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Economics
Governments influence the economy in many ways, but the two most often discussed in economics are fiscal policy and monetary policy (another might a trade policy, for example). Fiscal policy reflects the use of government spending and taxation to influence the economy (Weil, 2008). Thus, the level of spending, the amount of revenue collected, and how the money is spent are all things that must be taken into consideration in fiscal policy. Fiscal policy also frequently has an effect on the decisions that businesses and individuals make. Consider the debate about taxes and the "Buffet Rule" -- the tax polices we have now are designed to encourage specific behaviors. This is why capital gains are taxed at a different rate than dividends, and why dividends are taxed at a different rate than interest income. So fiscal policy does affect the way some people behave, as they attempt to maximize their wealth.
Monetary policy is the policy set by the central bank with respect to interest rates and the money supply (FRBSF, 2012). According to the Federal Reserve, the objective of monetary policy is to "influence the performance of the economy as reflected in such factors as inflation, economic output, and employment. It works be affecting demand across the economy."
Among other things, Keynes...
Thus, he made the point that a government can increase its spending temporarily in order to offset declines in investment and consumer spending. He also made the point that if such deficit spending is to be used in a down economy, that the government must also decrease its spending during strong economic times. Hayek, writing at a time when the industrial world faced what felt like a binary choice between capitalism and communism, took a dimmer view of any form of government involvement in the economy. Hayek outlined his theory about recessions and government in ten points. He argued that government spending would only stimulate the deficit, but that regulation was required to allow the market to function. He noted that economic planning does not work -- though this discussion seen through the lens looking eastward at Communism caused Hayek to fail to consider that what government spends on does matter. He made the point, however, that in general economic forecasting is fraught with difficulty and that there are often unintended consequences to actions (Azerrad, 2011). Even with regulation, he was aware that corporations have incentive to seek government conferred advantages, so surely he would have wanted whatever regulation was required…
Works Cited
Azerrad, D. (2011). Hayek's top 10 dos and don'ts in a recession. The Foundry. Retrieved April 20, 2012 from http://blog.heritage.org/2011/02/14/hayek%E2%80%99s-top-10-do%E2%80%99s-and-don%E2%80%99ts-in-a-recession/
FRBSF. (2012). U.S. monetary policy: An introduction. Federal Reserve Bank of San Francisco. Retrieved April 20, 2012 from http://www.frbsf.org/publications/federalreserve/monetary/index.html
Weil, D. (2008). Fiscal policy. The Concise Encyclopedia of Economics. Retrieved April 20, 2012 from http://www.econlib.org/library/Enc/FiscalPolicy.html
This provides two strong disincentives to innovate. What is left is a Chinese state that discourages the development of the most tried-and-true means of economic development -- competition and innovation -- and instead relies on wealth transfer due to currency manipulation as the foundation of its success. The role of government in an economy, therefore, should be limited if long-term sustainable growth is the objective. For totalitarian capitalism to be
Role of Government in Healthcare/How Government Influence Sunnydale Similarities between Monopoly, Perfect Competition and Oligopoly Importance of Government Involvement with Health Care Entities at the Local, State, and Federal Levels Structure, Conduct, and Performance Paradigm As It Relates To Health Care Implications of the Sherman Antitrust Act on Sunnydale Care Overview of the Structure and Operation of Medicare and Medicaid Services That Each Cover Coverage Establishment Funding Differences Benefits and challenges of government involvement at Sunnydale Care Similarities between Monopoly,
(Buchanan, 72) The economic policy tools that were employed just after the war subsequently underwent some changes. From 1947 to 1950 direct controls on wages and distribution were eliminated followed by removal of trade controls in 1958. However, the government continued to maintain its hold over prices and credit distribution which made it different from many of its neighboring states in the postwar period. The French Ministry of Finance exerted
B. In market economies, governments are supposed to provide economic conditions for private enterprises to function effectively. However, the main purpose is to create an environment for a healthy national economy, in which all the parties are prosperous, not only private enterprises (USINFO, 2007). The main difference between market economies and planned economies lies on whether the influence of the government is used to preclude private decision (Wikipedia, 2007). The
Economic Environment of a Business The objective of this work is to summarize the economic environment of a business including information relating to microeconomics, macroeconomics, and international trade aspects The business organization is a "micro-economic unit" and the business environment is that which makes provision of the "macro-economic context within which firm operates." (Reddy, ) The business environment can be categorized into the 'economic' and non-economic' and the 'micro- and macro-environment. (Reddy,,
Governments neutralize the monetary impacts of their foreign exchange activities. This sterilization seeks to prevent foreign exchange transactions from posing as obstacles to the domestic monetary policy objectives. The underlying disturbance is likely to cause conflict between governments. When the underlying disturbance to exchange rate originates from the domestic government, it is likely to pursue inflation objectives through non-sterilized foreign exchange interventions (Auerbach & Kotlikoff, 2009). While other governments have boundaries