the economy.
A deficit heart and soul that the organization spends more than it receives in tax
revenues in a given year (OSullivan, Sheffrin, & Perez 2010, p. 374). The integral deficit is
spending, plus on the whole the interest payments on top of the original debt, minus the total tax
revenue (http://www.blurtit.com). There are three factors, cognise as willing
stabilizers, that affect and stabilize the economy, they are: 1) government purchases of
goods and services, such(prenominal) as public safety, government transfer of payments, and
unemployment insurance, 2) Medicaid or Medicare etc.,and 3) the collection of taxes.
If the government cut taxes or increases transfer payments such as unemployment
insurance and food stamps this helps to offset the decrease in household income.
Additionally, when government cuts corporate taxes, it helps prevent businesses
from cutting expenses as much as they would during a recession. Therefore, an
increased federal budget deficit can help stabilize an economy for as households
disposable income rises they will spend more. Fortunately, mechanisms such as
automatic stabilizers are in place to neutralize the ups and downs of the economy
without having to kind laws (OSullivan, Sheffrin & Perez 2010, p. 375).
How do adjustments in wages and prices take the economy from the short-run
equilibrium to the long-run equilibrium?
During the short-run, prices and wages do non respond to changes in the economy, short run equilibrium identifies the genuine Gross Domestic Product that the economy will rise when wages and prices are at a stand restrained (OSullivan, Sheffrin & Perez 2010, p. 358). When the economy is in the long run, is reached equilibrium at the full stop where meat demand curve intersects the long run aggregate supply curve. Also...If you want to get a full essay, state it on our website: Orderessay
If you want to get a full essay, wisit our page: write my essay .
No comments:
Post a Comment