Economic Critique - 1396 Words

Economic Critique University of Phoenix ECO371 January 21, 2013 Economic Critique Currently, our country is in a recession, and the unemployment rate is at an all-time high. The unemployment rate consists of people not only out of work but also those who can work and are actively looking for work (Colander, 2010). Unemployment also means there are more people out of work than there are jobs available (Colander, 2010). Unemployment has extremely negative effects on many people and businesses. The government budgets funds for unemployment benefits and when the unemployment rate rises, the government has to re-allocate funds to accommodate†¦show more content†¦The foreign exchange market is influenced when the Federal Reserve increases or decreases interest rates. The change will cause the stock markets worldwide to react in a positive or in a negative manner. Federal Reserve rates also influence the exchange market bank deposit factor that will determine if the supply of money will be added to the consumer or not. When the Federal Reser ve lowers interest rates because of the economic slowdown or recession, the supply of money will be available to banks for loans. If there is a constant demand for money, interest rates will continue to drop. When interest rates increase, this causes a decline in consumer spending. Keynesian Model Keynesian recommendations of approach to fiscal policy favored the government policy. Keynesian recommended that fluctuations in the economy should be controlled. Expansions of business should be a long-term trend and contractions are a symptom of an underlying problem in the economy. When problems arise with the economy the problems need to be dealt with immediately by the government. In the class textbook Macroeconomics by Colander he states, â€Å"Keynesians argued that, in times of recession, spending is a public good that benefits everyone† (Colander,Show MoreRelatedRational Fools : A Critique Of The Behavioral Foundations Of Economic Theory1260 Words   |  6 PagesFools: A Critique of the Behavioral Foundations of Economic Theory written by economist, Amartya Sen, takes a look at behavioral self-interest and its relation to behavioral economics. At the time that this paper was written, behavioral economics was becoming a popular area to explore and economists were trying to figure out how they could apply their research to encourage human flourishing. 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