions of avoiding such catastrophes...
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...Government activity affects the economy in four ways: • The government produces goods and services, including roads and national defense. Less than half of federal spending is devoted to the production of goods and services. • The government transfers income through both the tax system and outlays. Popular perception typically focuses on transfers across income classes through the progressive income tax system and means-tested benefits, referred to as vertical redistribution. But vertical redistribution is dwarfed by horizontal redistribution, transfers unrelated to income class. The largest beneficiaries of transfers are the elderly, through programs such as Social Security. • The government collects taxes, and that alters economic behavior. For instance,taxes on labor change the incentives to work, while taxes on specific goods (e.g., gasoline) change the incentive to consume and produce those goods. • The government regulates economic activity for a number of reasons, including environmental protection, workplace safety, and consumer protection. The economic impact of regulation is probably the hardest and most contentious to measure of the four types of government economic activity. In a nutshell, the government’s largest activity has gone from national defense in the 1960s to transfers to the elderly today. Defense spending peaked at 9.5% of GDP in 1968, and then fell to 4.7% of GDP in 1978. It then rose to 6.2% of GDP in 1986, before beginning a sharp decline to...
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...Government Spending: An Expansionary Fiscal Policy Article Summary “On fiscal policy, USC professor's viewpoint is moral and farsighted” by Edward D. In this article, Kleinbard Challenges reliance on the tax code in order to stimulate the economy. According to Kleinbard (2014), increased government spending is a solution of achieving an expansionary fiscal policy in the American economic system. Moreover, he argues with the progressive tax systems as the only popular way of achieving equitable distribution of resources and growing the economy. Additionally, he mentioned the use of government spending in achieving equity and growth. Government Expenditure Increase The fiscal policy postulated is expansionary in nature. The application of the policy would lead a growth in the economy. Government spending should be viewed as an investment. The government should increase its spending on housing, medical care, and education. Also, it should invest in infrastructure. Infrastructural investments include investments on roads, bridges, seaports, airports and dams. Economic Analysis The most important point in government spending is in order to minimum the existing recessionary gap in the economy. Increasing in the government expenditure results in an upward shift of the aggregate demand. Government spending generates demand for goods and services. As a result, the overall aggregate demand increases. Moreover, government spending infuses more capital into the economy. Consumers...
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...paper I will talk to you about Government spending and how it is hurting our country. First, I will tell you how the government is spending more money than it is receiving from the citizens of the United States of America. Secondly, I will write about some ways that I think we can try to cut the spending of the government. I will also write about some of the wasteful spending that the government has done in the past. Currently the government is spending more money than it is taking in from taxes and other; means (Boccia, Fraser & Goff, 2013). According to Boccia, Fraser & Goff (2013) we have a deficit of $642 billion which is less than previous years, but that does not mean that the government has its spending under control. Boccia et al. (2013) states that the reason that we see a smaller deficit, is because of the raised taxes and the sequestration that happened this year. Boccia et al. (2013) states that Washington will spend $3.5 trillion this year while only collecting $2.8 trillion in revenue which means that there will be a deficit of about $642 billion. Boccia et al. (2013) states that “Medicaid Is the Fastest-Growing Major Entitlement” at 109%. Medicaid is at $265 billion in 2013 and is projected to reach $554 billion in 2023 Boccia et al. (2013). Boccia et al. (2013) also state that in 2011 the total Anti-Poverty cost reached $927 billion. Boccia et al. (2013) stated, “Welfare spending has increased 16-fold since...
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...Government Spending and Taxation Joseph La France Grantham University Government Spending and Taxation In this paper I will attempt to apply 4 of the 8 guideposts to government spending and taxation. I will begin these applications with “tradeoffs”. A good example of the government “tradingoff” something I believe would be in the way Social Security works. Taxes are pulled out of people’s paychecks to put toward retirement or “Social Security”. With over expenditures in other areas of spending through the government they pulled money from the social security funds to compensate. Thus causing a lack of funds in the social security department and causing them to come up with a way to compensate. If my understanding is correct on the matter, they now pull social security from younger workers, to pay to the retirees. Therefor trading off the debt from the retiree, to the worker that will one day retire himself. In appliance of economizing, the government for the first 125 years spent only what was needed federally, on 4 main aspects: Income Transfers, Health Care, National Defense, Net interest. Thus providing funds for things that anyone can use and benefit from. Income transfers being like Social Security. Health Care being medical plans and or insurance. National Defense, like funding the US Army and Navy. And Net interest being the national debt. Incentives are a huge...
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...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 revenue the government has generated...
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...Mankiw, Macroeconomics 8e Chapter 3 1. The returns to scale in the production function Y = K0.5L0.5 are: A. decreasing. B. constant. C. increasing. D. subject to wide fluctuations. 2. If a production function has two inputs and exhibits constant returns to scale, then doubling both inputs will cause the output to: A. reduce by half. B. stay the same. C. double. D. quadruple. 3. If the supplies of capital and labor are fixed and technology is unchanging, then real output is: A. fixed. B. determined by demand. C. uncertain. D. subject to wide fluctuations. 4. If a production function has the property of diminishing marginal product, then doubling: A. all of the inputs will less than double the output. B. all of the inputs will double the output. C. all of the inputs will more than double the output. D. one of the inputs will reduce its marginal product. 5. Consider the following production table: Assuming that the production function displays constant returns to scale, what is the marginal product of labor when labor and capital are both equal to 1,000? A. 1 B. 5 C. 10 D. 20 6. Consider the following production table: By how much does the marginal product of labor decrease as labor input increases from 1 to 2 and from 2 to 3? A. 0 B. 1 C. 2 D. 3 7. Euler's theorem implies that if a production function exhibits constant returns to scale, then: A. economic profit is zero. ...
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...“business cycle.” The business cycle consists of four phases: expansion, peak, contraction, and trough. Expansion: Expansion is an acceleration of the pace of economic activity. Peak: Peak is the point in which the business cycle takes an upward turn. Contraction: Contraction is the opposite of expansion in where the pace of economic activity has slowed down. If a contraction is severe, it is a recession. Trough: Trough is the lower turning point in the business cycle where a contraction turns into an expansion. A deep trough is also known as a depression. The fiscal policy is used to control spending, which will then influence the level and quality of the gross domestic product. The fiscal policy is used to control demand in an economy but can also affect the supply side by providing incentives to work and investment. Fiscal policy is calculated by taxation and government spending. The governing bodies can place in service a number of taxation actions to control aggregate demand, or...
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...Health expenditure in India C. P. Chandrasekhar Jayati Ghosh There are perceptions that government spending on health in India, which is low by international standards, has been further undermined during the period of economic liberalisation since the early 1990s. In the first of a two-article Macroscan on this subject, C. P. Chandrasekhar and Jayati Ghosh examine the relative significance of public and private expenditure on health and the trends in Central Government expenditure. The next edition will analyse health expenditure by State governments in the recent past. | In the past decade, Central Government expenditure on woman and child development has remained relatively constant as a share of GDP - Mahesh Harilal It is well known that health expenditure in India is dominated by private spending. To a large extent this is a reflection of the inadequate public spending that has been a constant if unfortunate feature of Indian development in the past half century. This is particularly unfortunate because of the large positive externalities associated with health spending, which make health spending a clear merit good. The greater reliance on private delivery of health infrastructure and health services therefore means that overall these will be socially underprovided by private agents, and also deny adequate access to the poor. This in turn has adverse outcomes not only for the affected population but for society as a whole. It adversely affects current social...
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...if a higher growth rate of GDP meant that a higher percentage was spent in the public sector. Data was gathered from the ECLAC, The World Bank and also the International Monetary Fund. Introduction The reason I was very attracted in this research is because as someone born in South America and lately Latin America has been doing better than before, and visiting South America the past year I have seen how infrastructure has improved lately so I was very interested in seeing how big of a role public expenditure plays in countries that are developing. Expenditure on welfare, health and education are an essential part of what governments do to enhance the quality of life of their citizens and the human capital base of their societies. My focus on public and social expenditure in Latin America is mainly guided by the concern of how Governments utilizes existing policies and seeing how these theories and policies have helped increase Latin America’s GDP. In Latin America we find a great variation in social policy regimes; ranging from Uruguay and Argentina, where a large majority of the population is covered by social policy and has decent education and health services, to El Salvador and Guatemala, where social policy and quality of education and health services does not have a big reach or covers the majority of the population. Public expenditure is and has been very important for the economies of every country because, it has a big role in the determination of level...
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...The returns to scale in the production function Y = K0.5L0.5 are: constant If a production function has two inputs and exhibits constant returns to scale, then doubling both inputs will cause the output to: double If the supplies of capital and labor are fixed and technology is unchanging, then real output is: fixed If a production function has the property of diminishing marginal product, then doubling: one of the inputs will reduce its marginal product. Consider the following production table: Assuming that the production function displays constant returns to scale, what is the marginal product of labor when labor and capital are both equal to 1,000? 5 Consider the following production table: By how much does the marginal product of labor decrease as labor input increases from 1 to 2 and from 2 to 3? 1 Euler's theorem implies that if a production function exhibits constant returns to scale, then: economic profit is zero. If a firm with a constant returns to scale production function pays all factors their marginal products, then: economic profit is zero and accounting profit is positive. A competitive firm hires labor until the marginal product of labor equals the: real wage. A competitive firm rents capital until the marginal product of capital equals the: real rental price of capital. Suppose that a major natural disaster destroys a large part of a country's capital stock but miraculously does not cause anybody bodily harm. What will happen...
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...service costs money; therefore a nation’s economy - and the spending of that money - works to shape the sociological core of that nation. But how should that money be spent? One can argue that education spending is important to a nation’s well-being. During the 19th century US President James Garfield commented that “next in importance to freedom and justice is popular education, without which neither freedom nor justice can be permanently maintained” (as cited in McPherson, 1912, p.192). One way in which a nation’s value for the importance of education can be quantified is by examining the public spending on education as a total percentage of government spending. In this paper, I will review education spending as a social indicator for three distinct, geographically diverse, and very financially disparate nations: Oman, Georgia, and the Republic of Congo. The social indicator that is education spending greatly affects other social factors; I argue that it is a foundation piece of a great country, and that without national support for education, overall quality of life is diminished. What defines public spending on education? The World Bank clearly describes it as “public expenditure on education includes government spending on educational institutions (both public and private), education administration, and transfers/subsidies for private entities (students/households and other privates entities).”1 Education spending is not only governmental monies, it also includes items like...
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...Fundamentals of Macroeconomics ECO/372 Macroeconomics studies the aggregate behavior of the economic system as opposed to microeconomics whose concentration is on subcategories or individuals and how they make decisions. The use of macroeconomics can have a direct impact on the choices made for the nation’s economic benefit. When employing macroeconomics an economist can determine why products have decreased or increased in price. It analyzes many factors that play part in the health of the economy. This study, though, complicated can be employed to encourage different government policies that develop a certain affect for instance; increased government spending can create jobs and increase employment this is called expansionary policy. Decreased government spending can have the opposite affect this is contractionary policy. Macroeconomics Terms There are different terms associated with macroeconomics are important to know and understand. One known term is Gross Domestic Product (GDP). GDP is the value of all finished goods and services produced in a certain country during a certain time frame. GDP measures a country’s standard of living. Two words associated with GDP are real GDP and nominal GDP. Real GDP is the measure of the gross domestic product value adjusted for change in prices; this can be owing to inflation. Nominal GDP uses current prices on products and services (Colander, 2010). Unemployment rate is another important part of macroeconomics it indicates...
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