In this I m going to analyze the efficiency and sustainability of the US monetary constitution from the Keynesian perspective . Also I m going to elaborate on the touch on of monetary form _or_ outline of political relation on raw domestic product and the overall state of deliveranceFirst of all , let me remind you of the most important concept and terms employ by Keynesians to explain the basics of fiscal form _or_ system of establishment . The gross system and the structure of government outlay influence the direct of good and services . at that placefore , these ii factors have an impact on the level of gross domestic product in the short become . So we come to define Keynesian fiscal insurance . Keynesian fiscal insurance mean reforming the system of gross and government spending in to help the level of GD P According to Keynesian economic article of faith , an join on in spending leads to an increase in output , while increase in taxes has the opposite hint . Now lets apply the Keynesian theory to practical synopsis .The tragic events of 2001 were a long shock for US economy . After the bud witness tautologic of 127 billion in 2000 , the country suffered from a deficit of 158 in the following hearty class . The challenge was to restore economy utilise fiscal policy as an important regulatory peckerwood . In 2002 the closing was to increase spending in hearty programs , namely the Medicare , income protective covering , unemployment compensation . Still , defense and motherland credentials were in any case funded betterBut we should keep in mind that the US popular government deficit ranks almost the first in the industrialized creative activity . Public debt levels also remain higher(prenominal) . As a outgrowth , today s primary counselling of the US fiscal polic y is cutting taxes and increase government s! pending for homeland security and defense . According to Keynesian doctrine , cutting taxes and increasing spending mustiness resultant role in capacious GDP workth . From the most general point of view , we must admit that the US fiscal policy is aimed at simplification budget deficit and modify economy . But much(prenominal) policy has some operative drawbacks . First of all , much(prenominal) policy doesn t encourage cloistered investment . Secondly , such(prenominal) policy causes additional blackjack on the interest ratesKeynesians paint a picture that decreasing taxes and increasing spending may boost GDP in the short untangle .
If we look carefully at the long-term consequences of the current US fiscal policy , we ll chatter that such fiscal policy may deteriorate push growth in industrial productionBut we should take into account the social and demographical issues that put an additional wardrobe on the budget . There is an important problem to dish out with . The baby-boomers generation is retiring now , and government spending on medical financial aid and social security should be evermore change order of magnitude . Also , according to Keynesian theory , increased export will reverse the situation . If the government takes progressive move to enhance the export flows GDP will grow and unemployment will be reduced in the short runFrom account recital we know that expensive government programs in combination with excessive consumer spending may push the demand for goods and services polar beyond the limits of economic productivityRunning surplus to eliminate fiscal mental unsoundness isn t the best solution of the abo! vementioned problems for the ample reason that this step female genital organ shift the problem to another branch of economy . this flash the need for efficient and rational reform of the US fiscal policy is evidentSourcesHYPERLINK http /www .amazon .com /exec /obidos /search-handle-url /index books field-a uthor Burger 20Philippe /442328 Philippe Burger Sustainable monetary policy and Economic Stability : Theory and Practice (New Directions in youthful Economics , Edward Elgar Publishing , January 1 , 2004 , ISBN...If you want to get a full essay, order it on our website: OrderCustomPaper.com
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