Grade 9B
Discuss how government can play an effective role
in the management of economic activities
in a particular economy.
in the management of economic activities
in a particular economy.
Time Duration for submitting the Article is
August 25th to September 1st, 2013
Write your answer here in 500 Words.
For rubrics please check in
'Food for thought column on my bog under title Rubrics'
Government has gone through alot of crisis of the economy, such as recessions, high rate of unemployment, or even slow period of economic growth. The way of government showing to create money supply, is to cut taxes to increase demand in goods, and increase consumer's spending which will rapidly increase it's money supply. But in order to have an effective role in an economy for the government, they must maintain the stabalization and growth of the economy. Also they have to have rules and regulation and controlling to the economy to do activities. To maintain it's stabilization and growth, the government must maintain it's price and also controlling the use of credit ( monetary policy), djusting speding of taxes(fiscal policy) , it can speed up the rate of growth of the economy by it's level of prices and employments. Although there might be a high inflation, high rate of unemployment and huge government deficits, weakended confidence by fiscal policy, instead monetary policy may help by controlling the money supply through interest rates.
ReplyDeleteTo maintain the economy for being not a disaster, the governments must have a restricted rules and regulation that who ever disobeyed it will be taken by the law, to keep the citizens remain and maintained by antitrust law, to strengthen market so that direct regulation is unnecesary. Government also exercises control over private companies to achieve social goals, such as protecting the public's health and safety or maintaining a clean and healthy environment. The U.S. Food and Drug Administration bans harmful drugs, for example; the Occupational Safety and Health Administration protects workers from hazards they may encounter in their jobs; and the Environmental Protection Agency seeks to control water and air pollution.
Another way of maintaining the econmy's growth would be through the small businesses into making the demand and production increase by helping them from public and merit goods, which will not only grow the economy but the governments will get higher tax from the cost of the product(indirect tax) and since the business is getting bigger, rate of unemployment will decrease and more people will pay tax from their wages(direct tax) which also will decrease inflation and will be prosperity and will also increase in BOP(balance of payment = currency), but getting the money when needed will be easy for the government ince they have unlimited borrowing, and also can print money and from also supply of the central bank. which will get by the government and will continue on by the goods and taxes by recieving and spending of the public expenditure and current expenditure.
-celine B
9 Business
In market government needs to control the demand of the goods and high rate unemployment. Government needs to control the demand of goods by increasing the tax or lowering the tax by increasing the tax the price goes higher that makes the demand falls and by decreasing the tax the lower the price will be and the demand will increase. Increasing the tax is use to goods such as drugs, alcohol drink, cigarette, imported goods, etc. the government give a high tax to the imported goods to protect the local goods that made in there on country. How bout drugs, alcohol drink and cigarette? The government want to lessen this demand so the people in his country don’t get drank every they and use drugs as he want smoke every day and the then people that using this things will die faster if the whole country buy this there generation will death because the goods is cheap they can buy it easily so the government increase the tax so there will be lesser people were buying those goods and the human live will longer. A country can be called developed country if the number of people death per year is low so the country increase the tax to dugs, alcohol deink, cigarette, etc. government give low taxes to local goods, medicine, etc. government give low tax to the local goods hope that there demand will be greater than the imported goods .if no one buy the local goods the company will bankrupt but the company outside became more richer.
ReplyDeleteGovernment needs to control high rate unemployment in company so government need to make a regulation so every time company want to hire some of their worker the company should pay so the company need to add more expenses to hire a worker so the company will not hire the worker. Government make a regulation of minimum balance of payment so the company can’t pay low wages and if the company pays them low they can’t pay there needs such as food, drink, cloths, etc.
Government can control every market in his country by regulation and taxes
The government plays an effective role in an economy by identifying the needs of the economy and the country itself. There are general objectives of the government are: keeping a low and stable inflation, a high and stable employment, economic growth in national output and to stabilize international trade. In doing this, the government will need to types of demand-side (policies that influence the level of aggregate demand in an economy) and supply-side policies (aimed at increasing economic growth by raising the productivity potential of the economy), called fiscal policy and monetary policy.
ReplyDeleteFiscal policy involves changing the level of public spending and/or taxation to affect the level of aggregate demand. It is split into 2 categories, expansionary fiscal policy and contractionary fiscal policy. Expansionary fiscal policy is when the government tries to increase government spending and/or cutting taxes to boost aggregate demand, output and employment (this belongs in the demand-side policy section), while contractionary fiscal policy is when the government tries to reduce pressure on prices in the economy by cutting aggregate demand through reductions in government spending and/or by raising taxes (belongs to supply-side policies). Also, monetary policy are the actions the government takes which involves changing the interest rate to influence the growth of aggregate demand, supply of the country’s money, output, employment and inflation.
But the three main problems with fiscal policy is that it is cumbersome to use, public spending ‘crowds out’ private spendings and by raising taxes on incomes and profits, it reduces work incentives and employment, leading to a slow-down in economic growth. It is cumbersome to use since the government will not know for certain if it will affect the country well. The data collected might not me accurate and can even lead to massive inflation, high unemployment and high inequality. Public spending also can give a crowd out effect on private spendings. This is because if the government wants to boost the economy and the country itself by borrowing money from internal sources, such as private banks, interest rates become higher, investment becomes lower, causing high unemployment. Because of this, private sectors will have less to spend. For example, in simple terms, Cassie is known as the ‘government’, and Nina is the ‘private sector’. Nina brings $20 to school to buy lunch, and Cassie borrows $10. Since she borrows $10 from Nina, Nina has less to spend for lunch. Another problem is when the government reduces taxes, this reduces work incentives since workers become lazy to work. The disadvantage of monetary policy is that, by printing more money, it can cause an inflation since less people will demand for a product.
In conclusion, fiscal and monetary policies are quite risky to use, since there isn’t a very accurate data the government can use to trigger the demand and supply of the government. Another problem is that monetary policies can cause an inflation in the economy since there becomes less demand.
Government can can play an important role in the economy by:
ReplyDelete-Controlling Circulation of Money
By controlling the circulation of money, government can control both the market and the economy because money is the thing that keeps trading going. Without money, no trading/business can happen. By controlling the circulation of the money, the government can also manage the risks of inflation/recession. This also includes: Researching whether the Central Bank print enough money, too much money, or too less money.
-Introducing Policies
Government can play an important role in an economy because once the government apply the policy, everyone needs to follow the policy and everyone is affected. The fiscal policy is introduced/created by the Central Bank. The Central Bank will decide whether printing more/less money will solve economic problems or not. The central Bank can also raise/decrease interest rates to help/"kill" the people. The other policy is the monetary policy. It is created/applied by the government. But the only problem is that the government needs to be more objective. For example: Some election candidates give money/prioritize their own "people". These policies can either "kill" or "grow" the economy of a country, it's all according to how the policy is being used.
-Giving Subsidies/Charging Taxes
Government can be the key role of the "life or death" of a business because the government can just give subsidies to the businesses that give benefit to other people in order to succees. But the government can also apply higher taxes to businesses that produce demerit goods in order to "kill" the business.
Conclusion: The government can be a key factor to the "life or death" situations of the businesse because by introducing policies, giving taxes/subsidies, controlling money circulation, the governmant can either "kill" or "raise" a business.
The government play an effective role in the management of economics,the government need to control low&stable inflation,the government may also need to control the rate of the unemployement,the government also need to boost the demand for goods,and services.The government can control the inflation by making a rules ,and regulations such as making barrier for some of the imported goods.When the price of the goods increase the demand for that products will reduce ,and the consumer will start to find another alternatives products which Is one cheaper.The government have a chance to increase the economic growth by giving subsidies to the local firm so they can compete with the foreign firms.When government give subsidies the cop( cost of production will reduce ) ,relatively the price of the products will also reduce ,it will increase the demand of the local goods.The government can also control the unemployement rate by giving the local firm subsidies ,and reducing the taxes imposed on goods ,and services It will encourage he local firm to expand their business ,and they will need to hire a workers ,so it will also provide a work fields.The government can boost the demand for goods ,and services by reducing the tax on it .For ex: the government will reduce the tax that is imposed on health ,merit goods,and education because I will bring a positive effects on the countries.No one will smoke If they know how bad is the effects of cigarettes for our body.And opposite the government should increase the taxes that imposed on cigarettes,drugs etc.The government should also make a rules and regulation for those people who were using drugs,so they will stop using it.When the rate of economic growth increase the rate of unemployement will reduce,and the value of the countries currency will also rise,The government revenue will also increase since more people is working and their income is already cut by 10% tax,The government will have money to be spend n the public goods such as providing education,and health for the poor people ,and the positive effects in the future there will be more people working ,and have a better life.
ReplyDeleteCHRISTHOPER MATTHEW
ReplyDelete9 BUS/ 03
1/9/13
To start, the term 'economic activity' refers to the daily work one government did for the economy of its country; which can be successful/ unsuccessful. In other meaning, not all things government did is effective.
As an example, take the governer of Indonesia now, Jokowi. What he's doing now isn't all effective. Raising the price of parking fees double folds from IDR 2k to 4k doesn't make people use less cars. The worst thing is, the extra money will be taken by corruptors.
So what are the measures a country has to make its economy stable?
First and foremost , government are authorized to give 'subsidies'. These 'subsidies' are usually given to public sectors, which usually sells local goods. By government giving money, local firms will have lower cost of production, and therefore they can sell their products at a cheaper price, which will attract local consumers to buy their product, increasing one's country's sales.
Secondly, government must deal with 'merit' and 'demerit' goods. 'Merit' itself or what you call as 'free' in other terms, are given by government also through subsidies for local consumers as they will increase the productivity of the local people. Examples are education and healthcare. In giving education for one's child will trigger the parents' to put their child in the free school even if they don't have any money. Even though later on, the school might expect the parents to pay for books and school uniforms, once the parents experience and has gotten the potential benefit, they won't bother to work hard to get money for buying their son books and school uniforms.
In the other hand we have 'demerit goods', From the name itself, we can know that demerit goods is the vice versa of 'merit goods' which is totally not supported by the government. Simple examples of demerit goods are smoking, drinking high percentage of concentration of alcohol and consuming drugs. People expect for the benefit, but it turns out that the expected benefit is less than the real benefit they can get with the exact same amount of money.
So to handle people from purchasing demerit goods, government tags a higher tax on demerit goods. Higher tax=higher total price which will result on a fall in demand, which is both beneficial for the country and the consumers themselves.
So then, government must have policies. Policies itself is divided into 2: 'Fiscal' and 'monetary' policy.
Fiscal policy is controlled by the government. Where does the government came from? Government came from an election (vote) nominated by the public; and one of the other qualification is that the candidate must know politics (> 5 years).
Fiscal policy is the use of government revenue collection (taxation) and expenditure (spending) to influence the economy. The two main instruments of fiscal policy are changes in the level and composition of taxation and government spending in various sectors.
But what are the problems of fiscal policy?
First, it is difficult to use, since it needs data calculation.
Second, it has the 'crowd out effect', which occurs when a private sector lends more and more money to the bank and the private sector has less to use for itself. In that case, government only has 2 choices: by printing or borrowing.
Third, there will be an increase in tax, as there is a fall on the incentives to work.
The other type of policy, 'monetary policy', and is controlled by the Central Bank. They are employees of the government, the Academic Body. Central Bank itself is the one who prints money, so there will be an increase in money supply. They're also the one who gives Rules and Regulations and custodian to government money.
To sum it up, all governments have their own strengths and weaknesses. Not everything they did is efficient, so they must explore what they should do to make one's country more effective in controlling one's economy.