Fiscal Cliff Impact And Decisions

1582 words, 7 pages

Intro Sample...


With the “Fiscal Cliff” coming close, it is important that we take a look at the effects of different kinds of cuts and increases in spending and taxes will have on the economy. The decisions that the Congress makes is very important because we are at a time where increasing GDP is very important to US recovery, as the US is just coming out of recession. Many believe that if no action is taken regarding the fiscal cliff, then the US will spiral back into recession, especially because GDP will drop so much. This is because a $600 billion dollar cut will have an even larger effect because of the multiplier effect. Overall, my opinion is that Congress should do something small, letting most but not all of... View More »

Body Sample...

The US always has some structural deficit; it’s just that now the structural deficit is rather high. Structural defecit is considered a liability because if lenders were to call upon the US to pay their dues, which makes up the structural deficit, then government spending would have to go to paying of debt instead of stimulating the economy, which would decrease GDP, and possibly send the US back into recession. This is a huge reason why policy makers are frantically trying to decrease the structural deficit, because of the liability
In the case of monetary policy, which is conducted by the Federal Reserve and its board of governors, the Fed is indeed facing the zero lower bound, where interest rates are almost at zero, and the Fed cannot really decrease the rates. Of course, the Fed cannot charge a negative interest rate. Generally to stimulate the economy, the Fed will decrease interest rates by buying T-bills to increase the money supply, which will increase investment spending which will increase aggregate demand in the economy, which will increase GDP. This helps to bring a nation out of recession. With tax increases and spending cuts, the US needs to counteract this with expansionary monetary policy, by increasing the money supply through a decrease of interest rates, but because of the zero lower bound, they can no longer do this. So now the Fed is using quantitative easing to buy other types of securities to increase the money supply. The goal is to increase the money supply without changing the interest rates too much. Currently the Fed is buying up mortgaged ...

Read More

Related Essays on Fiscal Cliff Impact and Decisions

  • Krispy Kreme Doughnuts In 2005: Are The Glory Days Over?

    12969 words, 52 pages

    Overview In early 2004, Krispy Kreme’s prospects appeared bright. With 357 Krispy Kreme stores in 45 states, Canada, Great Britain, Australia, and Mexico, the company was riding the crest of customer enthusiasm for its light, warm, melt-in-your-mouth doughnuts. During the past 4 years, consumer purchases of Krispy Kreme’s doughnut products had taken off, with sales reaching 7.5 million doughnuts a day. Considerable customer excitement—approaching frenzy and cult status—often surrounded the opening of the first store in an area. For instance, when a new Krispy Kreme opened in Rochester, N.Y. i

    View Document »

    Look Back In Anger

    2946 words, 12 pages

    Plot Summary Act I The plot of Look Back in Anger is driven almost entirely by the tirades of Jimmy Porter rather than outside forces. The play is set in a one-room attic apartment in the Midlands of England. This large room is the home of Jimmy Porter, his wife Alison, and his partner and friend Cliff Lewis, who has a separate bedroom across the hall. The play opens with Alison at the ironing board and Jimmy and Cliff in easy chairs reading the Sunday papers. Jimmy complains that half the book review he is reading in his “posh” paper is in French. He asks Alison if that makes her feel igno

    View Document »

    Covering Fiscal Deficit Should It Be Through Monetization X Or Market Borrowing Y

    2994 words, 12 pages

    Abstract The topic relates to the fiscal deficit and how it should be covered. Fiscal deficit is a reality in today’s political economic structure, and an important tool for developing nations for financing development activities even though it is accompanied by inflation which has a negative side effect (if not controlled). Moreover for developed economies also, the governments often resort to fiscal deficit because the growth so triggered leads to small inflation, which is desirable in the economy. To state concisely Fiscal Deficit is budgetary deficit plus market borrowings and other l

    View Document »

    Economic Impacts Of Tourism

    12547 words, 51 pages

    Page # 1 Economic Impacts of Tourism Daniel J. Stynes Businesses and public organizations are increasingly interested in the economic impacts of tourism at national, state, and local levels. One regularly hears claims that tourism supports X jobs in an area or that a festival or special event generated Y million dollars in sales or income in a community. “Multiplier effects” are often cited to capture secondary effects of tourism spending and show the wide range of sectors in a community that may benefit from tourism. Tourism’s economic benefits are touted by the industry for a variety of

    View Document »


    3236 words, 13 pages

    Title: Inflation targeting in emerging market countries. Module: monetary policy and central bank operation. Tutors: Dr G.A. vento Code: GBF457 Student: Hyunsun Lee(S00300443) Date: 13/04/2016 Word count: In my paper on the choice of exchange rate regimes in emerging market economies I have outlined five fundamental institutional differences for emerging market countries that must be taken into account to derive sound theory and policy advice. These are: • Weak fiscal institutions. • Weak financial institutions including government prudential

    View Document »

    Stablization Policy

    3879 words, 16 pages

    STABILIZATION POLICIES Macro economics not only explains the business cycle and inflation but it also explains how to control and avoid these episodes of fluctuations. Macro economics helps to provide insight into government policies. These policies are • Monetary policy • Fiscal policy • Physical policy MONETARY POLICY Monetary Policy of any country refers to the regulatory policy in which Central Bank maintains its control over the supply of money to achieve some goods like stability of employment and price, balanced economic growth and economic development. In other words,

    View Document »


    6583 words, 27 pages

    Chapter 1 Concepts a. Describe the main business of the MNC. Starbucks is the premier roaster and retailer of specialty coffee in the world. Starbucks Corporation was formed in 1985 and its common stock trades on the NASDAQ Global Select Market (“NASDAQ”) under the symbol “SBUX.” Starbucks (together with its subsidiaries, “Starbucks” or the “Company”) purchases and roasts high-quality whole bean coffees and sells them, along with fresh, rich-brewed coffees, Italian-style espresso beverages, cold blended beverages, a variety of complementary food items, a selection

    View Document »

    Dell Financial Analysis

    1526 words, 7 pages

    Revenues come from the sale of Dell’s products and services. Revenues increased a combined 16% from January 2010 to January 2011 primarily because of the recovery in the economy. The health of the economy is critical for the company because its products are not primary products; so during a recession, people will rather save money for food than buy a computer. This explains the big decline in revenues for the 2009 fiscal year (a 13.4% drop compared to the previous year). The increase in 2010 is also due to a change in business strategy. Dell is growing its e

    View Document »

    Toyota Motor Corporation

    6461 words, 26 pages

    In this essay I will give an overview of Toyota Motor Corporation (TMC) within the framework of international business. The reason of my choice is that during the last decades Toyota is getting a continuously growing share in automobile production, it acts globally, and has an admirable business strategy. Firstly having a glance at the brief history of the company we will look at Toyota’s position in the Worldwide Automotive Market. The paper will then present Toyota’s strategy and its key initiatives promoted globally, the company’s sales and distribution, markets and competition, and prod

    View Document »

    Financial Management Essay

    3170 words, 13 pages

    1.0 1.0.1 Scope Introduction This document is meant for our client – Japan Trustee Bank, Ltd, who is major shareholder of Toyota Motor Corporation. The document will provide some strategic analysis of Toyota’s financial status based on the past five year business performance, with the intention of helping Japan Trustee Bank, Ltd. To make strategic decisions around their current and future investments with Toyota. 1.0.2 About the Company - Toyota Toyota, the world’s largest carmaker, is primarily engaged in the design, manufacture and sale of sedans, mini-vans, compact cars, SUVs, truck

    View Document »

More Popular Essays

Research help is just moments away!