...How Tax Cuts Help Revive The Economy Introduction How can tax cuts help revive a poor economy? Many economists that are in favor of tax cuts argue that by reducing taxes, we can improve the economy by increasing spending. However, there are people who oppose them and say that tax cuts only help the rich because it can lead to a reduction in government services upon which lower income people rely on. No matter which side you agree with, they both have they’re pro’s and con’s depending on the current state of the economy. Understanding our countries Federal tax system and how they can implement certain tax cuts is important as it directly impacts the GNP. Since we are currently in one of the worst recessions, we must consider if tax cuts will help revive our economy. The Federal Tax System Our Federal tax system relies on a number of different types of taxes to generate revenues. The largest source of funds is the personal Federal income tax. Personal income taxes are levied against income, interest, dividends and capital gains, with higher earners generally paying higher tax rates. Another source of funds are payroll taxes. The payroll tax is a tax levied at a fixed percentage on salaries and wages, up to a certain limit and is paid equally by both the employer and employee. Payroll taxes have become an important source of revenue for the Federal Government and have grown more rapidly than income taxes as the government has raised rates and income limits. Payroll taxes...
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...organizations, are the ways that our economy is kept under control. Both policies have their strengths and weaknesses, some situations favoring use of both policies, but most of the time, only one is necessary. Fiscal Policy can be explained in many ways, for example. Fiscal policy is the use of the government budget to affect an economy. When the government decides on the taxes that it collects, the transfer payments it gives out, or the goods and services that it purchases, it is engaging in fiscal policy. The primary economic impact of any change in the government budget is felt by particular groups make tax cut for families with children, for example, raises the disposable income of such families. Discussions of fiscal policy, however, usually focus on the effect of changes in the government budget on the overall economy on such macroeconomic variables as GNP and unemployment and inflation. Fiscal Policy also can be explained as the economic term which describes the behavior of governments in raising money to fund current spending and investment for collective social purposes and for transfer payments to citizens and residents of the territory for which the government is responsible. The money may be raised by taxation, by borrowing, by user charges on social assets or services, or by fiat. Fiscal policy can include deficit spending to stimulate demand for domestic goods and services to help unemployment or make efforts to cut deficits or raise the budget surplus...
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...What is fiscal policy and how can it be used to manage the economy? Briefly describe the current UK fiscal policy, and comment on the effect it may have on the economy. Fiscal policy is the use of government spending, taxation and borrowing to influence the level and growth of aggregate demand, output and employment. Aggregate demand (AD)= Consumption + Investment + Government spending + (Exports – Imports). Changes in fiscal policy affect both aggregate demand and aggregate supply. (Riley 2006) Fiscal policy is used to achieve macroeconomic objectives such as full employment, price level stability and sustained economic growth. Expansionary fiscal policy is an increase in government expenditures or transfer payments, or a decrease in tax revenue. A tax cut will increase AD because it increases households’ disposable income. The greater the disposable income the greater is the quantity of goods and services demanded and therefore the greater is AD. This will stimulate economic growth in a recession, which will shift the AD curve to the right. (Parkin, Powell and Matthews 2008) The magnitude of the shift = expenditure multiplier x the increase in government expenditures. In the short run it will increase both Gross Domestic Product (GDP) and the price level. An increase in the price level will increase the money wage rate, which reduces the SRAS. The SRAS curve shifts left until in the long run real GDP = potential GDP at a higher price level. Contractionary fiscal policy...
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...Did the Stimulus Work? Mehrdad Namazi Angela Agboli Ph.D Pad520 Apr 9, 2012 The Stimulus Analysis In this research I am trying to explain why the stimulus packages did not stimulate the economy that much, where the money is gone and also evaluate some alternatives. Congress has enacted two huge stimulus programs since the recent recession started in 2008. The first one was under President Bush for $152 billion and the second one was under President Obama totaled $863 billion. After more than three years since the recession emerged, still the unemployment is through the roof and the economic growth is sluggish. Why? In order to shed a light on this problem, first we have to know where the billions have gone and how they have been used. There are three kinds of Keynesian stimulus packages (1) the government gives money to people directly, in hopes that they would buy more stuffs and services. (2) The government directly buys goods and services (3) the government sends the check to state and local governments to spend it. In either one, the philosophy is that the increase in buying would result more activity and eventually will boost the economy. The 2008 stimulus was the first kind and the 2009 was almost a mix of all three. In 2008 the U.S Treasury started sending checks to households in the summer. It was supposed to put more money into the hands of people to buy additional goods and services and thereby stimulate production...
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...theories and how his policies were embraced by some conservative politicians but are not as widely adopted today. Milton Friedman would famously say “there is no such thing as a free lunch” (Moore 2012). What he meant was that everything comes with an opportunity cost. If the government spends money then that money must come from the private economy. He was an advocate of capitalism and his views helped revive modern capitalism in the latter part of the twentieth century. He was a proponent of the free market economic system and was opposed to government interference in the economy. Many of his theories have become accepted and lauded by modern day conservative politicians. Milton Friedman was born in Brooklyn, NY in 1912 to immigrant parents. He was awarded a scholarship to Rutgers University where he majored in mathematics. While at Rutgers he became interested in economics due to the poor state of the economy during the Great Depression. After graduating from Rutgers University he went on to receive his master’s degree from the University of Chicago and then on to Columbia University for his doctoral work (Academy of Achievement, 2010). During the early years of his career, Friedman went to work for the Treasury Department. While there he helped implement the income withholding tax as a way to help finance World War II. At the time, taxes were paid in a lump sum one time per year. He later came to regret helping implement the withholding tax. Friedman...
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...Title: Principles of Economics Essay Title: A part of China’s economy Contents Introduction of China economics…………………………………………..…..….4 Summary of article…………………………………………………………………...….4 Aggregate supply (AS) models……………………………………………………..…5 Aggregate demand (AD) models………………………………………………..….....6 Government policies to overcome above problems and effectiveness…………7 Conclusion…………………………………………………………………………………..8 Reference list…………………………………………………………………………………9 Introduction of China economics China’s economy is rapidly huge and expanding in these years. It is the fourth largest country in area after Russia, Canada and USA has experienced multifarious changes in its economic system which has seen it become the second largest economy in the world after USA if measured on the Purchasing Power Parity (PPP) scale. However, China still considered as an emerging economy as per capita incomes fall in the lower-middle level, China is making its presence felt in the global stage by taking big strides in opening up its economy to international trade. There are many economic problems faced by China during the years. And the inflation has become a serious challenge for the developing economy; the surplus of population and the rising unemployment rate and price. According to statistics, more than 250 million migrant workers and their dependents had removed to urban areas to find work. Hence, as China’s economy slows down due to falling external and internal demand, a number...
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...cell and other medical research. America right now is at a very critical situation from whatever point we look at. We are struggling economically, which is making America suffer in many ways. We have millions of illegal immigrants who contribute so much to our nation, but yet they are in a dark shadow where we do not see a close light to this issue. The war, we’ve had so many innocent Americans fighting for our country and giving their lives I thing it’s unfair. One of our major issues is the illegal immigration, “the current system makes criminals out of some 12 million people who only want to work hard on whose efforts large parts of the economy now depend.” (Bush Baiting). We also have thousands of young people who need to go to school, because America’s youth is what going to make this country more successful. If we do not help the young people get their immigration paperwork done, then we do not know what will happen to the country’s future. According to Dream Act website, the Dream Act is a bill that applies to over 60,000 illegal immigrants who finish high school, but cannot proceed with their studies in a community college or university, because of their inherited title of “illegal...
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...5 – INFLATION RATE OF JAPAN 19 G. CHART 6 – DISCOUNT AND LOAN RATES FROM BANK OF JAPAN 20 H. CHART 7 – UNEMPLOYMENT RATE – JAPAN 21 I. CHART 8 – NIKKEI 225 INDEX 21 IX. REFERENCES 22 I. Executive Summary Japan experienced a period of exceptional economic growth becoming an economic powerhouse by the 1980s. However, Japan was not able to carry this economic prowess forward into the 21st century. The Japanese economy lost an entire decade in the 1990s due to economic stagnation -- one that was characterized by deflation, three recessions and a slowdown in economic growth. A stock market crash followed along with more than a three-fourths decline in real-estate prices which plagued Japan’s economy causing huge destruction in wealth, leaving both corporations and households with large amounts of debt. This period famously came to be known as the "lost decade". The Japanese government watched as GDP growth slowed down and inflation fell at a rapid pace causing them to enact several fiscal stimulus packages in an attempt to revive the economy. At the same time, the Bank of Japan was continually lowering interest rates until it finally brought them down to zero. In spite of several monetary and fiscal policy responses the first signs of a recovery did not appear until 1999-2000. This paper critically evaluates the possible causes behind Japan’s economic slowdown of the 1990s and examines the measures and effects of the...
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...BSE 18,694.41 points (as on Tuesday, September 25) PERSONALITIES OF THE WEEK Christine Lagarde Sachin Bansal CORPORATE INTELLIGENCE BIG THREE MANAGEMENT CONSULTANCIES NEWS DIGEST… BUSINESS NEWS GLOBAL NEWS MISCELLANEOUS NEWS Wal-Mart plans to open its first outlet in India within 12-18 months More than two-thirds in USA live pay check to pay check Foxconn unit in China closes after workers clash ECONOMIC INDICATORS 2 COVER STORY 3 PERSONALITIES OF THE WEEK 4 CORPORATE INTELLIGENCE 5 NEWS ANALYSIS 6 JOB PROFILE 11 PART TWO KNOW YOUR BASICS: DATA ANALYTICS KNOW YOUR BASICS: DATA ANALYTICS D ata analytics (DA) refers to examination of raw data for drawing meaningful conclusions usually with the help of the latest IT tools. DA is categorised into exploratory data analysis (EDA) and confirmatory data analysis (CDA). EDA refers to finding new features in the data (similar to data mining) while CDA is used to examine the validity of existing hypotheses. There‟s another category known as Qualitative data analysis (QDA) which is generally used in the social sciences to draw conclusions from non-numerical data like words, photographs or video. The term "analytics" has been used by many business intelligence (BI) software firms as a keyword to describe quite different functions. Data analytics is used to describe everything from online analytical processing (OLAP) to CRM analytics in call centres. Banks and credit cards companies, for instance...
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...intuition/motives gotten mostly by being racist with their religion/believe, discriminating against Sexual Orientation and Financial Status. Every-one would like to live in a just society because I believe justice is something that very few people around the world enjoy. Not many societies have fair and effective justice systems, and the very few that do are sometimes seen as doing things the wrong way. The first question that comes to mind when looking at how to run a just society while being religious. It is a very hard thing to do because as a religious person, you surely believe in something. Be it a supernatural being or believing that there is no God (which I believe is another topic for another debate). Our religion makes us judge someone even before we get to meet them or talk to them. That fact has been known for decades, and it’s rather surprising given that mainstream religions are unanimous in preaching racial tolerance. Just why this should be is not well understood. Does religion really cause racism? Are racists drawn to religion? Can you make someone more racist simply by subtly reminding them about religion? These are questions that I ask myself alot. After the incident of September 11th, we got changed as a Nation and as people. For example, I had a friend that I worked with and his Parents migrated to the United States from the east in the year 1998 and he is an American Citizen. The...
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...Canada: A Small Open Economy INTRODUCTION Canada has a small economy, which should translate into weaker economic growth projections. Canada relies intensely on its trade for enhancement and maintenance of standard of living. Recent expansion and growth of trade and prospects of business in developing market provided Canada with the prospect of trade with China and other similar markets. Market moderation resulted in the reduction of growth in Canadian international trade. Canadian traders needed to find newer grounds and solutions outside the natural reserves. The solution was found in international trade and free trade agreements. CANADIAN TRADING HISTORY Initially, Canada was in no shape to manufacture goods, the natives hunted and bought their needs by supplying fish and furs for trade. This basically established the link between Canada and Europe, and was the initial face of free trade. The connection of Canada and America trade established quite late, but USA became the most significant partner of trade with Canada. After WWII, the face of trading changed for entire world. Canada established strong connections with Japan, and with Pacific Rim Connection the Japanese industrialisation started, international trade with many countries of pacific region. In 1993, Canada signed NAFTA (North American Free Trade Agreement), with America and Mexico to remove trading hurdles. This agreement was basically devised by Americans, who already had a strong business tie with Mexico...
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...Keynesian ideas revolutionary? 2 How does Keynes theory work? 4 What economic conditions in your news article that require government intervention? Do you have faith that this intervention will be effective? 7 How have the economists’ views on Keynesian economics changed over time? 9 Is Keynesian economics dead today? 12 Works Cited 14 Appendix A 15 Why you should be wary of the Japanese “revival” 15 Why were Keynesian ideas revolutionary? Keynesian economics is a macroeconomic theory developed by John Maynard Keynes, who is a British economist. According to Keynesian theory, government intervention plays an important role in the economy, and focuses on short-term goals. It is used mostly in times of recession, inflation, unemployment to stabilize the business cycle, therefore active government policy is required and government spending is a good way to put money back into the GDP. (hupii.com) Keynes is famous for his simple explanation for the cause of the Great Depression during the 1930s. His idea was based on a circular flow of money, which states that when spending increases in an economy, earnings will also increase, and the outcome it will lead to even more spending and earnings (economic growth). His ideas had led to a revolution in economic thought. (martinfrost.ws) During the period of World War 2, United States president has spent enormously huge on defence which has that helped revive the U.S economy. Besides that, Paul Volcker has overcome...
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...what are its origins? What are the pros of having a minimum wage, what problems does it have potential to solve? What are the problems with having a minimum wage, and just how much do they affect the U.S. economy? What are potential alternative solutions to raising the federal minimum wage? Many different viewpoints and ideas will be discussed below, but it is difficult to fully grasp how far reaching the effects of minimum wage. The purpose for a baseline wage was set to help poverty stricken workers a fair wage for their cost of living. In June 25, 1938 President Franklin D. Roosevelt signed the “Fair Labor Standards Act of 1938,” which aimed to ban child labor, set maximum work weeks at 44 hours, and set minimum hourly wage at 25 cents. Roosevelt felt child labor, undercutting wages, and stretching out hours of the lowest paid workers during times of recession had a big effect on buying power even though this act affected one-fifth of the United States population at the time. Roosevelt realized a population without buying power is more than just an ethical problem but an economic one as well (U.S. Labor Department). The father of modern economics Adam Smith once stated, “But what improves the circumstances of the greater part can never be regarded as an inconveniency to the whole. No society can surely be flourishing and happy, of which the far greater part of the members are poor and miserable (wealth of nations).” Although it is easier to justify wage increases during...
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...began in the mortgage markets of the United States and erupted through financial markets (Savona, Kirton, Oldani 3). Many factors have contributed to the economy's recession, where signs of housing bubble problem were seen at the end of 2007. Caused by low interest rates beginning on January 3, 2001, and ignored by regulatory agencies, Americans borrowed excessively for home mortgages and this phase lasted to 2004. After that, from June 30, 2004, interest rates started to rise which led to the mortgage being unbearable and eventually subprime. This phase was marked by the increasing foreclosures and it extended from 2005 to 2007. This lead us to the conclusion that global financial crisis occurred due to easy monetary policies along with tax cuts and to failure of regulatory arrangements (Desai 1-3). This was the origin of the global financial crisis in the United States. Global financial crisis major impacts were in the west countries at first, but it has exceeded all borders and reached the Middle East and despite the common believe that GCC countries didn't get affected by the global financial crisis, they were affected in several ways and different degrees. The idea that GCC countries didn't get affected by the global...
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...Monetary Fund (IMF) works to bring up International Monetary Cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth and to reduce the poverty around the world. IMF was created in 1945 and it’s an organization of 187 countries. Why IMF was created and how it works? The IMF, also known as the “Fund,” was conceived at a United Nations conference convened in Bretton Woods, New Hampshire, United States, in July 1944. The 44 governments represented at that conference sought to build a framework for economic cooperation that would avoid a repetition of the vicious circle of competitive devaluations that had contributed to the Great Depression of the 1930s. Work of IMF The primary mission of the IMF is to provide financial assistance to countries those countries who experience financial and economic difficulties and to sought those difficulties they are given financial help by using funds deposited with the IMF from the institution’s 187 member countries. Member of IMF states with balance of payments problems, which often arise from these difficulties, may request loans from IMF to help fill gaps between what countries earn and/or are able to borrow from other official lenders and what countries must spend to operate, including covering the cost of importing basic goods and services. In return, countries are required to launch certain reforms which have often been dubbed the Washington Consensus. These reforms...
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