We consider the choice in a variety of fiscal policy options and their implications when comparing the following assumptions, the case may be illusory to help. Suppose a portion of the federal government borrow money, and then:
Case A: large-scale spending as the money to the Bob (such as tax breaks), but he chose to stay home and watch in my spare time,
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Case B: use the money to hire Bob stay home and watch \
Case C: use the money to hire Bob stay home and watch \
In all cases, Bob is part of the money used to buy consumer products and services, which is said Keynesian \However, three cases caused by this indirect effect is the same, so we can now put this question aside the. We first compare cases A and B. Both cases, the final allocation of funds and economic welfare have never differed. Bob is watching,
air max 2010 sale, \But we need to note that the relevant statistics on the macroeconomics will be different. In case B, Bob was hired to provide government services. If we use the data to compare the standard case A and B, then B in the case, we can see Bob working hours more,
nike air max 2009, the value of gross domestic product GDP higher.
We now look at the case of C. Compared with the case B,
air max sale, case C, the employment rate and the total GDP and Case B the same. However, strictly speaking, Bob enjoyed the benefits lower. After all, Bob see \A case C will be compared with the case,
nike air max shoes, we can see that case C, a higher employment rate, GDP output value of higher benefits but lower.
Generally speaking, GDP can reasonably reflect the economic benefits, so the higher the GDP the better. However, in this case it clearly can not be established. Part of the problem is due to cost, according to economists count on government procurement in total GDP. Therefore, if the government servants is not the slightest value to create something that some of the items inside will be counted into the GDP, with the government to buy something of value arising from the same GDP. When those responsible for the calculation of national income accounting personnel in the calculation of GDP, they usually do not determine the social effects of government procurement. Therefore, any concern for the economic welfare of the people need to think the problem over the value of GDP.
moral of this story is: If the government adopted a package of fiscal incentives to those who do not buy products and services of public value (as in case C), according to the set of macroeconomics it also stimulated the economy,
nike air max cheap, but so participants in the welfare state economies worsen (with a more viable solution, as compared to Case A). To avoid falling into this trap, the government needs to use taxpayer dollars only to those who can bring projects of public interest, it is difficult to achieve quickly. Thus, economic output is measured in a wrong way to measure when the way seems to be hesitant to spend a good way.
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