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How can Fiscal Policies be used for the workers like Joe Brezinski?

Joe Brezinski is one of those workers who are fired and are worried about losing their house. They’ve formed worker’s political action committee called Campaign for Job Security. How can fiscal policies can help the workers like Joe? There are several actions that the government can implement to solve this problem.

The unemployment rate is 12.5% and the inflation rate is 9%. Joe Brezinski is part of that unemployment rate and is suffering from high inflation rate. To satisfy the workers of Campain for Job Security, the government can implement strict fiscal policy by taxation.

The government can impose 30% increase in taxation for all businesses. However, they can cut the taxation to 0% for those firms that are willing to employ a large number of people. This way the government can get the unemployment rate down to 1~0%.

The government should also decrease the amount of government spending to reduce the debt and deficit. Also, they should pressure the foriegn firms to invest on factories and technology to boost up the domestic aggragate demand.

So adjusting taxation for businesses according to how many people they employ will be a great help to the unemployed workers like Joe!

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Yuan Rise Harmful for Chinese Economy

Yi Xiaozhun says the currency has been turned into a political issue

BBC News: News Article 1, News Article 2

According to BBC News, allowing the yuan to strengthen against the dollar would hurt the Chinese economy in the short-term.

If yuan strengthens against the dollar, the Chinese firms or international firms in China will have difficult time exporting their products to foreign markets. Because Chinese economy and growth is heavily depended on its exports to foreign markets, especially US market, it is resentful toward the appreciation of yuan against US dollar.

The minister Yi Xiaozhun argued that if yuan value rises, the Chinese economy would suffer short-term economic depression. China has already experienced its first ever trade deficit of $7.2bn and if the appreciation of yuan takes place, this trade deficit would be aggravated. Some experts say that this could be a short-term phenomenon due to unplanned importing, however, it could be a serious problem for Chinese economy if yuan appreciates.

In sum, China will suffer economic depression if its currency, yuan, rises against US dollar. Thus, even if United States politically, diplomatically pressures China, China will never give up due to this its pivotal role in Chinese economy.

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Circular Flow Model

The Circular Flow Model

There are some assumptions in this Diagram:

  • No government regulations
  • No savings
  • All output is purchased

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Why I enrolled for Economics

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I have always thought of economics as a great study of how the world works. There is one and the most important reason why I chose this class.

The  reason is that economics is easy compared to other social studies subjects such as history and geography. When some subject is ‘easy’ to study, it should not be recognized as bad or inferior  subject. In fact, economics is comparably easy to study because of its feature of relevance to everyday life unlike history or geography.

In short, because economics is an easy and relevant study of our daily life, I enrolled for economics.

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