Economics (Research Paper Sample)

Economic Analysis
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Introduction
Apart from earning and consuming the money, investing and utilizing are some of the major elements that found important in the economic functions (Allison, 2013). There are two dominating types of economics, known as Microeconomics and Macroeconomics. Economic recessions and Hardship is one of the major aspects that strides specifically under the line of Macroeconomics. London School of Business & Economics (LSBE) has revealed the most widely used definition of recessions. According to them, Economic Recession is the time in which the economy starts to lose a large part of their assets. It is the time in which the credit of the banks squeezed, stocks markets deteriorates and budget deficit increases (Allison, 2013). Recessions always bring economic hardships and hard times for the economies from different angles, and that is the main thing why economies always try to nullify the adverse effects of the economic crisis.
Brief Discussion of Fiscal Policies
The game of policies is very common in the field of Economics; in fact the entire field of economics lies on the fact of providing different policies. Among some of the major policies use in the field of economics, the name of fiscal policy is one of them. In economics, a policy that specifically deals with the revenue collection (taxes) and expenditures in order to influence the entire economic structure of the country is known as Fiscal Policy. John Maynard Keynes (JMK) torched on the government spending and its relative effects over the aggregate demand and supply. As per JMK, if the government spending will be on a lower level, then the chance of economic prosperity would be on a higher scale (Allison, 2013).
The United States of America (USA) had envisaged a real time economic recession from the year 2007 to 2010, known as worst as the great depression after the World War II. However, the government of the US took serious and powerful measures to overcome on those issues completely to make their place in the economic functions. There is a serious linkage found between the Government Spending and Consumer Spending. Governments spending of the United States (US) were actually increased in the economic crisis, and it can be found from the below mentioned graph
According to the aforementioned graph, the Government Spending which was nearly to a level of US$ 2,850 Billion in the financial year 2007 increased to a level of US$ 3,100 in the financial year 2010, showing that the Government of the United States took large amount of money on the name of credit from the Central Bank due to which the fiscal deficit of the country increased heavily (Tradingeconomics.com, 2014). Resultantly to this, the consumer spending on the other hand actually decreased in the same time period in the U.S. and it can be analyzed from the below mentioned chart
The relation described above can be clearly seen in the aforementioned graph, in which the consumer spending was very low during the year 2009, while the government spending was on all time high. Later on from 2012 to 2014, when the government spending decreases, the consumer spending increases consequently because of the low fiscal deficit problem (Tradingeconomics.com, 2014).
Brief Discussion of Monetary Policies
Apart from the fiscal policy, there is yet another important policy of economics known as Monetary Policy. A policy in which the central bank intervenes to control the supply of money through decreasing and increasing the interest rate is known as Monetary Policy. It is an important policy as far as economic growth and stability is concerned. Most of the times, it is found that economies actually decreases their interest rates during the economic crisis, merely to increase the level of borrowings accordingly. The same stance is found in the economic consequenc...