What Are The Fundamentals Of Macroeconomics
Fundamentals of Macroeconomics Paper
Alyssa Chun
ECO/372
February 12, 2015
Dr. Christian Teeter
Fundamentals of Macroeconomics Paper There are many economic activities that have an apparent affect on businesses, households, and the government. Some of these various financial affairs include tax reductions, vast employee layoffs, and purchasing groceries. For each activity there is a flow of resources that go from one entity to another. Although it may seem as if these activities are not directly related, in many ways they can have an affect on each other as well as on each entity. Acknowledging the influence an economic activity can have on a community can be beneficial for an individual, family, business, or political authority, …show more content…
in making wiser economic choices. Although for any hard working tax paying citizen a tax reduction sounds like a blessing, the government uses these sources of revenue to help rebuild land and properties, fund programs, and other various things that help the community. The government uses payroll taxes from businesses, known as FICA (the Federal Insurance Contributions Act), to fund unemployment benefits, Medicare, and Social Security benefits (Cloutier, n.d.). The government may also use the strategy of reducing taxes in order to help lift the country out of a recession. Lowering taxes improves the economy by increasing purchases because it raises disposable income (Cloutier, n.d.). Any household or business will be thankful for a decrease in taxes, providing more money for the consumer to spend on additional sums, which increases GNP (gross national product). Massive employee layoffs can have a severe negative affect on the economy and society.
Abrupt unemployment for any individual is, as one can imagine, very hard on a household. It can cause a household to be behind on bills, cut their resources for medical needs, and cause on overall impact on their standard way of living (Simpson, n.d.). High unemployment also affects the household of those still employed because they will have to pay more payroll taxes to help fund the unemployment benefits for those who qualify. Therefore, the government is affected because they have to raise payroll taxes in order to compensate. Though as stated before if the country falls into a recession, another tactic would be to then lower the taxes once again. Prolonged unemployment can lead to a loss in skill and motivation, which can affect a business when they rehire a person who has been previously laid off. There is a higher risk of employee pessimism or skepticism in the value of investing time and effort in training to gain a long-term position (Simpson, nd.) once a person experiences being laid …show more content…
off. A common everyday activity such as buying groceries has an interlinking influence on households, businesses, and the government.
The purchasing of groceries is something that all people in a household need to sustain a healthy and affordable diet. Eating out all the time can be costly and often unhealthy, so the price and convenience of groceries from the local market, greatly affects any household. Businesses then need to have prime locations and provide consumers with quality food for affordable prices. Many people are turning to stores like Trader Joe’s to find cheaper and healthier options. The government determines the cost of taxes on food, as well as approves whether or not a product is eligible to be sold on the market. There are food and health regulations that have become stricter over the years that try to keep unhealthy products off the shelves. Currently the government is considering a new higher tax on soda, the Obesity Action Coalition (Friedman, n.d.). The idea is to decline soda purchases that in turn can help our country’s issues with obesity, which directly affects both households and businesses. Economic activities such as buying groceries, decreases in taxes, and immense employee layoffs, on some level have an impact on the government, businesses, and households in positive and negative ways. Each entity also has affects that intertwine with one another. All economic activities large or small can make a difference to the individual, to society, or to
the country. Understanding and identifying these types of connections can assist a household, business or the government when making important economic decisions.
References
Cloutier, R. (n.d.). Do tax cuts stimulate the economy?. Retrieved from http://www.investopedia.com/articles/07/tax_cuts.asp
Friedman, R.R. (n.d.). A soda tax – Will it change anything?. Retrieved from http://www.obesityaction.org/educational-resources/resource-articles- 2/nutrition/a-soda-tax-will-it-change-anything
Simpson, S.D. (2011). The cost of unemployment to the economy. Retrieved from http://www.investopedia.com/financial-edge/0811/the-cost-of-unemployment-to- the-economy.aspx
Alyssa Chun
ECO/372
February 12, 2015
Dr. Christian Teeter
Fundamentals of Macroeconomics Paper There are many economic activities that have an apparent affect on businesses, households, and the government. Some of these various financial affairs include tax reductions, vast employee layoffs, and purchasing groceries. For each activity there is a flow of resources that go from one entity to another. Although it may seem as if these activities are not directly related, in many ways they can have an affect on each other as well as on each entity. Acknowledging the influence an economic activity can have on a community can be beneficial for an individual, family, business, or political authority, …show more content…
in making wiser economic choices. Although for any hard working tax paying citizen a tax reduction sounds like a blessing, the government uses these sources of revenue to help rebuild land and properties, fund programs, and other various things that help the community. The government uses payroll taxes from businesses, known as FICA (the Federal Insurance Contributions Act), to fund unemployment benefits, Medicare, and Social Security benefits (Cloutier, n.d.). The government may also use the strategy of reducing taxes in order to help lift the country out of a recession. Lowering taxes improves the economy by increasing purchases because it raises disposable income (Cloutier, n.d.). Any household or business will be thankful for a decrease in taxes, providing more money for the consumer to spend on additional sums, which increases GNP (gross national product). Massive employee layoffs can have a severe negative affect on the economy and society.
Abrupt unemployment for any individual is, as one can imagine, very hard on a household. It can cause a household to be behind on bills, cut their resources for medical needs, and cause on overall impact on their standard way of living (Simpson, n.d.). High unemployment also affects the household of those still employed because they will have to pay more payroll taxes to help fund the unemployment benefits for those who qualify. Therefore, the government is affected because they have to raise payroll taxes in order to compensate. Though as stated before if the country falls into a recession, another tactic would be to then lower the taxes once again. Prolonged unemployment can lead to a loss in skill and motivation, which can affect a business when they rehire a person who has been previously laid off. There is a higher risk of employee pessimism or skepticism in the value of investing time and effort in training to gain a long-term position (Simpson, nd.) once a person experiences being laid …show more content…
off. A common everyday activity such as buying groceries has an interlinking influence on households, businesses, and the government.
The purchasing of groceries is something that all people in a household need to sustain a healthy and affordable diet. Eating out all the time can be costly and often unhealthy, so the price and convenience of groceries from the local market, greatly affects any household. Businesses then need to have prime locations and provide consumers with quality food for affordable prices. Many people are turning to stores like Trader Joe’s to find cheaper and healthier options. The government determines the cost of taxes on food, as well as approves whether or not a product is eligible to be sold on the market. There are food and health regulations that have become stricter over the years that try to keep unhealthy products off the shelves. Currently the government is considering a new higher tax on soda, the Obesity Action Coalition (Friedman, n.d.). The idea is to decline soda purchases that in turn can help our country’s issues with obesity, which directly affects both households and businesses. Economic activities such as buying groceries, decreases in taxes, and immense employee layoffs, on some level have an impact on the government, businesses, and households in positive and negative ways. Each entity also has affects that intertwine with one another. All economic activities large or small can make a difference to the individual, to society, or to
the country. Understanding and identifying these types of connections can assist a household, business or the government when making important economic decisions.
References
Cloutier, R. (n.d.). Do tax cuts stimulate the economy?. Retrieved from http://www.investopedia.com/articles/07/tax_cuts.asp
Friedman, R.R. (n.d.). A soda tax – Will it change anything?. Retrieved from http://www.obesityaction.org/educational-resources/resource-articles- 2/nutrition/a-soda-tax-will-it-change-anything
Simpson, S.D. (2011). The cost of unemployment to the economy. Retrieved from http://www.investopedia.com/financial-edge/0811/the-cost-of-unemployment-to- the-economy.aspx