Business Cycles: Phases, Indicators, Measures Essay

Pages: 4 (1419 words)  ·  Bibliography Sources: 2  ·  File: .docx  ·  Level: College Senior  ·  Topic: Economics

SAMPLE EXCERPT . . .
This may well lead to a booming economy.

2. Lagging -- This follows an event. It is an indicator that analyzes an event that has just occurred and confirms whether a pattern is occurring or is about to occur. If the unemployment rate, for instance, is raising this shows that the economy is doing poorly. If food prices rise, it shows that there is inflation and likely a recession with a drop in supply.

3. Coincident -- These indicators occur simultaneous to the conditions which they analyze and they change at the same time as the economy or stock market changes.

An example of this is the rising level of wage or personal economics that drops and raises correspondent to economy. High personal income rates usually coincide with a strong economy. Hiring and firing of workers also coincide with economy.(Investopeida.)

3. All major economic indicators show the United States is recovering from the recession but that the process is not as strong as previous recoveries have been. If you were the President what would you do right now to help the economy recover so that the unemployment rate decreases faster than it has over the past two years?

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In 2009, Obama signed the American Recovery and Reinvestment Act of 2009 (ARRA) otherwise known as the Stimulus Act which drew on Keynesian theory to create jobs as soon as possible and to help those hit by the recession (CBO (2012). The Stimulus package was based on Keynesian economics that argued that during periods of economic hardship, the government should step in by increasing public spending which would in turn stimulate more private spending by giving people the money to do so and by creating a large flow of money in the economy.

The Keynesian approach doesn't always work. Britain had also used it to its detriment in the pre-Thatcher era. This was superseded by Thatcher's Miltonian approach which too failed. It is the New Labor's Mixed Economy approach that I would most recommend for Obama to employ in order to increase level of employment.

Essay on Business Cycles: Phases, Indicators, Measures, Assignment

Britain's New Labor government from 1994- 2010, created what they called a "Mixed Economy." 'Mixed economic' approach refers to attempts to integrate right wing with left wing economic policies. This was accomplished in New Labor by the Party attempting to sufficiently detach them form capitalism to achieve the aims of socialism without totally relinquishing the capitalist approach. Pragmatically, New Labor perceived markets useful in empowering consumers to make their own decisions and to act independently (as in pollution). They, therefore, believed that market economics could be useful for social aims as wells for increasing economic efficacy.

At the same time, the New Labor party relied on public-private partnerships and private finance initiatives to raise funds and to dispel fears of excessive borrowing. The Private Finance Initiative (PFI) was announced in 1992 with the aim of achieving closer partnerships between the public and private sectors in order to increase involvement of private sector in providing public services. Under this PFI bill, the Government has been forced to rely on and hire more private contractors to accomplish its tasks (The Guardian, 2005.)

The socialist part could, on the other hand, be seen in that New Labor tried to replace to certain extent welfare with workfare. They were also high on regulation introducing commissions that included Commission for Health Improvement, Commission for Care Standards and so forth thereby rejecting pure laissez faire economics and, in fact, they introduced a host of regulations that controlled businesses and regulated corporate integrity.

In short, Britain's Third Way stressed commitment to: balanced budgets, providing equal opportunity with the emphasis on personal responsibility, decentralization of government power, encouragement of public-private partnerships, improving labor supply, investment in human development, protection of social capital, and protection of the environment. The economy improved and unemployed lessened.

Sources

FactCheck.org. "Who Caused the Economic Crisis?."

http://www.factcheck.org/elections-2008/who_caused_the_economic_crisis.html

Investopeida. What are leading, lagging and coincident indicators? http://www.investopedia.com/ask/answers/177.asp#ixzz2NQavlUvd

NY TImes,( 2012) Derivatives http://topics.nytimes.com/top/reference/timestopics/subjects/d/derivatives/index.html

Century 21 Hindsight Shows the Real Cause of the Housing Market Crash http://www.manausa.com/housing-market-crash/#ixzz2NQf2TifD

The Guardian. (2012/jul/05/) PFI will ultimately cost £300bn http://www.guardian.co.uk/politics/2012/jul/05/pfi-cost-300bn [END OF PREVIEW] . . . READ MORE

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