If we do not buy imported goods then they will not buy ours and without export revenue and foreign investments we would not be able to function financially. When exports increase so does the Gross Domestic Product (GDP). GDP is the dollar amount of all goods and services produced within the United States. When the GDP is high it signifies that our economy is healthy and stable. When companies can produce more due to demand they are able to hire more workers, which can lower the unemployment rate.
According to Gallup, the lack of good jobs in America is a greater problem than the inefficient healthcare costs, runaway government spending, and even global terrorism. The lack of good jobs is a poignant crisis in America today, and is making our nation bankrupt. When GDP is up, there are more jobs in a nation, resulting in better welfare. This is why GDP is so important to the welfare of its citizens. GDP is the sum of all goods and services produced in a country during a year (Ferrell).
Expansion is measured from the trough of the previous cycle to the peak of the current cycle, while recession is measured from the peak to the trough. During a boom there is high levels of consumer spending, business confidence, profits and investment. In addition, prices and costs also tend to rise faster and unemployment tends to be low as growth in the economy creates new jobs. During a recession falling levels of consumer spending and confidence means lower profits for businesses, which then start to cut back on investment. Also recession increases spare capacity and unemployment rises as businesses cut back and reduce stocks.
By raising the minimum wage to $8, the government thinks that poverty will go down and the quality of living will go up. But, with the increase in pay comes the increase demand for skilled workers. The skilled workers are not the ones in poverty right now. The more skilled worker would replace the unskilled workers, who are likely to take the minimum wage job in the first place, if the minimum wage were to go up. This would defeat the whole purpose of the idea to eradicate poverty.
Small businesses actually rely on low-income families to spend money on goods to increase business sales. Raising the minimum wage “would allow people to afford basic necessities and decrease the pressure on taxpayers” (Sklar). There are those who believe increasing the minimum wage “will only speed up the pink slips and prolong [low-income workers] unemployment” (Norwood). Since the latest increase in the minimum wage in 2009, unemployment has yet to have dramatically increase nor decrease significantly. This type of result would only occur if the minimum wage was increased by a tremendous amount.
The advantages from higher minimum wage can have a positive effect on the whole economy flows, while the disadvantages have some negative effects on employment rates. This essay is going to discuss about how higher minimum wage affect economy. Body The effect can be both negative and positive .The supporters assume that a rise minimum wage increases the level of living and reducing poverty and they also think that it is a good way to improve on labor’s right. On the contrary , the others think that it increases unemployment ,specially those workers who are unskilled or handicap and there is possibility of encouraging teenagers to drop out of the school to work. Further more , at this point every small business face trade-off , people running small businesses make decision for changes in strategic by comparing benefits and cost at the margin , as long as the marginal profit exceed the marginal cost .
This benefit will be evident in the distant future as the unsustainable growth in federal debt would be reined in. The federal debt is currently more than 70 percent of GDP and is growing at a pace higher than GDP (Page & Reichling, 2012). Without current sequestration or a similar solution, the United States would become insolvent much sooner. According to a nonpartisan economic study, removing fiscal tightening like sequestration would boost output and employment in the short term. Conversely, the United States’ output and employment would suffer and lead to larger increases in interest rates over the long term (Page & Reichling, 2012).
If one household had all the income then it would be one (complete inequality). Inequality in economics encourages individuals to work more. The potential to earn higher incomes produces an incentive for workers to work longer and harder, however, workers will have to give up leisure time in order to gain more work. This will only occur when the extra income is more valuable than leisure time. Output will then be increased, and will boost the economy.
As well as increasing living standards, it also benefits the government, as they will see an increase in revenue collected in income tax. This will allow the government to further improve public services such as healthcare, and as the quality of healthcare increases, so does the quality of life for the population. Another benefit of economic growth is that unemployment will fall. As companies and services expand, they can output a great deal more, and therefore more labour is demanded, this means that unemployment will fall. If unemployment falls, less people will be claiming unemployment benefits and other similar pay-outs from the government, this will allow a lot of tax to be spent on other things, such as expanding public services further, which also leads to an increase in living standards.
Short-term and Long-term Effects It is quite difficult to predict short-term effects of migration, as this process mainly depends on Political and Economic changes. As Christian Dustmann and Tommaso Frattini say, those immigrants who arrived to the UK in the 2000s may have realized less benefits despite the tax they paid. In a short-term time immigration is likely to have a negative impact on wages as the labour market widens. As for the employment in longer term, “increase in labour supply should lead to increases in aggregate demand through increases in demand for goods and services” (Ciaran et al). Specialists say that in the long term, it seems to be