Topic: Can government really stabilize the economy?
Thesis statement (My view):
Due to some historical and statistical facts, government’s acts and policies to intervene the economy do helpful to stabilize the economy.
Introduction:
Different schools economists hold different points of view about the topic. The classic school, the rational-expectations school indicates that the government cannot really stabilize the economy. However, Keynesians and neo-Keynesians think that government’s acts, if act properly, do helpful to stabilize the economy.
Background Knowledge:
Different Schools of Economists View:
Against government intervention:
1. Classic View:
Argue that there is a nature tendency for an economy to move toward an macro equilibrium at full employment without inflation.
Adam Smith: there’s an “invisible-hand” of the market, so government do not to intervene the economy.
Failure examples:
The great depression in 1930s
2. Rational Exceptions View
They think that people’s anticipation of fiscal and monetary policies undermines the policy and thus the government’s act is not useful to stabilize the economy anymore.
Advocate government intervention:
1. Keynesian View:
The school of thought argues that by useful government adjustment and intervention, it is possible for an economy to reach the full employment without inflation.
1. Keynesian view of the unemployment
2. Keynesian view of inflation
3. Keynesian’s method to improve the economy during the great depression.
Supporting examples:
Economist Keynes advocates government intervention of economy. In the midist of 1930s’, he was invited to white house as a financial advisor for President Franklin D. Roosevelt. After he demonstrates his view to president, Roosevelt supports his ideas and applies the New Deal. Soon the economy turns vivid again.
2. Neo Keynesian View
They revised the idea of Keynesian view about the possibility for an economy to reach full employment without any inflation because the statistics should the reverse relationship between the inflation rate and rate of unemployment. However, they believe that by managing the aggregate demand, government can achieve the most comfortable combination of inflation rate and the rate of unemployment.
Supporting examples:
The Humphrey-Hawkins Act of 1978
It states that, the most comfortable combination of unemployment and inflation in 1978 is 3percent rate of inflation and 4percent rate of unemployment. The government should force the economy to that rate by adjusting aggregate demand or government expenditure. This act reduces both the inflation rate and the rate of unemployment in the next 10 years.
Conclusion:
Although government cannot reduce the rate of unemployment and inflation rate to zero percent at the same time, government, however, can stabilize the economy by using propitiate policies in different situations.
Reference,
6e, principles of MacroEconomics
Fred Gottheil
Chapter 12, Chapter 13.
Friday, November 13, 2009
Wednesday, November 11, 2009
journal again!
Journal Topic: do automobiles really improve our life?
Although some people indicate that the automobile has improved modern life because automobiles make our life more convenient, I, however, think that automobiles cause more harmful effect than benefits they brought us because automobiles cause air pollution, traffic jam and numerous accidences.
First, automobiles exhausts contain nitric oxides, carbon oxides and variable kinds of hydrocarbons. These gases are detrimental and can seriously pollute our environment. According to high school chemistry text book, the nitric oxides can cause acid rain; carbon dioxides and hydrocarbons can increase the green house effect; the carbon monoxide is toxic to human beings and other animal’s health. Now a day’s automobiles exhaust is being considered as one of the most serious environmental problems.
Second, when more and more automobiles on the road, traffic jam will become a serious problem. In my hometown Shenzhen, a metropolitan city, for example, every morning when people on their way to work by automobiles, there will be traffic jams for at least 1.5 hours ranging from 8am to 9:30am because more than 600,000 automobiles are gathering on the Shennan Road and Riverside Road (two main avenue of the City). Same situation happens in every evening during the time that people back to home at 5pm to 7pm. Approximately everyone who lives in comfortable suburb may waste at least 2 hours to suffer the traffic jam during their way to work and their way back home. So, recently a increasing number of people sell the comfortable house at suburb and move to the apartment in the downtown because they cannot stand the long time they waste in the road.
Third, traffic evidence had already killed more than 30,000,000 people totally (WHO’s Statistics, updated to 2007) In China，more than 200,000 people are killed by the car collisions and more than 20,000,000 people suffered from the injury of traffic accidents (Traffic agency of P.R.China). According a scientific report by Traffic Agency of PRC, the death accidents caused by every 10000 cars in Chinese City ranges from 10.8 to 50 per year, which means that every year in Chinese cities, every 10000cars can cause every 10.8 to 50 people die. How terrible it is!
To conclude, automobiles do bring convenience to us and in this case improve our life. However, because of the air pollution, the traffic jams and the traffic accidents, automobiles in fact, decrease our life quality.
Although some people indicate that the automobile has improved modern life because automobiles make our life more convenient, I, however, think that automobiles cause more harmful effect than benefits they brought us because automobiles cause air pollution, traffic jam and numerous accidences.
First, automobiles exhausts contain nitric oxides, carbon oxides and variable kinds of hydrocarbons. These gases are detrimental and can seriously pollute our environment. According to high school chemistry text book, the nitric oxides can cause acid rain; carbon dioxides and hydrocarbons can increase the green house effect; the carbon monoxide is toxic to human beings and other animal’s health. Now a day’s automobiles exhaust is being considered as one of the most serious environmental problems.
Second, when more and more automobiles on the road, traffic jam will become a serious problem. In my hometown Shenzhen, a metropolitan city, for example, every morning when people on their way to work by automobiles, there will be traffic jams for at least 1.5 hours ranging from 8am to 9:30am because more than 600,000 automobiles are gathering on the Shennan Road and Riverside Road (two main avenue of the City). Same situation happens in every evening during the time that people back to home at 5pm to 7pm. Approximately everyone who lives in comfortable suburb may waste at least 2 hours to suffer the traffic jam during their way to work and their way back home. So, recently a increasing number of people sell the comfortable house at suburb and move to the apartment in the downtown because they cannot stand the long time they waste in the road.
Third, traffic evidence had already killed more than 30,000,000 people totally (WHO’s Statistics, updated to 2007) In China，more than 200,000 people are killed by the car collisions and more than 20,000,000 people suffered from the injury of traffic accidents (Traffic agency of P.R.China). According a scientific report by Traffic Agency of PRC, the death accidents caused by every 10000 cars in Chinese City ranges from 10.8 to 50 per year, which means that every year in Chinese cities, every 10000cars can cause every 10.8 to 50 people die. How terrible it is!
To conclude, automobiles do bring convenience to us and in this case improve our life. However, because of the air pollution, the traffic jams and the traffic accidents, automobiles in fact, decrease our life quality.
Friday, November 6, 2009
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