Macroeconomics discussion questions and core concepts

Macro Economics

Politicians and Macro Economics

In America, the duty of running the economy belongs to members of congress. Some decisions they make concerning the economy shoe they have vast knowledge of macroeconomics. Although, some of the members of congress are lawmakers and hardly understand the role they need to play for the economy. Macroeconomics involves studying and decision making of the whole economy and contributors of the economy within the country surrounding. During his administration, George Bush demonstrated his knowledge of macroeconomics when he cut down taxes. This is a monetary policy in macroeconomics increasing income disposable to individuals. Increase in disposable income increases the level of savings and investments. In an economic cycle, these are injections into the economy, which promote economic independence. This showed that some politicians understand macroeconomics, but it is hard to generalize for all of them as these congressmen come from different backgrounds.

How to Reduce Deficit

Politicians plan to use fiscal policies to reduce this deficit. Politicians are a part of the government they have access to taxes and tax behavior, and they plan to use this to reduce the deficit. If properly executed fiscal policy can reduce this deficit, but the problem is getting all taxpayers satisfied. Taxing the top earners in an economy a higher percentage than the other citizens will be unjust to them. According to them, it is not a crime to earn more money as it is they believe they earn more because they work harder than others do. To reduce this deficit taxing those earning more than $250,000 is not a perfect plan. Reducing taxable percentage and reducing government spending if monitored over time is a brilliant plan. This reduction will also involve simplification of corporate and individual tax. In the end, reducing taxes will increase investments, which is a sure way to increase taxable incomes .

Too Big to Fail

The way the government handled the economic crisis when some companies were at the risk of failing raised much controversy. The government bailed these companies out on the bases of their influence on the economy. The corporate tax these companies pay if lost would leave a deficit on the American budget. A policy to save the companies such as General Motors and Chrysler saved a substantial part of the American economy as these companies also employ a large number of Americans. However, critics of this bailout feel all companies should have the same treatment. In a country, equality is paramount as all citizens pay taxes. During times of serious economic crisis however, it is necessary for the government to prioritize sectors of the economy .

Functions of Federal Government that Should be Eliminated

A function of the government that deserves elimination is spending too much money on the armed forces with intentions of maintaining peace in other countries. These countries that benefit, always end up complaining and ungrateful and yet the American citizen get inadequate services due to this spending. The government should eliminate Federal Reserve in the country. Federal Reserve keeps the government in debt, as the government cannot withdraw enough money to pay its debts. Since the creation of the Federal Reserve in 1913, the currency continues to depreciate. This shows that the Federal Reserve does not in any way control the strength of the country's currency.