Week 9, Action Access Prior Knowledge Item
Question 1
In times of recession, politicians talk about spending more money to boost the economy. It is said that spending more enhances job creation leading to an increase in income among the citizens. Notably, during the recession experienced in Russia, the Russian government improved government spending to counter the economic crisis. According to the fiscal policy, spending more improves the demand hence aids in production and employment rates in a country (Van Dalen, 2017). Leaders rarely discuss spending less in times of economic boom as the reduction in spending has adverse effects. These effects include lower economic growth, lower inflation, and reduction in the government budget.
Question 2
During an economic boom, the overall tax revenue of a country increases significantly. The attributes that lead to the realization of higher taxes include greater employment rates, high incomes, improved wages, and adverse economic activities. However, during an economic bust, the tax revenue remains constant or lowers depending on the severity. This aspect is due to low economic activities like investments, loss of jobs, and a decrease in salaries of employees. Unemployment benefits are the financial assistance offered to unemployed people to cater for basic needs like food (Van Dalen, 2017). When the economy expands, the poor get multiple benefits from the government while during economic decline, the benefits are minimal. The inverse relationship is bad as it adversely affects the living standards of the disadvantaged groups.
Question 3
The proportion of a typical man’s budget that is adjustable is 30% following the 50/30/20 budget rule. The 50% is on needs, 30% on wants, and 20% on savings; hence, it is advisable to shift the wants factor than the needs and savings.
Question 4
The government subsidizes many things including foods, exports, oil, and the education sector. I have enjoyed government subsidies like scholarships and education fees. The most popular subsidies include unemployment benefits, partial scholarships, and farm subsidies.
References
Van Dalen, A. et al., (2017). Economic news through the magnifying glass: How the media cover economic boom and bust. Journalism Studies, 18(7), 890-909. https://www.tandfonline.com/doi/abs/10.1080/1461670X.2015.1089183?casa_token=H0nybdc7lLgAAAAA:QwDq7rgWKxgGCAR_J7ED92LJCCmBMxZFlhFQoLNvPdclZKXYldK9WW16gu77WHSsxL5gmJWiIrbBIqeE