IB Economics IA

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Instructor Name

Art 101

10 October 2019

Internal Assessment

The article is written by William G. Gale in which he expressed his concerns about U.S. budget office release regarding an unusual combination of lower interest rates and high federal debt. The author states that the current situation will lead the economy towards financial cries. Even after the low-interest rates, and the country is operating at almost full employment the fiscal outlook of U.S economy is traumatic ADDIN ZOTERO_ITEM CSL_CITATION {"citationID":"BIEw5pZN","properties":{"formattedCitation":"(Perspectives)","plainCitation":"(Perspectives)","noteIndex":0},"citationItems":[{"id":251,"uris":["http://zotero.org/users/local/55bqtMd8/items/6FFRDR6H"],"uri":["http://zotero.org/users/local/55bqtMd8/items/6FFRDR6H"],"itemData":{"id":251,"type":"webpage","title":"Opinion: Don't be fooled by low interest rates. America's ballooning deficits are more than our economy can handle","container-title":"CNN","abstract":"Low interest rates help the fiscal situation, but they don't make the US government's long-term fiscal position any more sustainable, writes William G. Gale, senior fellow at the Brookings Institution.","URL":"https://www.cnn.com/2019/08/28/perspectives/us-deficit-debt-economy-interest-rates/index.html","title-short":"Opinion","author":[{"family":"Perspectives","given":"William G. Gale for CNN Business"}],"accessed":{"date-parts":[["2019",10,12]]}}}],"schema":"https://github.com/citation-style-language/schema/raw/master/csl-citation.json"} (Perspectives)

Reasons

During the recession, the fiscal deficit of the U.S economy was on a hike. Up till now, the economy has grown and is operating at full employment level; still, the fiscal deficit is continuously rising. According to Gale, the reasons behind this critical situation are lower interest rates and high federal debt. The diagram given below will help explain how lower interest rates give rise to the fiscal deficit.

4019550212090P → Price Level

Y → Aggregate Supply

AD → Aggregate Demand

400000 P → Price Level

Y → Aggregate Supply

AD → Aggregate Demand

Channel

Lower interest rates make the borrowings cheaper, intended towards more spending and investment. The increase in spending and investment, leading to higher aggregate demand (AD2) and economic growth. The rise in AD may cause inflationary pressures (P1 to P2). The shift in aggregate supply from Y1 to Y2 is because of an increase in Government spending (Investment) due to a lower interest rate.

Theoretically, a lower interest rate reduces the incentive to save, encourage borrowings at cheaper rates, lowers the mortgage interest payments, and give rise to asset prices. It is terrible to think about how expensive would it be for the U.S government to pay such a huge amount of debt if the interest rate jumped high again shortly.

Explanation

The U.S government is making a lot more payments for Medicare, Medicaid, Social Security, and interest on the debt, giving a hike to government spending, which further adds to federal debt of the country. The lower interest rate, on the one hand, helps the U.S. government to borrow more spend more and consume more. But on the other hand, the pre-funding policy for social security and Medicare necessitates higher taxes (for pre-funding) or reduced spending (cut down the need for pre-funding), making the program defenseless in recessions.

The figure below shows a shocking situation of Debt/GDP ratio of U.S economy.

Increase in fiscal debt is continuously followed by financial, business, and household debt just because the borrowings are cheap. People keep on borrowing and consuming more with fewer savings. But once the interest rate rises, there will be a heavy debt burden on the whole economy.

Low interest on federal debt is not a blessing for U.S government, but it is more expletive, because it makes borrowing and spending easy; logically, federal interest payments should be even higher than they are today. For this, policy-makers should opt for more investment followed by deficit financing, in human capital, research and development, and infrastructure despite lower interest rates, for sustainable growth in the long run.

Conclusion

From the above discussion, it is concluded that as long as low-interest rates and high debt to GDP ratio continue together, there is nothing to worry about. The problem will arise when high debt leads to higher interest rates. There will be extreme pressure on all the macroeconomic indicators, including consumption, investments, government spending, and balance of trade. Government of America should be worried about the rising fiscal debt and Artificially lowered interest rates because the situation is leading to malinvestment, which will lead the economy towards massive capital accumulation, deflation, and ultimately depression.

While writing his perspective on the current US situation, the author ignores the role of public behaviors in response to the changes in tax policy. The author suggested a long-term solution to the aforementioned problems that policy-makers should opt for policies like phased-in consumption taxes (progressive consumption taxes) and a carbon tax to incentivize people and industrialists to increase the spending and production. But he ignores the fact that substituting the tax systems would penalize the existing wealth holders when they try to spend their accrued savings, which have already been taxed (income tax). However, investment boost in social security and rising increasing competition in health insurance markets will reduce medical expenses and will reduce the need for pre-funding.

The long-term solutions suggested by the author will work, but there is no policy recommendation to avoid the exogenous shock in fiscal debt if in case the interest rate goes up due to any reason.

Above all, the long-term deficit financing will surely provide insurance against the threat of rising interest rates soon. Gradual debt reduction policies will allow the investor to cope up with his business plans, and ensure certainty about future initiatives.

Works Cited

ADDIN ZOTERO_BIBL {"uncited":[],"omitted":[],"custom":[]} CSL_BIBLIOGRAPHY Perspectives, William G. Gale for CNN Business. "Opinion: Don't Be Fooled by Low-Interest Rates. America's Ballooning Deficits Are More than Our Economy Can Handle." CNN, https://www.cnn.com/2019/08/28/perspectives/us-deficit-debt-economy-interest-rates/index.html. Accessed 12 Oct. 2019.

Immigration

Immigration

Immigration

In recent decades, in United States immigration significantly increased the foreign-born worker presence. The immigration impact on the economy of the US is hotly debated. Some think that immigrants have diminished the job opportunities for those workers who are born in United States whereas other depicts immigrants as filling important job position that is avoided by other workers. Economist has analyzed the local labour market and failed to determine the immigrant's larger effect on the US born workers’ wages and employment. The effect of immigration on productivity, income and employment vary by industry, job and occupation. The administration of Trump has used every tool to remove the undocumented immigrants in the United States and proposed the plan that puts the wages, jobs and safety of American citizen first. In this article both negative and positive impact of immigration will be seen on the economy of the United States.

History

The 1924 immigration act limited the immigrant's number to enter into the United States through the quota of national origin. Immigration visas provided to 2% of the total number of immigrants of each nationality by the quota in the US. This act excluded all immigrants from Asia. In 1917, congress enacted the first restrictive immigration law. During the word war 1, the uncertainty that was generated over the national security made it promising for congress to pass the legislation. The 1917 immigration act has made literacy test compulsory that required that immigrants over 15 years old exhibit basic comprehensive reading skills in any language. This act also increases the tax for new immigrants on their arrival. This act also excluded the entry of any person born in geographically defined "Asiatic Barred Zone". The literacy was not alone enough to prevent the entry of immigrants, so in 1920 congress members found another way to stop immigration. Republican senator and immigrants experts introduced different measures to create quotas for immigration. According to this new reform, the total number of visas for immigrants was set at 350,000 every year. In 1922 this act was renewed to another 2 years. Just before the 1965 law, immigrants from only three countries (the United Kingdom, Germany and Ireland) were entitled to almost 70% of the quotas visas to enter into the United States. Today the immigrants in the United States is dominated by people born in Latin America and Asia and immigrants from whole Europe is only 10%. A bipartisan bill was introduced in the house of representative gives legal status and citizenship to many unauthorized immigrants working in the agriculture sector. According to this bill, almost 325,000 immigrant has given citizenship ADDIN EN.CITE <EndNote><Cite><Author>Parker</Author><Year>1924</Year><RecNum>359</RecNum><DisplayText>(Parker, 1924)</DisplayText><record><rec-number>359</rec-number><foreign-keys><key app="EN" db-id="2s2s0zrapsf0pbe5efuvv20f9rszvx0sd2fe" timestamp="1575546080">359</key></foreign-keys><ref-type name="Journal Article">17</ref-type><contributors><authors><author>Parker, A Warner</author></authors></contributors><titles><title>The quota provisions of the Immigration Act of 1924</title><secondary-title>American Journal of International Law</secondary-title></titles><periodical><full-title>American Journal of International Law</full-title></periodical><pages>737-754</pages><volume>18</volume><number>4</number><dates><year>1924</year></dates><isbn>0002-9300</isbn><urls></urls></record></Cite></EndNote>(Parker, 1924). The Trump administration has raised immigration and visa application fees. The Trump government is closing doors for those people who have the right to live in the US. Immigrants contribute to a greater share of the United States population. In 1980, there were almost 14.2 million foreign-born immigrants representing 6.5% of the total population. In 2013, almost 41.4% of million immigrants were present representing 13.3% of the total US population. The impact of US immigrants on the economy is greater than their total population suggest. In the US immigrants account to a large working-age population share (16% in 2013). From 1996 to 2008, the share of working-age population immigrants rises rapidly. It is reported that immigrants in the working-age population are more probable to participate in the labour force as compared to US-born citizen in the same age group ADDIN EN.CITE <EndNote><Cite><Author>Orrenius</Author><Year>2017</Year><RecNum>352</RecNum><DisplayText>(Orrenius, 2017)</DisplayText><record><rec-number>352</rec-number><foreign-keys><key app="EN" db-id="2s2s0zrapsf0pbe5efuvv20f9rszvx0sd2fe" timestamp="1575545809">352</key></foreign-keys><ref-type name="Journal Article">17</ref-type><contributors><authors><author>Orrenius, Pia M</author></authors></contributors><titles><title>New Findings on the Fiscal Impact of Immigration in the United States</title></titles><dates><year>2017</year></dates><urls></urls></record></Cite></EndNote>(Orrenius, 2017).

Pros and Cons of immigration on the economy

Immigrants have always been considered as an important asset for the economy of the United States and it contributes greatly to the tax revenue and economic output of the nation. In 2013, approximately $1.6 trillion was added by immigrants to the US Gross domestic products. Economist has determined that immigrants usually complement native-born workers and also improve the living standard of people for all Americans. Immigrants also create demand for small businesses and strengthening the economy by playing a very important role in creating businesses and technological innovation. Although the economic contributions of immigrants are significant, they could be even more if legislative reform is enacted by Congress that includes a citizenship pathway which allows more unauthorized immigrants to participate in the economy of a country ADDIN EN.CITE <EndNote><Cite><Author>Camarota</Author><Year>2013</Year><RecNum>351</RecNum><DisplayText>(Camarota, 2013)</DisplayText><record><rec-number>351</rec-number><foreign-keys><key app="EN" db-id="2s2s0zrapsf0pbe5efuvv20f9rszvx0sd2fe" timestamp="1575545738">351</key></foreign-keys><ref-type name="Journal Article">17</ref-type><contributors><authors><author>Camarota, Steven A</author></authors></contributors><titles><title>The fiscal and economic impact of immigration on the United States</title><secondary-title>Center for Immigration Studies [Official Site]</secondary-title></titles><periodical><full-title>Center for Immigration Studies [Official Site]</full-title></periodical><dates><year>2013</year></dates><urls></urls></record></Cite></EndNote>(Camarota, 2013).

In the US, some of the leading entrepreneurs are immigrants or children of immigrants. For example Jerry yang, Yahoo Founder emigrated from Taiwan at the age of ten years and Satya Nadella, CEO of Microsoft emigrated from India. It is reported that in 2010, more than 500 companies were founded by the immigrants such as Google, Apple, Bank of America and Mc Donald’s. The total revenue generated by these companies was more than $1.70 trillion and employed almost 3.6 million people in the US. Apart from the contribution to big businesses, the contribution of immigrants has also created an impact on the small business entrepreneur. In the United States, almost 28% of small business owners are 2 times more likely to become an entrepreneur as compare to the native-born population. In 2010, the immigrants generated $ 100 billion income, $775 billion in sales and approximately $126 billion was paid in payroll taxes. The small business owned by immigrants has provided employment opportunities to more than 4 million people in 2012. The United States is home to a large number of immigrants in the world. As compared to developed European nations, immigrants in the United States assimilate faster despite this immigration policy in America has become highly contentious. The economic analysis finds little evidence for the view that foreign labour inflows have reduced jobs or wages of Americans. Different research and prediction of economic theory also confirm that over the long term, wages are not affected by immigration and have a positive effect on the economy.

It is reported that in recent years, immigrant's populations have rapidly grown from less than 5% in 1970 to 13% in 2013. Although today immigrants comprise a large population share, since World War II, the share of the foreign body is almost the same as during the late 19th and early 20th century. In the United States immigrants is an imperfect substitute for a native worker in the labour market. This means that immigrants don't compete for the same job and also put less pressure on the wages of natives ADDIN EN.CITE <EndNote><Cite><Author>Orrenius</Author><Year>2017</Year><RecNum>352</RecNum><DisplayText>(Orrenius, 2017)</DisplayText><record><rec-number>352</rec-number><foreign-keys><key app="EN" db-id="2s2s0zrapsf0pbe5efuvv20f9rszvx0sd2fe" timestamp="1575545809">352</key></foreign-keys><ref-type name="Journal Article">17</ref-type><contributors><authors><author>Orrenius, Pia M</author></authors></contributors><titles><title>New Findings on the Fiscal Impact of Immigration in the United States</title></titles><dates><year>2017</year></dates><urls></urls></record></Cite></EndNote>(Orrenius, 2017). There are studies which found that immigration has raised the native-born workers' wages in the last few decades. Immigrants are ingenuity and innovation in the United States which accounts for a disproportionately high share of senior position, science and engineering graduates and patent filing. Immigrants also create many opportunities and chances for less-skilled native workers to have specialization in their field hence increasing their productivity. Immigration also enhances the fiscal situation of government as most of the immigrants pay more taxes than they utilize government services.

The conservative view is that most immigrants are taking opportunities of the job from US citizen. However, although immigration increases labour supply, they also spend their wages on food, homes and other services and good and in turn increases the domestic economic demand. In the United States, immigration is one of the main issues. There are some misperceptions about the fundamental aspects of immigration such as immigrant population composition and size, the effect on economy and impact on the budget of the unauthorized immigration. One method to determine the contribution of immigrants to the economy of the US is to look at the salaries and wages they earn and immigrant-owned businesses income. From 2009-2011 the total output share of immigrants was 15%. Despite being 13% of the total population, they comprise 16.1% of the total labour force. It is also reported that most immigrants are a business owner. The share of an immigrant who owns a small business is slightly greater than the comparable share among native-born workers. There is great argument among different economist that immigration in the long-run has a positive impact on the outcome of the labour market of US-born citizen. There is a debate that whether immigration has an impact on native workers with a low level of education. The studies show that in the long run, foreign born immigrants do not reduce job opportunities for native workers. But there is some evidence which demonstrates that immigration in the short run reduces the employment opportunities for native workers. The reason is that the economy needs some time to adjust new immigration ADDIN EN.CITE <EndNote><Cite><Author>Taylor</Author><Year>2016</Year><RecNum>353</RecNum><DisplayText>(Taylor et al., 2016)</DisplayText><record><rec-number>353</rec-number><foreign-keys><key app="EN" db-id="2s2s0zrapsf0pbe5efuvv20f9rszvx0sd2fe" timestamp="1575545842">353</key></foreign-keys><ref-type name="Journal Article">17</ref-type><contributors><authors><author>Taylor, J Edward</author><author>Filipski, Mateusz J</author><author>Alloush, Mohamad</author><author>Gupta, Anubhab</author><author>Valdes, Ruben Irvin Rojas</author><author>Gonzalez-Estrada, Ernesto</author></authors></contributors><titles><title>Economic impact of refugees</title><secondary-title>Proceedings of the National Academy of Sciences</secondary-title></titles><periodical><full-title>Proceedings of the National Academy of Sciences</full-title></periodical><pages>7449-7453</pages><volume>113</volume><number>27</number><dates><year>2016</year></dates><isbn>0027-8424</isbn><urls></urls></record></Cite></EndNote>(Taylor et al., 2016).

The United States can get advantage from the immigration system. In a current system of immigration, the legal flow of immigrants is less responsive to the business cycle. Congress has set a limit on several temporary and new immigrants who may immigrate for work. In 2010, in the construction industry, the unemployment rate was more than 20% but the Department of Labour issued thousands of temporary visas for the construction industry. Immigration boosts economic growth. The more immigrants the more working hours in the economy. Immigration also increases participation of female labour force via a “reduced cost in-service care” mechanism. Increased in skilled migration can directly enhance human capital aggregate level. Technology, entrepreneurship and knowledge are a main driving force of the changing economics. The two reliable ways to create innovation and ideas in an economy are to introduce diversity and highly skilled workers in the workplace. In the US, immigrants account for almost 60% of workers in mathematical sciences and computer. Immigrants are fully integrated into the economic prosperity of the United States. In 2016, the two leading economist studies the impact of removing all undocumented immigrants on the economy. The report demonstrated that implementing this type of policy reduces GDP by 1.5% and 2.75 ultimately. By removing immigrants, all industries will suffer significant damage and in a long-run annual loss in GDP will be in ten billions of dollars for every industry. US Senate has passed the legislation in 2013 to make reform in the immigration system and to provide a citizenship path for undocumented immigrants who had long been residing in the US. Immigrants not only helps to create a strong local market but they also contribute to a strong global market.

Georges Borjas who is an economist has quantified the wage loss that occurred after 1965. He reported that immigrants who arrived between 1980 and 2000 have reduced the annual earnings of US citizen by $1700 (4%). Some economists have reported that mass immigration has exacerbated income inequalities in the US. It is also reported in some studies that immigration can increase poverty. By increasing the competition in the labour market the wages of native-born worker decreases which force them more into poverty. Secondly, immigrants are themselves poor which means that the United States is importing poverty. In 2013, more than 28% of the immigrants in the US live below the poverty line. As immigrants are poorer, pay less tax, less educated and more likely to get public benefits. As a resulting state, federal and local finances are all adversely impacted by immigration. It is estimated that in 1996, the households of immigrants created a fiscal burden on all government level. The lower-income and less-educated immigrants are net fiscal drain whereas higher income and more educated immigrants are net fiscal benefits ADDIN EN.CITE <EndNote><Cite><Author>Card</Author><Year>2016</Year><RecNum>355</RecNum><DisplayText>(Card &amp; Peri, 2016)</DisplayText><record><rec-number>355</rec-number><foreign-keys><key app="EN" db-id="2s2s0zrapsf0pbe5efuvv20f9rszvx0sd2fe" timestamp="1575545926">355</key></foreign-keys><ref-type name="Journal Article">17</ref-type><contributors><authors><author>Card, David</author><author>Peri, Giovanni</author></authors></contributors><titles><title>Immigration economics by George J. Borjas: a review essay</title><secondary-title>Journal of Economic Literature</secondary-title></titles><periodical><full-title>Journal of Economic Literature</full-title></periodical><pages>1333-49</pages><volume>54</volume><number>4</number><dates><year>2016</year></dates><isbn>0022-0515</isbn><urls></urls></record></Cite></EndNote>(Card & Peri, 2016).

Recent trends that are found in the labour market shows that, although the majority of population growth is accounted for by the natives, most of the employment gain has gone to the immigrants. In 2013, the total working-age native’s workers were 1.4 million less than in the first quarter of the year 2000. On the other hand, the working immigrants number was 5.4 million larger over the same period. From this, it can be predicted that over the last decade most of the employment growth goes to the immigrants. Different household and establishment survey have measured weak employment growth over the last 13 years. This is a time during which more than 16 million people migrated to the US ADDIN EN.CITE <EndNote><Cite><Author>Orrenius</Author><Year>2019</Year><RecNum>358</RecNum><DisplayText>(Orrenius, Zavodny, &amp; Gullo, 2019)</DisplayText><record><rec-number>358</rec-number><foreign-keys><key app="EN" db-id="2s2s0zrapsf0pbe5efuvv20f9rszvx0sd2fe" timestamp="1575546013">358</key></foreign-keys><ref-type name="Generic">13</ref-type><contributors><authors><author>Orrenius, Pia M</author><author>Zavodny, Madeline</author><author>Gullo, Stephanie</author></authors></contributors><titles><title>How Does Immigration Fit into the Future of the US Labor Market?</title></titles><dates><year>2019</year></dates><publisher>Washington, DC: MPI. www. migrationpolicy. org/research/immigration-fit …</publisher><urls></urls></record></Cite></EndNote>(Orrenius, Zavodny, & Gullo, 2019). Most of the economist has focused on wages instead of employment. Many studies were conducted to determine the immigration impact on the employment pattern of immigrants. It is found that immigration impact black American in an adverse manner. A study was conducted which shows that immigration not only decreases the employment opportunities for less-educated black Americans but also increases the incarceration and crime among immigrants. It is also found in this study that immigration adversely affects young worker employment. A study was conducted by Christopher Smith in which he determined that immigration played a very important role in reducing the opportunities of employment for young people ADDIN EN.CITE <EndNote><Cite><Author>Valentino</Author><Year>2019</Year><RecNum>356</RecNum><DisplayText>(Valentino et al., 2019)</DisplayText><record><rec-number>356</rec-number><foreign-keys><key app="EN" db-id="2s2s0zrapsf0pbe5efuvv20f9rszvx0sd2fe" timestamp="1575545952">356</key></foreign-keys><ref-type name="Journal Article">17</ref-type><contributors><authors><author>Valentino, Nicholas A</author><author>Soroka, Stuart N</author><author>Iyengar, Shanto</author><author>Aalberg, Toril</author><author>Duch, Raymond</author><author>Fraile, Marta</author><author>Hahn, Kyu S</author><author>Hansen, Kasper M</author><author>Harell, Allison</author><author>Helbling, Marc</author></authors></contributors><titles><title>Economic and cultural drivers of immigrant support worldwide</title><secondary-title>British Journal of Political Science</secondary-title></titles><periodical><full-title>British Journal of Political Science</full-title></periodical><pages>1201-1226</pages><volume>49</volume><number>4</number><dates><year>2019</year></dates><isbn>0007-1234</isbn><urls></urls></record></Cite></EndNote>(Valentino et al., 2019).

Since 1960, the US has been a top destination for immigrants. In 2017, more than 21% of the world immigrants resided in the US. Immigrants contribute to a significant portion of the US population. Enrollment of foreign student in colleges of the United States doubled between the year 2008 and 2016. Students from South Korea, China and India accounted for more than 50% of the international students pursuing an education in the United States ADDIN EN.CITE <EndNote><Cite><Author>Basso</Author><Year>2015</Year><RecNum>357</RecNum><DisplayText>(Basso &amp; Peri, 2015)</DisplayText><record><rec-number>357</rec-number><foreign-keys><key app="EN" db-id="2s2s0zrapsf0pbe5efuvv20f9rszvx0sd2fe" timestamp="1575545981">357</key></foreign-keys><ref-type name="Journal Article">17</ref-type><contributors><authors><author>Basso, Gaetano</author><author>Peri, Giovanni</author></authors></contributors><titles><title>The association between immigration and labor market outcomes in the United States</title></titles><dates><year>2015</year></dates><urls></urls></record></Cite></EndNote>(Basso & Peri, 2015).

In 2017, approximately 17% of the overall population of the workforce of the United States was comprised of immigrants. Most of the immigrants have careers in textile manufacturing, food production, private household employment, hotel work and agriculture. Foreign-born immigrants have also a high value in STEM fields. This not only increases productivity but also contribute to rising shares of patents of US in medical devices, electronics, pharmaceuticals and computing. Since 1990, the immigrant worker's percentage contributing to innovation in technology, engineering and math occupation has also doubled. It is found that more than 75% of the patents from top United States patent producing universities had at least one foreign immigrant. Immigrant staff researcher, student, and post-doctoral fellow play a very important role in critical technology development such as pharmaceutical drug development, manufacturing of pharmaceutical devices and optics. In 2013, the immigrants have added $1.6 trillion to the total GDP of the US. Immigrants are also investing their creativity and time in creating a prosperous future for all people who live in the US.

References

ADDIN EN.REFLIST Basso, G., & Peri, G. (2015). The association between immigration and labor market outcomes in the United States.

Camarota, S. A. (2013). The fiscal and economic impact of immigration on the United States. Center for Immigration Studies [Official Site].

Card, D., & Peri, G. (2016). Immigration economics by George J. Borjas: a review essay. Journal of Economic Literature, 54(4), 1333-1349.

Orrenius, P. M. (2017). New Findings on the Fiscal Impact of Immigration in the United States.

Orrenius, P. M., Zavodny, M., & Gullo, S. (2019). How Does Immigration Fit into the Future of the US Labor Market? : Washington, DC: MPI. www. migrationpolicy. org/research/immigration-fit ….

Parker, A. W. (1924). The quota provisions of the Immigration Act of 1924. American Journal of International Law, 18(4), 737-754.

Taylor, J. E., Filipski, M. J., Alloush, M., Gupta, A., Valdes, R. I. R., & Gonzalez-Estrada, E. (2016). Economic impact of refugees. Proceedings of the National Academy of Sciences, 113(27), 7449-7453.

Valentino, N. A., Soroka, S. N., Iyengar, S., Aalberg, T., Duch, R., Fraile, M., . . . Helbling, M. (2019). Economic and cultural drivers of immigrant support worldwide. British Journal of Political Science, 49(4), 1201-1226.

Impact Of Low Interest Rates On Monetary Policy

Answer

Expansionary policy is used after a recession. In this policy, the central banks use their tools to stimulating the market. It increases aggregate demand and lowers interest rates by increasing the money supply. Overall, it encourages growth. The near-zero interest rates limit the ability of expansionary monetary policy to work because the central banks can no longer encourage growth by reducing the interest rates. The Fed affects interest-sensitive spending such as residential investment, household spending on consumer durables, and business capital spending on plant and equipment, by influencing the interest rates (Woolley, 1985). The Fed conducts monetary policy by setting a target for federal funds rate, i.e., the credit-easing program, which reduces the cost of credit and thus, facilitates credit flows. Secondly, the Fed launched large-scale asset purchase program. The Fed has the best policy to prevent or minimize the effects of recession, i.e., cutting interest rates (Irwin, 2019). It produces evolution rather than revolution, which is appreciable.

References

Woolley, J. T. (1985). Monetary politics: The Federal Reserve and the politics of monetary policy. Cambridge University Press.

Irwin, N. (2019). How Will the Fed Fight the Next Recession? It’s Trying to Figure That Out Right Now. NY Times. Available at: https://www.nytimes.com/2019/04/29/upshot/how-fed-can-fight-next-recession.html (Accessed: 7th June 2019)

Answer

Keynesian fiscal policy states that the governments must increase or decrease its spending and tax rates to influence macroeconomic productivity levels. In high inflation, government must increase taxes to reduce money supply in the market, and vice versa. Keynesian monetary policy believes in the indirect link between money supply and gross domestic product. Therefore, increasing loanable money in the market decreases the interest rate. Thus, aggregate expenditures increase causing the gross domestic product to rise. Neo-classicals, on the other hand, assume that the market is in equilibrium, i.e., prices can adjust quickly. Thus, prices are flexible but the quantities are not. Overall, the neo-classic’s policy mix works better in the long-term whereas Keynesian policy mix works better in short-term because prices have time to adjust in the long-term, and vice versa (Goodfriend & King, 1997). Also, if the economy is good and market is near employment, the neo-classic’s policy mix works better.

References

Goodfriend, M., & King, R. G. (1997). The new neoclassical synthesis and the role of monetary policy. NBER macroeconomics annual, 12, 231-283.

Impact Of Monetary Policy On Business Environment

Impact of monetary policy on the business environment

[Name of the Writer]

[Name of the Institution]

Impact of monetary policy on the business environment

Monetary Policy:

It is the process to control the supply of money to maintain the inflation rate and interest rate. It is controlled by monetary authority often central or state bank of the country.

The instrument of Monetary Policy:

They are classified into the qualitative and quantitative method.

Quantitative Methods: These methods affect the entire credit market in the same flow. It does not include credit control still due to the same direction effect, its impact is uniform on all the economic sectors. The quantitative methods include:

Open market Operations

Cash Reserve Ratio

Bank/Discount Rate

Qualitative Methods: These methods work on the objective of credit control which quantitative methods do not take into account. These methods help in directing the flow of credit from one sector to other, also control the speculation tendency based on the bank credit availability. It includes:

Moral Suasion

Credit Rationing

Lending Margins change

Impact of Expansionary and contractionary Monetary Policy:

The change in the circulation of the quantity of money leads to real effects on the economy of the country. Monetary authorities use expansionary or contractionary monetary policy to control the economic factor like inflation that has a negative impact over economic growth. Expansionary monetary policy is used by the monetary authority when they need to increase the supply of money in the economy, it decreases the interest rate and increases the aggregate demand which results in inflation. Inflation means more money in the hand of the consumers; therefore, it increases the prices of goods and services which shows the impact on the business decision-making process.

On the other hand, Contractionary monetary policy is used by monetary authority when they need to increase the interest rate and decrease the aggregate demand by decreasing the supply of money to control the inflation rate. Inflation has a negative impact on the employment rate and GDP. When the inflation rate decreases, businessman get more opportunities to expand their business and provide more employment.

In Description

Name of Writer:

Instructor Name:

Course Number:

Date:

Racial Disparity in America

Introduction:

Since, the Civil Rights Movements of 1963 and the march on Washington, America has been thought of having several years of inclusion and prosperity for all. But the truth is far from it. Since the fifty years till the original movement and its marches were done the long battle for equality still wages on. Increasing racial disparity can be seen in the eyes of the law, unemployment, poverty and education. In all these areas people with a darker skin tone are being marginalized and treated differently to the ones with a lighter skin tone. Hence leaving the country divided and on the brink of collapse.

Disparity in the Eyes of the Law:

The marginalization and treatment of people of color in the eyes of the law is a clear representation of the rising racial disparity in America. The rising number of police brutality cases and misuse of power shines a clear light on the existing and rising occurrences of racial disparity even in the eyes of the law (Chaney, and Robertson,). Anyone who is responsible to provide safety and security to the people around them has a tough job ahead of them. They should be properly trained and evaluated so they do not have any biases that might impede them in performing their duties. But incidents of racial profiling and shootings by the police have skyrocketed and show that the police do have a bias against people of color. For example The Malcolm X grassroots organization published a report showed that between Jan 1 to July 30th 2012, one black person was killed like Rodney King, every 36 hours in extrajudicial killings (Chaney, and Robertson).

This marginalization and unfair treatment of people of color in the eyes of the law is clearly visible in the courtrooms and criminal proceedings against them. The courts are a sacred place, where people come to find justice for the wrongs done to them. It is the responsibility of the Judges to provide judgments that take into account the situation revolving the crime and provide the appropriate sentence. When it comes to people of color, they are prosecuted to the fullest extent of the law for small one time offences (Wright). They are demeaned and made to feel less than normal humans and a burden on the economy of the country. According to the NAACP, rates at which blacks are put in prison are six times higher than whites and this statistic does not involve drug arrests ("NAACP | Criminal Justice Fact Sheet"). Michelle Alexander, a professor at Ohio State University researched that the number of people of color in prisons or on parole is way higher than it was during the time of slavery in 1850 (Alexander).

Creating a Divide in the Country:

The American society has to open its eyes and see that this expanding problem of racial disparity that is dividing the country ideologically. The notion of Black lives matter versus All Lives Matter (Carney), where one propagated awareness for the rising brutalities against people of color. While the other is trying to shine a light on the importance of all lives no matter the color. Hence, reducing the efforts of each other. The rise of Neo-Nazis and white supremacists is also on the up and up, who think they are being taken over and that their race is in jeopardy of staying pure (Kimmel, and Ferber) and in response the reformation of Black Panthers happened, a militant black organization. All these organizations are fighting to protect their own interests and people and are breaking the social culture of the country that their forefathers fought so hard to make and protect. According to a survey by Atlantic/ Aspen/ Institute of American Values, sixty percent of the people agree that the American nation compared to ten years ago is more divided now than ever before (The American Values Survey).

Racial disparity is causing a divide within the American society in limiting the access of people of color to basic rights in their own country. These include basic education, health and voting right. The schools are more segregated than ever before. Ninety percent of segregated schools for people of colour (including African- Americans and Latinos) suffer poverty (The Civil Rights Project). This effect is taken over to the colleges as well, where only forty five percent of Black women and thirty three percent of black men get to graduate (US Department of Education). The divide due to racial disparity does not stop there as apparently there are also health disparities between whites and people of colour. These disparities range from life expectancy and death rates to lack of health insurance. Even there is a divide in how patients are treated because of the racial disparity present in the medical circles. Also, the right to vote and have a say in choosing the person who represents them was something people of color fought long and hard to achieve. But due to unlawful arrests leading to exorbitant sentencing, this right is also taken away. Because voting rights are taken away from someone with a criminal record. thirteen percent of people of color (male) in the whole country have lost the right to vote ("Restoring Voting Rights").

Some individuals have also suggested that racial disparity is not as high in USA as it is shown out to be. They base their argument on how that today about ten percent of all colored households in the colored middle class has grown. There are colored communities with median incomes higher than the national average. Cities such as Waldorf, Maryland with a high population of people of color has the highest median income of $ 81592 and the lowest belongs to Highland Beach, Maryland of about $158,750 (Perry). They also believe that this rise in racist slurs and crimes are hoaxes and are purported by people who are just looking to garner sympathy. The case of Jussie Smollett, who allegedly staged a hate crime against himself and reported it to the police (Russell-Brown). This is looked as one of those type of cases, which are then used to garner sympathy and stigmatise conservative views. .

But the sad part is that individuals like these have their eyes shut to the reality of their surroundings and are living in a dream. Yes, there has been an increase of colored households in colored middle class but the unemployment rate for people of color (thirteen percent) is still double to that of white people (seven percent). According to a report from Harvard researchers, there is a twenty five to thirty percent wage difference between people of color and white people (Fryer et al.). Coupling the unemployment and wage gap, it is revealed that overall that colored people and communities suffer more from poverty than white people and communities. According to survey conducted by the National Poverty Centre in 2010, around twenty seven of colored people came under the poverty threshold whereas only ten percent came under it ("Poverty Facts | Poverty Solutions").

Conclusion:

It is clearly visible over the course of this paper that racial disparity is a huge phenomenon in American society. It is present in the American Law enforcement and Judicial entities and decides how a person based on their color is treated. It is a major force behind creating a divide within the country on the basis of ideology and access to basic rights. Where some believe that it is not that a big issue and is only highlighted to serve someones agenda are clueless to the reality of discrimination and problems people of color face.

Work Cited:

Alexander, Michelle. The New Jim Crow: Mass Incarceration In The Age Of Colorblindness. New York Press, 2012.

Carney, Nikita. "All Lives Matter, But So Does Race". Humanity & Society, vol 40, no. 2, 2016, pp. 180-199. SAGE Publications, doi:10.1177/0160597616643868.

Chaney, Cassandra, and Ray V Robertson. "Armed And Dangerous? An Examination Of Fatal Shootings Of Unarmed Black People By Police.". Journal Of Pan African Studies, vol 8, no. 4, 2015, https://s3.amazonaws.com/academia.edu.documents/38947351/Armed_and_Dangerous.pdf?AWSAccessKeyId=AKIAIWOWYYGZ2Y53UL3A&Expires=1556008614&Signature=AvWWrre1UZm8oAISXK9Iuc56FbE%3D&response-content-disposition=inline%3B%20filename%3DArmed_and_Dangerous_An_Examination_of_Fa.pdf. Accessed 23 Apr 2019.

Chaney, Cassandra, and Ray V. Robertson. "Racism And Police Brutality In America". Journal Of African American Studies, vol 17, no. 4, 2013, pp. 480-505. Springer Nature, doi:10.1007/s12111-013-9246-5.

The. "American Values Survey, 2013". The Atlantic, 2013, https://www.theatlantic.com/national/archive/2013/06/american-values-survey-2013/277301/.

Fryer, Roland G. et al. "Racial Disparities In Job Finding And Offered Wages". SSRN Electronic Journal, 2011. Elsevier BV, doi:10.2139/ssrn.1934590.

Kimmel, Michael, and Abby L. Ferber. "“White Men Are This Nation:” Right-Wing Militias And The Restoration Of Rural American Masculinity*". Rural Sociology, vol 65, no. 4, 2009, pp. 582-604. Wiley, doi:10.1111/j.1549-0831.2000.tb00045.x.

"NAACP | Criminal Justice Fact Sheet". NAACP, 2019, http://www.naacp.org/criminal-justice-fact-sheet/.

Perry, Andre. "Black Incomes Outpace The National Average In 124 Majority-Black Cities: So Where’S The Investment?". Brookings, 2019, https://www.brookings.edu/blog/the-avenue/2017/11/15/black-incomes-outpace-the-national-average-in-124-majority-black-cities-so-wheres-the-investment/.

"Poverty Facts | Poverty Solutions". Poverty.Umich.Edu, 2019, https://poverty.umich.edu/about/poverty-facts/.

"Restoring Voting Rights". Brennancenter.Org, 2019, http://www.brennancenter.org/issues/restoring-voting-rights.

Russell-Brown, ​​​​​​​Katheryn. "As Racial Hoaxes Go, Jussie Smollett’S Case Is A Strange One". The Atlantic, 2019, https://www.theatlantic.com/ideas/archive/2019/02/jussie-smollett-and-long-history-racial-hoaxes/583498/.

The Civil Rights Project. E PLURIBUS… SEPARATION DEEPENING DOUBLE SEGREGATION FOR MORE STUDENTS. 2012, https://civilrightsproject.ucla.edu/research/k-12-education/integration-and-diversity/mlk-national/e-pluribus...separation-deepening-double-segregation-for-more-students/orfield_epluribus_revised_omplete_2012.pdf. Accessed 23 Apr 2019.

US Department of Education. 120 Years Of American Education: A Statistical Portrait. Office Of Educational Research And Improvement, 2019, https://nces.ed.gov/pubs93/93442.pdf. Accessed 23 Apr 2019.

Wright, J. Skelly. "Poverty, Minorities, And Respect For Law". Duke Law Journal, vol 1970, no. 3, 1970, p. 425. JSTOR, doi:10.2307/1371848.

Inequality In Economic System

Name

Instructor Name

Subject

Date

Inequality in Economic System

Introduction

In economics, inequalities can be defined as the unequal and unjust distribution of resources among the different segments of society. These economic inequalities can be found in many different shapes. There can be income inequality, wealth inequality, and wage inequality. There can be found inequality in many socio-economic indicators like educational inequality, inequality in the availability of health facilities, etc. Inequality is considered as a social and economic evil. Many socialist economists linked inequalities with the capitalist system of economics. Economic inequalities have many consequences not only for the economy of a country but for the overall society as well. In this essay, we will analyze and discuss some imperial data of income and wealth inequalities in the United States. We will also highlight the consequences of income and wealth inequalities. In the end, we will also suggest some practical tools that can help in reducing the economic inequality in society.

Measurement of Income and Wealth Inequalities

Researchers and economists have developed many tools for the measurement of income and wealth inequalities. Among all of these measurement tools, the Gini Coefficient is most widely used and considered as a reliable indicator of income and wealth inequality. This indicator is a statistical formula that uses empirical data about income inflows and population. The final product of the Gini Coefficient is a single-digit number that varies between zero and one. If the calculated Gini Coefficient is zero, it means the income/wealth is equally distributed among all the segments and agents of an economy. While the number 1 in the Gini coefficient is an indicator of perfect inequality in the society and it shows that all the resources in the economy are owned by an individual. The higher the value of the Gini Coefficient, the higher the income/wealth inequality in the economy.

Another approach that is widely used to narrate the inequalities in the economy is to use a percentage of both the population and resources. This approach is often called a Quintile distribution approach. Ratio Measures and Palma Ratio are the other measurement tools that can be used for the measurement of income/wealth inequalities.

Empirical Data of Inequality for the US

Income and wealth inequalities have a direct link with economic development. The Gini Coefficient was 0.49 for the economy of the US in the year of 2018 ADDIN ZOTERO_ITEM CSL_CITATION {"citationID":"WEx8Qujm","properties":{"formattedCitation":"(\\uc0\\u8220{}U.S. Household Income Distribution, by Gini-Coefficient 2018\\uc0\\u8221{})","plainCitation":"(“U.S. Household Income Distribution, by Gini-Coefficient 2018”)","noteIndex":0},"citationItems":[{"id":999,"uris":["http://zotero.org/users/local/s8f0QVnP/items/SEU2PQS8"],"uri":["http://zotero.org/users/local/s8f0QVnP/items/SEU2PQS8"],"itemData":{"id":999,"type":"webpage","abstract":"In 2018, according to the Gini coefficient, household income distribution in the United States was 0.49.","container-title":"Statista","language":"en","title":"U.S. household income distribution, by Gini-coefficient 2018","URL":"https://www.statista.com/statistics/219643/gini-coefficient-for-us-individuals-families-and-households/","accessed":{"date-parts":[["2019",12,3]]}}}],"schema":"https://github.com/citation-style-language/schema/raw/master/csl-citation.json"} (“U.S. Household Income Distribution, by Gini-Coefficient 2018”). Empirical economic data of the US economy shows that there exists a severe income and wealth inequality in the economy. The top 0.1% of the US population earns almost 188 times higher as compared to the combined earnings of 90% of the lowest population ADDIN ZOTERO_ITEM CSL_CITATION {"citationID":"bzJCB5aW","properties":{"formattedCitation":"(\\uc0\\u8220{}Income Inequality\\uc0\\u8221{})","plainCitation":"(“Income Inequality”)","noteIndex":0},"citationItems":[{"id":1001,"uris":["http://zotero.org/users/local/s8f0QVnP/items/BSVHSLKX"],"uri":["http://zotero.org/users/local/s8f0QVnP/items/BSVHSLKX"],"itemData":{"id":1001,"type":"webpage","container-title":"Inequality.org","title":"Income Inequality","URL":"https://inequality.org/facts/income-inequality/","accessed":{"date-parts":[["2019",12,3]]}}}],"schema":"https://github.com/citation-style-language/schema/raw/master/csl-citation.json"} (“Income Inequality”). Moreover, income inequality is increasing over time. Data shows that the income share of the top 1% of the population has doubled during the last five decades. Historical economic data also shows that there can be found a link between the overall financial outlook of the economy and the levels of income inequality. Income inequality dropped significantly soon after the Great Depression of 1930 and the Great Recession of 2008. In both of the crises, the income share of the top 1% affects the most. There not only exists a gap between the earnings of rich and poor but this gap is widening over time ADDIN ZOTERO_ITEM CSL_CITATION {"citationID":"6xDJBcEK","properties":{"formattedCitation":"(\\uc0\\u8220{}USA \\uc0\\u8211{} WID \\uc0\\u8211{} World Inequality Database\\uc0\\u8221{})","plainCitation":"(“USA – WID – World Inequality Database”)","noteIndex":0},"citationItems":[{"id":1005,"uris":["http://zotero.org/users/local/s8f0QVnP/items/Z95JEADR"],"uri":["http://zotero.org/users/local/s8f0QVnP/items/Z95JEADR"],"itemData":{"id":1005,"type":"post-weblog","abstract":"USA The source for global inequality data. Open access, high quality wealth and income inequality data developed by an international academic consortium.","container-title":"WID - World Inequality Database","language":"en-US","title":"USA – WID – World Inequality Database","URL":"https://wid.world/country/usa/","accessed":{"date-parts":[["2019",12,3]]}}}],"schema":"https://github.com/citation-style-language/schema/raw/master/csl-citation.json"} (“USA – WID – World Inequality Database”). The income growth of the top 1% of the US population is much faster as compared to the income growth of the bottom 20% of the population.

This exists not only income/wealth inequalities in the US economy but there also exist wage disparities among different segments of society. The White and Asian workers in the US got approximately 30% higher wages as compared to the wage rate of Latino and Black people. Similarly, there can be found wage inequality between males and females.

Causes and Effects of Inequality

The key reason behind income inequality in the US can be the difference in wages and productivity. In the laws of economics, a worker's wage must be according to his productivity level. But this economic law has not been exercised in America since the 1970s. Since 1970, the productivity of labor has been increased by 180% but the wage rate increased only by 28% during the same time period. This lower growth rate in wages aslo becomes a source of inequality in the American economy. Moreover, the wage rate of executive-level services increases more rapidly as compared to the growth in the wage rate of blue-collar workers. Transformation in technology and the use of new capital intensive techniques of production also increased the gap between the rich and the poor.

Economic inequalities have many consequences not only for the economy but for the overall society as well. The concentration of wealth in a few hands decelerates the GDP growth rate of an economy. It divides society into different sub-groups that can become a source of high rates in society. It can also decrease public tax collection and can increase public expenses. Economic inequalities also give birth to many social-political inequalities.

Conclusion

The economy of the US has to face severe economic inequalities. The government of the US must intervene to decrease the level of inequalities. The government should make the tax regulations more progressive and also increase the subsidies for the poor and lower-middle-class of the society ADDIN ZOTERO_ITEM CSL_CITATION {"citationID":"H0WXmUfq","properties":{"formattedCitation":"(\\uc0\\u8220{}10 Solutions to Fight Economic Inequality\\uc0\\u8221{})","plainCitation":"(“10 Solutions to Fight Economic Inequality”)","noteIndex":0},"citationItems":[{"id":1003,"uris":["http://zotero.org/users/local/s8f0QVnP/items/9EXE5DVZ"],"uri":["http://zotero.org/users/local/s8f0QVnP/items/9EXE5DVZ"],"itemData":{"id":1003,"type":"webpage","abstract":"Experts offer their top ten ideas to reduce economic inequality and to ensure that growth is equitably shared.","container-title":"Talk Poverty","language":"en-US","title":"10 Solutions to Fight Economic Inequality","URL":"https://talkpoverty.org/2015/06/10/solutions-economic-inequality/","accessed":{"date-parts":[["2019",12,3]]},"issued":{"date-parts":[["2015",6,10]]}}}],"schema":"https://github.com/citation-style-language/schema/raw/master/csl-citation.json"} (“10 Solutions to Fight Economic Inequality”). Progressive taxation is a very smart tool that can decrease income inequalities. An increase in wage rates can also decrease the levels of inequality. Universal availability of health and educational facilities can also decree inequalities in the society ADDIN ZOTERO_ITEM CSL_CITATION {"citationID":"DAZw4EzV","properties":{"formattedCitation":"(\\uc0\\u8220{}Fighting Poverty Requires a More Humane View of Economics\\uc0\\u8221{})","plainCitation":"(“Fighting Poverty Requires a More Humane View of Economics”)","noteIndex":0},"citationItems":[{"id":1009,"uris":["http://zotero.org/users/local/s8f0QVnP/items/NR3AWREH"],"uri":["http://zotero.org/users/local/s8f0QVnP/items/NR3AWREH"],"itemData":{"id":1009,"type":"webpage","abstract":"Eight men have as much wealth as almost half the world. Is it time for radical rethink of capitalism?","container-title":"The Independent","language":"en","title":"Fighting poverty requires a more humane view of economics","URL":"http://www.independent.co.uk/voices/inequality-poverty-economics-humane-approach-fight-a7555016.html","accessed":{"date-parts":[["2019",12,3]]},"issued":{"date-parts":[["2017",2,1]]}}}],"schema":"https://github.com/citation-style-language/schema/raw/master/csl-citation.json"} (“Fighting Poverty Requires a More Humane View of Economics”). The government should also provide equal economic opportunities to every individual.

Works Cited:

ADDIN ZOTERO_BIBL {"uncited":[],"omitted":[],"custom":[]} CSL_BIBLIOGRAPHY “10 Solutions to Fight Economic Inequality.” Talk Poverty, 10 June 2015, https://talkpoverty.org/2015/06/10/solutions-economic-inequality/.

“Fighting Poverty Requires a More Humane View of Economics.” The Independent, 1 Feb. 2017, http://www.independent.co.uk/voices/inequality-poverty-economics-humane-approach-fight-a7555016.html.

“Income Inequality.” Inequality.Org, https://inequality.org/facts/income-inequality/. Accessed 3 Dec. 2019.

“U.S. Household Income Distribution, by Gini-Coefficient 2018.” Statista, https://www.statista.com/statistics/219643/gini-coefficient-for-us-individuals-families-and-households/. Accessed 3 Dec. 2019.

“USA – WID – World Inequality Database.” WID - World Inequality Database, https://wid.world/country/usa/. Accessed 3 Dec. 2019.

International Trade

International Trade

Jissely M Jimenez

[Institutional Affiliation(s)]

Author Note

Two Advantages and Two Disadvantages of International Trade

International Trade

International Trade means the process of trade happening between states. International trade forms a sizeable chunk of any states' macroeconomic markers like GDP, NDP, etc. These days, it is taken for granted as we use products that are made in China, Bangladesh or India, but around the late 90s, this was not so much common. The importance that this concept has achieved can be emphasized by the fact that now there are full-time courses and degrees devoted to the study of International Trade. This importance can be attributed to the enormous advances in Regionalism, Globalization, and Industrialization. In Addition to these factors, the internet has increased international trade tenfold in the last decade alone due to the establishment of direct contacts between buyer and maker of the product, increasing the global awareness of today’s generation.

International trade has proved to be advantageous for the global community as a whole. For one, it provides the consumer with a variety of choices that were not available before. This is advantageous for the consumer as he gets to pick the best product at the lowest prices. This also makes the market leaders honest as they strive to create the best product to give the best consumer experience. Another advantage that comes with international trade is more of a political one. International trade increases the interdependency between states. This often forces the states to seek their solutions on the negotiation table, rather than on the battlefield. This can be proved by the 2016 Doklam Crisis between China and India. The huge trade volume between both regions forced them to come to a solution on the table; otherwise, they would have taken to the battlefield, just like they did in 1962.

But it is not all sunshine and rainbows when it comes to International Trade, as there are certain downsides to the concept as well. It is international trade that has increase the proprietary information theft among China and the US. Almost all of the Chinese products can be argued to be cheap knock-offs of the American ones. There are repeated warnings by the US to China regarding this that has recently taken the shape of a “Trade War” between the states. Another disadvantage that a nation may face due to international trading is flooding of substandard goods within its borders. The living standard of the recipient of these goods plummets as they have to buy these goods to fulfill their needs. This is why many scholars are of the view that international trade is a form of Neo-Colonialism, as the colonial powers used to do the same before the Second World War.

To conclude the argument, International trade is good if a certain number of conditions are attached to it. The trading states should not try to subdue the other using the superior power of their industry. The dumping of sub-standard goods should be avoided at all costs so that there are no deep-seated grievances among states in the future. Also, the environment should be of concern to the world powers as GDP is not the only worthwhile thing; the main objective of any state is the survival and well-being of its citizens. In short, the practices of International Trade should be used only for the betterment of the world, so that its fruits are realized for the betterment of this world. Otherwise, the practices will end up as a powerful tool in the hands of a few major powers of the world, starting a new era of colonialism in world history.

International Trade Essay

[Name of the Writer]

[Name of Instructor]

[Economics]

[Date]

How Trade Barriers Harm Economy

There is no doubt that when it comes to trade barriers, it results in hurting not only just people but the economy as well. The matter of fact is that the outcomes of trade restrictions hurt foreigners who wish to sell their services and goods to Americans. It has been observed that trade barriers affect the economy of a state to a greater level in the 21st century. Due to trade protectionism, a consumer tends to have a limited choice of goods and products, because there is a high chance of quotas on how much may be imported (Leamer et al., 1994). The outcome of such quotas results in allowing the consumers to acquire a limited choice such as quality, quality, and product type. When it comes to the protectionist policies that tend to intend for safeguarding jobs, companies, and industries actually mean that consumers are limited in goods and products availability. There is no doubt that such concerns with consumers may affect the economy as well.

There are some policymakers and economists that tend to believe that trade protectionism will be helping the economy of a nation. However, the actual case is a slight difference. Studies and research show that trade barriers have a significant effect on the economy of a nation. There is no doubt that it plays a vital role in damaging the economy. It has been observed that the outcomes of trade protection can result in causing a trade which can easily trigger a global recession (Stiglitz et al., 2016). Apart from this, there is no doubt that in case if tariffs are made more punitive and lead to a public trade spat with China, it may result in making the markets nervous. In a nutshell, it can be said that trade protection is in a high need to be considered in a careful manner. The reason for that is due to the dangerous repercussions it could possibly have a domestic economy and globally.

When it comes to tariffs, there is no doubt that they may increase the prices of imported goods. It must be taken into consideration that due to this, domestic producers are not forced for reducing their prices from the rise in competition, Apart from this, domestic consumers are seen left paying higher prices in the outcome. One thing that must be taken into consideration is the fact that tariffs tend to reduce efficiencies. All of this has been done by allowing the organizations that would not be existing in a more competitive market to remain open. The reason why trade barriers are not considered to be good for the economy of a country is that they decrease the overall productivity and efficiency within economies. It must be considered that such economies are affected by them.

Meanwhile, some trade barriers can be in the place within a free trade agreement for protecting the consumers from dangerous, or harmful products. The matter of fact is that in such cases, trade barriers may not be as harmful to the economy of a country. The majority of the trade barriers tend to work on a similar principle. Following that principle, if a trade agreement is once applied, it results in increasing the cost of traded goods. In the current scenario, tariffs are considered to be the trade barrier. Tariffs are considered to be the most simple and company way of applying a restriction on foreign trade (Leamer et al., 1994). In a nutshell, it can be said that they are based around the import tax rates. It must be considered that an increase in the import taxes will be resulting in discouraging people to buy goods from other states. Within the previous few centuries, tariffs were undoubtedly the main source of income for a government. However, taxes replaced tariffs later on.

There is a wide range of problems that consumers may face. One such example would be consumers facing the issue to pay more for the limited quality of products and goods. The outcomes of this result in causing inflation to a great increase. In case if the consumers tend to acquire a limited choice, pay more for the limited products and goods, and must settle for lower quality, then they will have to either purchase that product or not at all. The matter of fact is that domestic firms can be quite hurtful in terms of finance. The reason for that lies in the fact that such firms may have to purchase parts for making their products and then passing the increased cost to the consumers (Stiglitz et al., 2016).

When it comes to the increased heat of trade war between nations, it may result in a number of serious problems with trade protectionism. One such problem would be that nation will be takin reciprocal action in case there is seen trade protection policies put into effect. In such a scenario, the problem would be that the nations will be retaliating if they are not able to sell their products and goods in the marketplace where they normally could. It does not matter even if such national is military and political allies, there may be seen nations imposing countervailing subsidies, quotas, tariffs, and exchange rate controls for dealing with the actions of another nation. The best example in such a scenario would be of the U.S. and Japan. Both of these states are long-time allies in terms of military and politically as well since the end of World War 2.

Work Cited

Leamer, Edward E., and James Levinsohn. International trade theory: The evidence. No. w4940. National Bureau of Economic Research, 1994.

Stiglitz, Joseph E. "Ethics, economic advice, and economic policy." Oxford Handbook of Professional Economic Ethics. 2016. 495-519.

Vernon, Raymond. "International investment and international trade in the product cycle." International Business. Routledge, 2017. 99-116.

International Trade In Korea

International trade in Korea

Student’s Name

University |Affiliation

Merchandise trade

The Korea Republic is one of the countries that participant in foreign trade by engaging in different economic activities. Statistically, Korea Republic has been recording a tremendous increase in international trade. The merchandise export of this country is higher than merchandise imports, which imply that the Korea Republic has been performing well economically (Ibp, 2017). Also, the breakdown of the economy of the totals export is much higher than the analysis of the economy of the totals import of the country. As such, this implies that the Korea Republic is a fast-growing country due to high-value economic export compared to the number of imports from other countries. On the other hand, Japan has been reporting a higher financial performance since 2017 than that of the Korea Republic (Ibp, 2017). For instance, this country's value of merchandise export of Korea was 573,694, which is was lower than that of Japan's economic condition.

Agricultural and Non-agricultural products

Besides, Korea Republic has been reporting improved economic growth on agricultural activities. This makes this country to have a low import of economic resources because this country can produce enough product to serve the country's population. Korea Republic non-agriculture products of exports are relatively higher than the value of imports (International, 2015). This implies that the Korea Republic can meet its economic needs using its available non-agricultural products. Japan has been reporting low agricultural products over the last three years compared to the value of exports reported by the Korea Republic. However, the country's non-agricultural export in Japan is relatively higher than that of the Korea Republic. For instance, Japan is one of the nations that primarily depend on non-agricultural products to meet their ends (International, 2015). As such, this makes Japan concentrate on the production of non-agricultural products than agricultural products.

References

Ibp, I. N. C. (2017). Philippines Customs, Trade Regulations And Procedures Handbook - Strategic Information,... Regulations, CONTACTS. S.L.: LULU COM.

International, B. P. U. (2015). Doing business and investing in Korea, south: Strategic, practical information, regulations... contacts. Place of publication not identified: Intl Business Pubns USA.

Welfens, P. J. J. (2019). The global Trump: Structural U.S. populism and economic conflicts with Europe and Asia. Cham: Palgrave Macmillan.

Introduction To Economics

[Name of the Writer]

[Name of Instructor]

[Subject]

[Date]

Economic Way of Thinking

Economics way of thinking determines how to make choices under scarcity conditions, and system of distribution, consumption, and production. It also helps in examining the government policy effect and actions on the outcomes of the market. It provides a framework of decision making for policymakers, firms, and individual. It also gives the sense of comparative advantage, market failure, market structure, supply and demand, and international trade. It is also concerned with market forces, rational behavior, opportunity, efficiency and analysis of cost benefit.

Economics is involved in the area of purchasing of our daily life. The amount of money I have in my bank account chose the type of my purchase. Economics divides the purchasing choices into three groups which include inferior groups, normal groups, and luxury groups. For example, let's take the example of clothes. As I started earning more, I might buy expensive and branded clothes. Similarly, within the rise of my income I started purchasing more normal goods like restaurant foods and movie tickets. The purchase of luxury goods such as Porsche or Ferrari also MARincreases when someone started to earn a certain amount (Zuidhof, Peter-Wim, 160).

Life decisions are another different scenario which are made using economic reasoning. For example, When I choose to have children, whom I marry, and where I will live are few of these. Before making any of these decisions, I will perform a common economic method known as cost-benefit analysis and put the cons against the pros. The choice which provides more personal satisfaction, utility than others will be chosen.

Similarly, employment also uses principles of economics which played an important role in my life experiences and can be demonstrated as, when I left a high-paying job due to sixty working hours per week. Similarly, I also picked overtime shifts for earning more money at holidays.

Works Cited

Zuidhof, Peter-Wim. "Thinking like an economist: The neoliberal politics of the economics textbook." Review of Social Economy 72.2 (2014): 157-185.

Is Economics Science ?

Is Economics Science?

[Name of the Writer]

[Name of the Institution]

Is Economics Science?

Introduction

The question of whether Economics can be referred with being science is a controversial topic to some extent. Most people argue that it is not science but instead deals with a more humane category. Science on the other hands extends to a vast infinity where the unknown lies and people are still trying to search for an answer.

Discussion

Identification

Economics can be referred to as a social science rather than science itself because it does not deal with a controlled environment but rather deal with a historical and cross-country context. Economics involves political viewpoints and ideas which can be imprecise. Whereas science is arguably the most precise form which executes itself in a controlled environment and deals with the hypothesis of understanding a certain aspect. Economics can arguably be referred to as an idealized science, and even most researchers have placed their thoughts upon this matter (Herrmann-Pillath, 2017). Most researchers do agree that economics is indeed a science which explains the actual artifacts of nature and the world around us. It has its complex system through which it uncovers the real experiments.

Conclusion

So the answer to this question and an end to this argument can only be defined as economics is science itself. As most researchers agree with proof that economics play the most critical role in scientific research. It has helped solve many scientific and existential problems.

Regardless of our faith about how God intends to manage mankind, we as humans are still abruptly flawed and embedded with the nature to spread suffering amongst one another. Even though God does not allow suffering but it still exists, but that does not mean that God does not exist. The problem with this statement is that God exists to make those suffer who have caused others to suffer and thus, intends to be equal and fair (Swinburne, 2016).

References

Herrmann-Pillath, C. (2017). The economics of identity and creativity: a cultural science approach. Routledge.

Swinburne, R. (2016). Why Believe That There Is a God?. Religious Inquiries, 5(10), 5-18.

Is Price Gouging Criminal Or Is It The Free Market Working Efficiently?

Price Gouging

[Author’s name]

[Institute’s name]

Price Gouging

Introduction

Price gouging is a specific economic term which is used when a seller spikes the price level of different goods, services, and commodities to a much higher level than the reasonable price. It is worthy to indicate that it is one complex phenomenon because it involves different moral and legal considerations. It is vital to examine whether it is fair for the seller to increase the price level or not, as it has the potential to cause some form of exploitation for the consumers. The practical idea of price gouging is characterized as ethically incorrect practice ADDIN ZOTERO_ITEM CSL_CITATION {"citationID":"k9CfPPNb","properties":{"formattedCitation":"(Zwolinski, 2008)","plainCitation":"(Zwolinski, 2008)","noteIndex":0},"citationItems":[{"id":1275,"uris":["http://zotero.org/users/local/7Hi3kAOD/items/A2L3WNQX"],"uri":["http://zotero.org/users/local/7Hi3kAOD/items/A2L3WNQX"],"itemData":{"id":1275,"type":"article-journal","title":"The ethics of price gouging","container-title":"Business Ethics Quarterly","page":"347-378","volume":"18","issue":"3","author":[{"family":"Zwolinski","given":"Matt"}],"issued":{"date-parts":[["2008"]]}}}],"schema":"https://github.com/citation-style-language/schema/raw/master/csl-citation.json"} (Zwolinski, 2008). Exploration of the legal foundations of this concept is also essential to make better inferences about its implications. The focus is to critically analyze the approach of price gouging to examine whether it is one criminal activity or it is established as the free market prospect working efficiently.

Discussion

It is critical to figure out whether it is legally permissible for the retailers to charge a price for the specific products higher than the normal price range or not. Undoubtedly, this particular phenomenon exists and mostly observed during the times of any disaster or crisis. The approach of price gouging can also be defined as the extensive increase in price due to the temporary rise in the product demand instead of the domain of supplier’s cost (Carney, 2017). The practice of price gouging is most applying in case of common household products such as food items, water, and medications, etc. ADDIN ZOTERO_ITEM CSL_CITATION {"citationID":"IrV1CleF","properties":{"formattedCitation":"(Bolton, Warlop, & Alba, 2003)","plainCitation":"(Bolton, Warlop, & Alba, 2003)","noteIndex":0},"citationItems":[{"id":1278,"uris":["http://zotero.org/users/local/7Hi3kAOD/items/ANCA28FA"],"uri":["http://zotero.org/users/local/7Hi3kAOD/items/ANCA28FA"],"itemData":{"id":1278,"type":"article-journal","title":"Consumer perceptions of price (un) fairness","container-title":"Journal of consumer research","page":"474-491","volume":"29","issue":"4","author":[{"family":"Bolton","given":"Lisa E."},{"family":"Warlop","given":"Luk"},{"family":"Alba","given":"Joseph W."}],"issued":{"date-parts":[["2003"]]}}}],"schema":"https://github.com/citation-style-language/schema/raw/master/csl-citation.json"} (Bolton, Warlop, & Alba, 2003). It is mostly observed that sellers abnormally increase the prices of common products during the times of natural calamities and incidents.

The implications of price gouging are complex because it involves controversial aspects. Some economic experts believe that the practice of price gouging is one suitable idea to increase effective economic activity. Identification of the legal prospects of price gouging reveals that it is against the law practice but laws vary throughout the country. It is observed that general business laws strictly exclude the option of price gouging during the approach of natural disasters or any other form of market disruption ADDIN ZOTERO_ITEM CSL_CITATION {"citationID":"MIGIerlE","properties":{"formattedCitation":"(Harvie, Lightfoot, Lilley, & Weir, 2013)","plainCitation":"(Harvie, Lightfoot, Lilley, & Weir, 2013)","noteIndex":0},"citationItems":[{"id":1276,"uris":["http://zotero.org/users/local/7Hi3kAOD/items/UDZLN8SJ"],"uri":["http://zotero.org/users/local/7Hi3kAOD/items/UDZLN8SJ"],"itemData":{"id":1276,"type":"article-journal","title":"Publisher, be damned! From price gouging to the open road","container-title":"Prometheus","page":"229-239","volume":"31","issue":"3","author":[{"family":"Harvie","given":"David"},{"family":"Lightfoot","given":"Geoff"},{"family":"Lilley","given":"Simon"},{"family":"Weir","given":"Kenneth"}],"issued":{"date-parts":[["2013"]]}}}],"schema":"https://github.com/citation-style-language/schema/raw/master/csl-citation.json"} (Harvie, Lightfoot, Lilley, & Weir, 2013). The main foundation of these laws is that it is unethical for the sellers to take advantage of the adverse situation for the sake of profit maximization. The concept of earning abnormal profit due to the misery of buyers is not justifiable on legal and ethical grounds. Critical consideration of the opposite approach in the form of the natural response of the market is also essential to examine the actual application of price gouging.

The conflicting implication of price gouging can be observed through the specific example of the disaster of the hurricane strikes. Due to this incident, many commodity products observed in the forms of an increase in demand or an extreme decrease in supply level. This specific phenomenon can be a reason of abnormal rise in prices of the products. The approach of price hikes is questioned by policymakers but on the other hand, it is defined as the natural market response. Presence of laws against price gouging is a practical step to ensure the protection of consumers’ rights effectively and efficiently ADDIN ZOTERO_ITEM CSL_CITATION {"citationID":"HV8end6L","properties":{"formattedCitation":"(Brewer, 2006)","plainCitation":"(Brewer, 2006)","noteIndex":0},"citationItems":[{"id":1277,"uris":["http://zotero.org/users/local/7Hi3kAOD/items/S2H2BLR3"],"uri":["http://zotero.org/users/local/7Hi3kAOD/items/S2H2BLR3"],"itemData":{"id":1277,"type":"article-journal","title":"Planning Disaster-Price Gouging Statutes and the Shortages They Create","container-title":"Brook. L. Rev.","page":"1101","volume":"72","author":[{"family":"Brewer","given":"Michael"}],"issued":{"date-parts":[["2006"]]}}}],"schema":"https://github.com/citation-style-language/schema/raw/master/csl-citation.json"} (Brewer, 2006). Proper consideration of the circumstances is essential to define the approach of price gouging as criminal activity. Extensive increase in price level during a declared emergency established as the illegal action in case of many states.

Conclusion

To conclude the discussion about the legal prospect of price gouging, it is critical to indicate that earning an abnormal profit during the time of disasters is prohibited. The role of federal and local governments is critical to ensure the availability of necessary products and create market balance by protecting the basic rights of buyers and sellers. The standard of the normal average price should be strictly applied to avoid the negative implications of price gouging.

References

ADDIN ZOTERO_BIBL {"uncited":[],"omitted":[],"custom":[]} CSL_BIBLIOGRAPHY Bolton, L. E., Warlop, L., & Alba, J. W. (2003). Consumer perceptions of price (un) fairness. Journal of Consumer Research, 29(4), 474–491.

Brewer, M. (2006). Planning Disaster-Price Gouging Statutes and the Shortages They Create. Brook. L. Rev., 72, 1101.

Carney, J. (2017). Is price gouging reverse looting? In N.G. Mankiw, Principles of macroeconomics (p. 84). Boston, MA: Cengage.

Harvie, D., Lightfoot, G., Lilley, S., & Weir, K. (2013). Publisher, be damned! From price gouging to the open road. Prometheus, 31(3), 229–239.

Zwolinski, M. (2008). The ethics of price gouging. Business Ethics Quarterly, 18(3), 347–378.

Jamaica

History

The history of Jamaica starts from Christopher Columbus’ mission to find new parts of the world for the Europeans to extract gold and other resources. He was commissioned by the Spanish crown and sailed west, where he landed in Jamaica on May 5th, 1494. His initial goal was to get his hands on gold as he had heard the name of the island as Xaymaca, which the Cubans described as ‘the land of blessed gold’. He soon found out that there was no gold in Jamaica so he restocked his supplies and made important repairs to his ship as he claimed the island. The Spanish rule was hostile as they made the Arawaks work hard and provided little food to them. The conditions were so harsh that soon all Arawaks died out either because of the extreme work or from the diseases the Europeans brought with them. The economic conditions were also very poor as the island served mainly as a base to help the Spanish conquer mainland America. They would stock up on food, arms and men as they sailed towards the mainland in search of more resources.

The English attacked Jamaica under the leadership of Admiral William Penn on May 10, 1655. The Spaniards could not sustain the defense and soon surrendered and fled to Cuba, freeing up their slaves as they escaped. These slaves, freed by the Spanish, along with their descendants came to be called as the Maroons. Port Royal in Jamaica was a little known town before it captured the attention of buccaneers. They brought their stolen gold and other jewels to Port Royal and settled there. Within a mere fifteen years, the town became one of the wealthiest cities in the world due to the inflow of all stolen items. Henry Morgan was the best buccaneer captain as he raided and terrorized Spanish ships and settlements. This kept the Spanish busy as they could not manage to attack Jamaica again. This brought Morgan respect from the English as he was knighted and appointed Lieutenant Governor of Jamaica in 1673. Although a devastating earthquake destroyed the port city, it served as a vital naval base later on in the eighteenth century.

The colonizers had great interest in growing crops that would be retailed in England at high prices. For this purpose, they grew such crops as indigo, cocoa and especially tobacco. The sugar industry also flourished as sugar growing estates increased almost eight-fold in just half a century. The slaves imported from Africa constituted the majority of the labor as the English were particularly impressed by the strength and endurance of African slaves. The fact that they were cheaper and easier to obtain also made this business more profitable. The combined business was so lucrative that the journey from Africa to the West Indies was named ‘Middle Passage’ as the journey took the English sailor to three different destinations. He would bring English products from England to Africa, where a trade for goods with slaves was the norm. For the next part, he would bring the slaves to islands like Jamaica and get the output of the crops for the slaves, which he would then transport back to England.

The treatment of slaves, however, was another issue altogether. The harsh conditions resulted in many rebellions, some of which are famous in Jamaican history. The 1760 rebellion, known as Eater Rebellion was led by Tacky and perhaps the most famous one, Christmas Rebellion was championed by Sam Sharpe - who was later named a National Hero - in 1831. Successful rebellions resulted in slaves running away from plantations and finding refuge with Maroons who used to live in treacherous places in the mountains.

The rebellions were so successful that they became one of the major reasons for abolition in Jamaica along with humanitarian appeal as the conditions of slaves kept deteriorating. The abolition bill was passed on January 1st, 1808 and completely enforced by 1834. It still took 4 more years for all slaves to completely obtain their freedom. Although, slavery was abolished, the socio-economic conditions of the people were still poor. There was still an oligarchic system in place and the voice of the masses was deemed unimportant. Due to supplies being cut off as a result of the American Civil War, the conditions got worse and this resulted in a rebellion. The Morant Bay Rebellion, 1865 saw many white people get killed by Paul Bogle and his men in the Morant Bay Courthouse. As a result of the rebellion, 430 people were executed and many more were flogged. The Crown Colony system was reintroduced and this led to significant social and economic development. This was an important time in Jamaican history as its sovereignty was developed and a sense of nationhood established. Infrastructure was developed and education and health sectors improved significantly.

The 1930s saw a turbulent few years in Jamaican history as the people felt politically halted and under-represented. There was widespread rioting in 1938 and due to this mayhem, two main political parties came into being along with labor unions. The two monumental figures in Jamaica’s move towards self-government were Sir Alexander Bustamante and Norman Manley. Their efforts paved the way for general elections in 1944. The final step was complete independence, granted by the British in 1962 as the first Constitution of Jamaica was adopted.

Central Bank

The Bank of Jamaica came into existence on May 1st 1961, with the passage of Bank of Jamaica Law (1960). The establishment of the Bank of Jamaica ended the existing financial system known as Currency Board System which had been in place since 1939. The timing of the establishment of the bank is concurrent with the political scenario of the time as Jamaica was in its final steps in its journey to complete independence from the British. It was recognized that there was a need to accelerate the development process in Jamaica. For this purpose, it was necessary to create a robust and aptly regulated financial system.

The bank’s hierarchy consists of a Board of Directors. Brian Wynter is the Governor of the Bank of Jamaica and Chairman of the Board of Directors. The Senior Deputy Governor is John Robinson. The Board of Directors is rounded off by five more members: Darlene Morrison, Gary Hendrickson, Christine Clarke, Wayne Henry and Andrea Coy. There is a Committee of Administration that consists of nine distinguished members such as Maurene Simms, Wayne Robinson and George Roper. The Management Committee is also headed by Brian Wynter, Governor and Chairman. The Senior Deputy Chairman John Robinson is next in the hierarchy of the Management Committee.

The Bank of Jamaica Act outlines the responsibilities of the Bank of Jamaica. The first and foremost duty of the Bank of Jamaica is issuance of currency notes and coins. The Bank of Jamaica also redeems these notes and coins from the people. Another major responsibility of the Bank of Jamaica is to secure, manage and administer the reserves of the country. This primary responsibility of securing and managing reserves is of paramount importance. The Bank also effects and influences the demand and supply of money and credit in order to protect the external value of the currency and maintain financial stability in the country. The demand and supply ratio is also important as credit flow is the key determinant in promoting trade, commerce and investment. The Bank is also expected to enact policies that positively influence capital markets and the development of money in Jamaica. The Bank of Jamaica also acts as the banker to the government as it lends money and controls its flow.

Early in its history, the Bank of Jamaica was a mostly passive and reactive entity as it only reacted to the developments in the country on a national and international level. This made it less influential in the market as other market forces affected the economy more than they should have if the Central Bank was an active institution. Recently, however, the Central Bank has adopted a more proactive approach in terms of monetization policies as it seeks to create an environment well suited for investments and economic growth. For this purpose, it enacts policies and takes steps that are in line with the vision to make Jamaica an economically strong and independent country. In order to fully realize this vision, the Central Bank sought the assistance of the International Bank for Reconstruction and Development, now known as the World Bank. The alliance between the two resulted in the formation of the Financial Sector Reform Programme (FSRP), a program initiated to enact financial reform in the country. The program allows for effective intermediation, and intervention aimed at bringing about financial stability and economic growth to the country. It would also enhance the capacity of the Bank of Jamaica to enact better policies and implement them effectively to solve the economic issues and problems of the country.

Japan

Student’s Name

Professor’s Name

Course Code

Date

Economic growth and real income production and consumption of goods and services

Japan is one third largest economy globally and highest industrialized country. Over the years, it has experienced steady economic growth almost from all of its economic sectors. According to Asheghian (23), the economic development of Japan is due to real income production and consumption of goods and services. Japan is one of the countries, which had a good population and highly educated and skilled human power and therefore, these factors have high contributed to its high economic growth. It is therefore, evident that the Japanese economic growth has been driven by several factors since 1960s CITATION Dyn14 \p 43 \l 1033 (Dynan and Sheiner 43). This paper therefore, investigates the relationship between economic growth (GDP) and human per capital, real income production and consumptions of goods and service. In the beginning of the 21st century, the Japanese economy was at heart beat and made several gains but later slowdown. It was then by passed by China to become the 2nd largest economy. From 2010, Japan economy started to make some gains increasing real income production, opening of the market and more foreign direct investment. Dynan and Sheiner (32) pointed that economic growth of a country is based on several factors and historical the growth of Japanese were slowed by post World War and also trigger by the industrial revolution, which engulfed the world during the 19th and early 20th century. It is therefore, important to understand factors, which influence the economic development of a nation.

Description of the study

Though economic analysts have pointed that most countries with higher population have high growth domestic product (GDP) and therefore, it is important to analyze the situation of Japan to understand the drive behind its high economic growth since 1960s. The purpose of this study is to investigate whether there is a direct relationship between economic growth of Japan and human per capital, real income production and consumption of goods and services. According to the data from the World Bank, the Japanese economy has been growing at the rate of 3.7% closely followed China. Since the beginning of the 21st century, the economic growth of Japan has been steady and this is attributed to the reform the government has taken. It is therefore, important to analyses the effect of real income production, human per capital, and consumption of goods and services. However, the study is design to test various four hypotheses to determine the factors, which influence the economic growth of Japan. It investigates whether real income production, human per capital, consumption of goods and services are some of the factors, which triggered the economic growth of Japan since the early 2000.

In the study, the dependent variable is economic growth (GDP) and the independent variable human per capital, real income production and consumption of goods and services. It is to determine the extent, which these factors affect the economic growth of a country. It also looks into how these four factors influenced the economic growth based on the data from the World Bank and other economic determiners. It also indicated the economy demands on the demand of goods and services. The higher the demand the higher the economic growth index and therefore, Japan economic growth relied on the high demand of products from customers. The analysis of the data from the Word Bank indicates that when the demand is high the country register high revenue and therefore, result to high economic growth. It is therefore, evident that

Human capital

It is believed that the growth of human capital is the reason behind Japan economic growth after the Second World. The analysis of data from the World Bank indicates that the increase of economic growth is directly proportional to the economic growth. First, the employment status survey indicates only three groups of education and classification of data towards educated under complex per education. The data also indicates that education standard index after the Second World War improved significantly and Japan had many graduates taking jobs in the industrial sectors. It is established that 65% of Japanese have high skills and experience in various sectors after the World War. This could be due to the strategies laid out by the Japanese government, which focused on education of citizens. It established that between 1970 and 1990 the economic growth of Japan was at steady growth.

It indicates a growth of almost 10%, which could be the highest time of economic growth experienced by Japan. In the same period, the education standard was high and there were several graduates from various institutions in technologies, economics and engineering. This indicates an important role which human power plays in the economic growth of a country and especially its contribution to the economic growth of Japan. The interpolation of the employment rate and economic growth based on the data indicates that the workforce index is directly reflecting the economic growth. The data indicates that the period, which Japan had the highest employment rate based on gender, age and education, the economic growth was significantly high. The rate of employment reflects the economic growth and during the same period between 1970s and 1990s Japan an escalating economic growth and the highest rate of employment. According to some analysts this period could be the time when Japan industrial sector was absorbing several people and the number of graduates was high as well. As stated by Kensuke 23, human capital is significant for industrial growth and therefore, the economic growth of a country depends on its human capital. Feldstein (150) further pointed that no country can experience significant economic growth with poor human capital because every industry requires experienced and skilled human force.

Result of the analysis

Hypothesis testing

The analysis of the data indicates that human capital, real income production and consumption of goods as services are directly related to the economic growth. The regression analysis shows the residual is 0 (zero), and this indicates that there is a direct linked between the factors and the economic growth of Japan. The test also indicates that the p-value is higher than 0.05 and therefore, the null hypothesis is therefore, accepted. The significant value is higher than the p-value and therefore, the null hypothesis is accepted. It means that the three factors are directly linked to the economic growth of the country. The test GDP growth and real income production shows a p - value of above 0.05 and the same to consumption of goods and services. This could mean that there is high possibility that real income production, consumption of goods and services affect the growth of the economic. According to Ironmonger (28), when a country has high level of production, it is highly likely to experience high economic growth. The goods and services produced are sold either locally or internationally and the government earns in terms of levies. The employment rate also increases and this increases the consumption rate. These factors are therefore, positively influence the economy.

The consumption of goods and services depends with the population and the higher the population the higher the rate of consumption. The data indicates that Japan has had a high population since 1940s and between 1970 and 1990 it was one of the countries with a higher population. Though its population has decline drastically, but the analysis of its economic growth in the early days shows a significant contribution of its population to the drastic economic growth. The dependent variable is economic growth (GDP) and the independent variable human per capital, real income production and consumption of goods and services. It is to determine the extent, which these factors affect the economic growth of a country. It also looks into how these four factors influenced the economic growth based on the data from the World Bank and other economic determiners. It also indicated the economy demands on the demand of goods and services. The higher the demand the higher the economic growth index and therefore, Japan economic growth relied on the high demand of products from customers. The analysis of the data from the Word Bank indicates that when the demand is high the country register high revenue and therefore, result to high economic growth.

Policy Implications

The study established that human capital, real income production and consumption of goods and services have direct impact to the economic growth. The study established that human capital influence, the economic growth. The rate of economic growth is directly related to the human capital of a country. The data shows that the periods when Japan had high human per capital, its economic growth was also high. This is significant signs of the relations between the economic growth of a country and the human capital. Therefore, the government must restructure the policy to support the economic growth by increasing human per capital. This could positively influence government to invest in education. The high skilled employees are needed in all industries and therefore, it could influence the government to have proper framework focusing on the education to improve skills and knowledge of workforce. Since the population is also an essential factor in the economic growth. Besides increased population, the factors influenced the government to seek for market of its products and services from other countries. It could make the government to open its market and seek other markets outside.

Since 1960s the Japanese products have penetrated the global market. This could be as the result of business partnership with other countries joining trade unions as well. Japan is a member of the World Trade Organization (WTO) and Asia pacific trade, and several others and the decision could have been influenced by the need for market for its goods, which are essential for the economic growth. It is therefore, important to state that policies are influenced by these factors, which determine the economic growth of the country. Due to the demand of market for the produce goods and services, the government has sought for alternative market for its produce in other regions outside Japan. This is one of the significant of these factors to the policies. It is also important to state that the factors, which influenced economic growth, are essential and therefore, the education policy was design to reflect the demand in the workforce. It is the reason several studies have indicated that Japan is one of the countries with the best education system. It produces highly skilled human power in technology and therefore, it could be the reason of steady industrial growth in Japan.

Summary

The economic growth is influenced by several factors. And based on the statistical analysis the Japanese economy between 1960 and 1990 was influenced by the human per capital, real income production and consumption of goods and services. The human capital is regarded as the workforce needed for industrial production. Without skilled and experienced workforce the economic growth could be retardant and therefore, Japan early high economic growth was driven by human capital and real income production. The real income production was also realized because of the highly skilled and experienced manpower, which Japan had during the early days. The analysis of the data from the World Bank also indicates that during the periods when Japan had a highly skilled labor, its economy was also performing better than even China. Japan was the second largest economy was the United States. The performance was steady until the early 20th century during economic meltdown and since then it has never catch-up with China. But its economy has improved fairly since 2010 and it is growing at 3.7% to be on the list of the countries whose economic is growing despite the global economic challenges.

It can therefore, be stated that economic growth depends on the consumption of goods and services, goodwill of the country, human capital, real income production. The income production is based on the demand of goods and services by the population. It could be reason why countries with the highest population experienced steady and high growth. India and China are some of the examples of countries, which are experiencing steady growth due to the high population. This therefore, confirmed the hypothesis that economic growth is determined by the demand of the produce and when the population is high the demand is also high. The hypothesis is therefore, right and the Japan steady and high growth could be as a result of its population and the market which it created outside in the United States, China and other nations. It is therefore, evidence that there is relationship between economic growths, real income production and consumption of goods and services.

Works Cited

BIBLIOGRAPHY Asheghian, Parviz. "Determinants of Economic Growth in Japan: The Role of Foreign Direct

Investment." Global Economy Journal (2009): 2-31.

Dynan, Karen and Louise Sheiner. "GDP as a Measure of Economic Well-being." Hutchins

Center on Fiscal and Monetary Policy, The Brookings Institution (2014): 2-35.

Feldstein, Martin. "Underestimating the Real Growth of GDP, Personal Income, and

Productivity." Journal of Economic Perspectives (2017): 145–164.

Ironmonger, Duncan. "Household Production and the Household Economy."

https://fbe.unimelb.edu.au/__data/assets/pdf_file/0009/805995/759.pdf (20155): 2-34.

Kensuke, Miyazawa. "Measuring Human Capital in Japan."

https://www.rieti.go.jp/jp/publications/dp/11e037.pdf (2011): 2-35.

Journal Review

Journal Review

[Name of the Writer]

[Name of the Institution]

Journal Review

The article is about the jobs available in the market and factors that affect the employment level. Three main macroeconomic variables are discussed in the article that are inflation, interest rate, and unemployment rate. The inflation rate is the most effective variable which creates fluctuation within the job market and growth of the economy. To control the unemployment in society, there should be control over the inflation rate.

The reason to control the inflation rate is the increase in interest rate by the state bank. The report of October employment number shows the increase in job approximately 250,000 at a healthy clip. The rate of unemployment kept low at 3.7% and the person seeking a new job or already employed increased by 0.2% ADDIN ZOTERO_ITEM CSL_CITATION {"citationID":"jY20ecJK","properties":{"formattedCitation":"(Irwin, 2018)","plainCitation":"(Irwin, 2018)","noteIndex":0},"citationItems":[{"id":1076,"uris":["http://zotero.org/users/local/mlRB1JqV/items/3VWE6RG4"],"uri":["http://zotero.org/users/local/mlRB1JqV/items/3VWE6RG4"],"itemData":{"id":1076,"type":"article-newspaper","title":"Three Key Factors That Will Determine How Long the Hot Job Market Lasts","container-title":"The New York Times","section":"The Upshot","source":"NYTimes.com","abstract":"Where is this growth really coming from; how real is the concern over inflation; and how many more workers are out there?","URL":"https://www.nytimes.com/2018/11/02/upshot/the-job-market-is-firing-on-all-cylinders-three-questions-will-determine-how-long-it-can-last.html","ISSN":"0362-4331","language":"en-US","author":[{"family":"Irwin","given":"Neil"}],"issued":{"date-parts":[["2018",11,2]]},"accessed":{"date-parts":[["2019",9,11]]}}}],"schema":"https://github.com/citation-style-language/schema/raw/master/csl-citation.json"} (Irwin, 2018). FED tried to control inflation by increasing the interest rate which leads to the possibility of substantial inflation in the market for the first time after the decade. Other important factor noticed was the increase in wages. It is the first time that the assumption of the Philips curve is being fulfilled in the real world that is with the increase in inflation rate there is the increase in wage rate and the decrease in unemployment level.

The fact behind this healthier situation of employment level is due to the effective initiative taken by the FED over the increase in the interest rate. Against the supply, constraint economy is butting up because production willingness by the companies increased as they have got opportunities to increase the prices of goods and services. The relationship between inflation and interest rate can be defined as whenever state bank lowers the interest rate people got more money in hand to spend, and producers get opportunity to increase the price to be the supply demand equilibrium. FED increased the interest rate which had a negative impact over the inflation and this fluctuation in inflation kick the Philips curve and according to the theory of Philips curve unemployment decreases.

The bottom line is that the inflation rate is so effective on unemployment and wages, it can only be controlled by the interest rate more rapidly, and interest rate can be increased and decrease by the state bank. Therefore, we can say that the government is the one whose decision can increase or decrease the growth of the economy.

References

ADDIN ZOTERO_BIBL {"uncited":[],"omitted":[],"custom":[]} CSL_BIBLIOGRAPHY Irwin, N. (2018, November 2). Three Key Factors That Will Determine How Long the Hot Job Market Lasts. The New York Times. Retrieved from https://www.nytimes.com/2018/11/02/upshot/the-job-market-is-firing-on-all-cylinders-three-questions-will-determine-how-long-it-can-last.html

Journal Review

Journal Review

[Name of the Writer]

[Name of the Institution]

Journal Review

In the article ADDIN ZOTERO_ITEM CSL_CITATION {"citationID":"k2sYYCoT","properties":{"formattedCitation":"(\\uc0\\u8220{}Is it time to switch income tax with a sales tax? | Business | The Guardian,\\uc0\\u8221{} n.d.)","plainCitation":"(“Is it time to switch income tax with a sales tax? | Business | The Guardian,” n.d.)","noteIndex":0},"citationItems":[{"id":1278,"uris":["http://zotero.org/users/local/mlRB1JqV/items/3CXVBL8P"],"uri":["http://zotero.org/users/local/mlRB1JqV/items/3CXVBL8P"],"itemData":{"id":1278,"type":"webpage","title":"Is it time to switch income tax with a sales tax? | Business | The Guardian","URL":"https://www.theguardian.com/business/2019/sep/05/is-it-time-to-switch-income-tax-with-a-sales-tax","accessed":{"date-parts":[["2019",9,27]]}}}],"schema":"https://github.com/citation-style-language/schema/raw/master/csl-citation.json"} (“Is it time to switch income tax with a sales tax? | Business | The Guardian,” n.d.), the author has discussed a serious economic issue that is wealth inequality. Government of America is taking initiatives to reduce inequality and to ensure equal opportunities to the citizens. The author argued that income tax should be a switch with a sales tax. Economists are already in favor of this switching but no support is observed from the politician’s side. This strategy is difficult to apply because it may result in a double deduction for the people who will use their savings. This means they have to give tax for money on which they have already paid income tax. However, it will increase investment in firms. Ultra-millionaire tax is another proposal which can be applied on 75000 wealthiest families of America. The government can apply 2% wealth tax on these families on annual earning. The estimated rise is about $3tn in a decade. However, Harvard's Lawrence Summers criticized this proposal with the claim that this estimation is totally optimistic. In response, a professor Natasha Sarin presented the suggestion that corporate tax can be increased excluding ultra-wealthy families ability to use bequests for reducing capital gain taxes. The argument among economists is continued on this topic which indicates that it is not so easy to increase the revenue through taxes.

The author argued that both approaches are complex for implication therefore, they all should make the same goal and work on it to provide a better taxes system. He discussed the consumption tax better for the economy because it does not demand tax from lower-income families and covers only high earning families. In addition, the lump-sum transfer can be better than excluding lower-earning families which can be beneficial not only for the long run but also for short-run gains.

References

ADDIN ZOTERO_BIBL {"uncited":[],"omitted":[],"custom":[]} CSL_BIBLIOGRAPHY Is it time to switch income tax with a sales tax? | Business | The Guardian. (n.d.). Retrieved September 27, 2019, from https://www.theguardian.com/business/2019/sep/05/is-it-time-to-switch-income-tax-with-a-sales-tax

Just Make Up A Title Based On The Essay

News Analysis

[Name of the Writer]

[Name of the Institution]

News Analysis

Hackman, Michelle. (2019). Wall Street Journal (Online); New York, N.Y. Democratic Presidential Hopefuls Amplify, 1.

In the respective news article, the author Michelle Hackman discussed the decision making policies followed by the democrats for reducing income inequality. To get a victory in the 2020 presidential elections, democratics need to develop a redistribution of wealth to the middle class and lower class families. The common policies on which most of the democrats depend include the increase in wealth taxes or increase in the spending of different programs which can help the low-income families. These programs include healthcare programs, educational programs, and housing programs. A politician, Sen. Cory Booker of New Jersey, thought about providing a program through which he wanted to provide one thousand dollars to newborns through an interest-bearing savings account. Sen. Kamala Harris of California wants to pay the cost of living for the families who ears 100,000 dollars while both politicians support direct payment for the household those earn more than thirty percent of income on rent.

Promoters follow these ideas by the placing an argument that the increase in wealth inequality can be control more effectively by providing choice to the household. The choice over the spending of money is better than providing them money through a specific program of benefits. A researcher Elaine Maag explains that "People often know how best to solve their problems." The Critics on the programs is made by arguing that direct payment to the household can discourage people to work. The author provides the policies followed by both parties was the policy of an increase in earned income tax credit, presented by the Obama administration. Different democrats proposing different policies to solve the issue but the author ends the news article with the explanation that programs to control inequality of weight would needed to be compared with other pricey priorities. In 2017, tax law was passed by the Republican that cut the taxes but 1.5 trillion dollars over the decades. In response, Democrats have been developing a measure to provide other solutions through which money could be spent. Therefore, it can be concluded that Democrats want to lower the inequality of wealth, they have ideas, but they have priorities as well — priorities in terms of a field where they want to spend political capital and money both.

I have chosen this article as I found it relevant to my course. An important economic factor that is wealth inequality is discussed in the news article. Global capitalism focuses on the development and monetizing of all the given resources and cheap labor. Inequality of wealth is a severe problem for the country. It can cause low economic growth in the long term. Inequality of wealth also increases poverty. It decreases health, education, and opportunities for low-income people. Politicians make policies to control the inequality of wealth. The article provided some of the ideas of democratic and its critics as well. The administration often promotes programs which help in maintaining inequality like programs of healthcare, and education. An interesting point of view is being discussed in the news that it is better to provide money to the people of the lower class so that they can spend money on their need. It can be useful because every individual has different problems and choices to solve the problem. Money can help them to solve their problem directly while spending money on different programs can restrict their access to money.

The critic is made that direct access to money can discourage people to work, as economics explains that every individual has different choices and different level of satisfaction, therefore providing money to the lower class may result in inefficient use of money. They may spend their money on personal desires and luxuries rather than useful things like education and healthcare. The primary goal of the administration should upgrade the standard of living. The decrease in inequality may help politicians to get power, but priorities of overspending of money can make it difficult. Therefore it is necessary to spend money on the programs which decrease inequality more effectively.

References

ADDIN ZOTERO_BIBL {"uncited":[],"omitted":[],"custom":[]} CSL_BIBLIOGRAPHY Democratic Presidential Hopefuls Amplify Income Inequality Message - WSJ. (n.d.). Retrieved February 23, 2019, from https://www.wsj.com/articles/democratic-presidential-hopefuls-amplify-income-inequality-message-11549449000

Keynesian Vs. Neoclassical Economics / The Income-expenditure Model

Keynesian and Neoclassical Economics

Student’s Name

Institution

Date

Keynesian and Neoclassical Economics

Keynesian economists could describe the economy as being on the expansion. In this case, they would term the economy as having been improving in recent years, and therefore being better than before. The aggregate demand has increased with time. This is because there has been an increase in the level of total spending of the economy. The government has been spending more finances to enhance economic development (Bober 2019). In return, there is much more money in circulation. People have a higher ability to purchase different items. In addition, there has been a reduction in the rate of taxes. This has also increased the aggregate demand of the people, thus boosting the rate of economic development.

The neoclassical economists could describe the performance of the economy in recent years as having increased. This is as a result of an increase in the supply of products in the market. Due to the increase in the supply, the prices of the products have reduced, thus enhancing a higher level of demand for the products. The evidence to support this is that more people are able to buy more items with the same level of income that they have had for some time (Morgan 2015). Between the neoclassical and Keynesian economists argument, the Keynesian explanation makes more sense. It is more possible that demand is stimulated by more money in circulation rather than the supply. In this case, more money means higher purchasing power for the people, and thus a higher demand which contributed to higher growth of the economy.

The expenditure multiplier matters in the real world as it measures the rate at which a change in aggregate production is caused by a change in autonomous expenditure. It also matters to employees, and businesses in that it determined the amount of production that could be enough to match the level of expenditure in the market (Ruccio & Amariglio 2016). It's effective for planning. The government took the right fiscal action during the great depression, as it initiated a reduction in taxes, an increase in government expenditure, which increased the purchasing power of the people, thus increasing demand. An increase in demand assisted in taking the economy back to the right track.

References

Bober, S. (2019). Recent developments in non-neoclassical economics. Routledge.

Morgan, J. (Ed.). (2015). What is neoclassical economics?: Debating the origins, meaning and significance. Routledge.

Ruccio, D. F., & Amariglio, J. (2016). Postmodern moments in modern economics. Princeton University Press.

Long-term Economic Growth

Long-term economic growth

[Name of the Writer]

[Name of the Institution]

Long-term economic growth

Long-term economic growth means an increase in the productive potential or overall production of any nation; in other words, the country's gross domestic product (GDP) is increased. Long-term growth is a result of development in either the quantity or quality of factor contributions, because of which a country is able to create or produce more. It is sustained growth in the magnitude of services and goods that an economy yields.

Short term economic growth, on the other hand, is measured by the yearly proportion change in gross domestic product (GDP) of a country. Short-term growth is the output of a country in terms of GDP (gross domestic product) over a given period of time typically a year.

Major determinants of long-term economic growth

The growth of productivity: It is the proportion of outputs to inputs such as labor, energy, services, capital, and materials concerning the economy. With an increase in productivity the cost of merchandises is dropped. Lower costs of production mean lower prices which increase the demand for the services or products. An escalation in demand means greater revenues.

Demographic changes: demographic changes such as age etc. effect economic growth because of the employment to population proportion. Age structures of the population effects employment and long-term economic growth.

Labor force participation: The quantity of workforce contribution and the size of economic segments influence economy. The workforce or labor contribution is the number of job seekers available.

Impact of long-term economic growth

Long-run economic growth results in greater average incomes, lesser unemployment, enriched public services, increased research, and development, investment in all sectors of the economy and growth of jobs and the production of those working, etc.

Moreover, long-term economic growth causes businesses to have more confidence as the economy does well and the risk of currency devaluation buying the power of public is negligible. Such economic growth also results in technological advancements that benefits business. In addition, costs per unit production decrease with an increase in profits.