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Essay / Research Paper Abstract
This 8 page paper answers four questions posed by the student; How do government transfer payments help reduce the severity of a recession caused by a contraction in aggregate demand? What are the two core macro-economic policies targets and how are they achieved theoretically with nominal GDP targeting? Explain why government debts are not necessarily harmful to the economy as a whole and what the impact of increased government spending will be if it is anticipated or not anticipated. The bibliography cites 4 sources.
Page Count:
8 pages (~225 words per page)
File: TS14_TEecqust.rtf
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Unformatted sample text from the term paper:
in reducing the impact or severity of a recession cause by a reduction in aggregate demand we first need to consider what we mean by transfer payments. These are payments
that are made by the government, but are not made in return for any goods provided or services. In other words they are not part of a commercial transaction. The
normal use of these payments are to help maintain a minimum standard of living for those in society that are at the poorest levels. The payments are usually by way
of welfare payments, such as unemployment benefits, and pensions as well as other supplementary benefits that are usually means tested. Sickness benefit and child benefits may also be included here
(Nellis and Parker, 1996). The next element we need consider why this may reduce the recession caused by a decrease in aggregate demand we need to look at why
aggregate demand may create a recession if it reduces. In an economy there will be a cycle of supply and demand, the goods that are manufactured or services provided will
be there to be sold. The balance of the supply and demand will lead to the price being set, for example, if the demand for a product is higher than
the supply and the supplier cannot provide enough to meet the demand then the price will rise until the demand is decreased sufficiently so that the supply and demand are
in equilibrium. This may be seen in many areas, such as the stock market with shares as well as smaller markets such as agricultural markets where there is a shortage
of a particular good, and as a result the price rises Nellis and Parker, 2000) The converse is also true, where there is a higher level of supply, and the
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