Decline In Private After Tax Incomes example essay topic

A rise of the economy, with increasing incomes, raises the tax base and raises the revenue if tax rates are unchanged. Expenditures for unemployment compensation also fall as the economy rises, and some other expenditures tied to earnings or employment also decline. Thus the deficit declines or the surplus rises as the economy rises. The reverse happens as the economy falls. When the economy declines and income falls, private after-tax incomes fall less than they would otherwise do, because some of the decline is absorbed in a decline of taxes. In addition, unemployment compensation and other government payments make up part of the loss of private incomes.

This cushioning of the decline in private after-tax incomes tends to limit the decline in private spending and so to limit the multiplication of the forces of decline in the economy. A similar process occurs in the other direction when the economy rises. Traditionally, the main objective has been to ensure that budget balancing would require that if the government spends money, it must also make decision to raise the money. From this standpoint expenditures have been defined comprehensively, so that no activity that might by any standard be considered expenditure escapes the budget-balancing discipline.

This goal calls definition of the deficit that would make it seem very large, to put the maximum restraint on spending. Economists have two interests in the definition of the budget. One is to measure the impact of the budget on the demand for output. This is also known as the deficit on income and product account.

It is also the deficit that fits into the proposition that private savings equal private investment plus the deficit. A second one of the budget deficit in economic analysis is to measure the effect of the government on total investment. If interest is only in private investment, the income and product account deficit serves the purchase. But if the interest is in total investment, including the investment government makes, as in buildings, the deficit should exclude the governments investment expenditures. Nowadays surplus in the social security accounts became much larger than it had previously been, and government outlays for the costs of deposit insurance also became very large. Index of Consumer Confidence is used to analyze the situation of the economy and consumers satisfaction.

The Consumer Confidence Survey is based on a representative sample of 5000 US households. NFO World Group conducts the monthly survey for The Conference Board. The Conference Boards Consumer Confidence Index, which has declined for five straight months, rebounded in November current year. The index now stands at 84.1 (1985 it was 100), up from 79.6 in October current year.

The Expectations Index rose from 81.1 to 88.4, but the Present Situation index remains relatively flat, edging up to 77.6 from 77.2. The modest improvement in consumers assessment of the present situation was due to a slight improvement in current business conditions, with labor market conditions still stagnant. One of the main determinants of the living standards is productivity. Rising productivity underlines rising living standards and most what I think of as economic progress. If the rise of productivity stops, so will the rise of living standards. The measurement of productivity growth poses many difficulties for the economic researcher.

Should the investigator be concerned with the business sector only or with the entire economy including government? This question is significant because in the US national income and product accounts, government output is more than 10 percent of the total, is defined to have a zero productivity growth. The increased education of the labor force has been an important source of growth in output since at least the early part of the century. Education attainment and earnings go hand in hand.

I think a rise in education will cause a rise in labor input, on the other hand rise in education is a part of productivity growth. A more educated population not only strengthens the society but also makes it capable of producing and earning more. One prominent investigator, Edward Denison, has estimated that the rise in average educational attainment and the resulting increased earnings accounted for one-sixth of the rise in output for the last fifty years or 30 percent of the rise in output per employed person..