Macro12C Essay Example | Topics and Well Written Essays - 1000 words

Macro12C - Essay Example The unemployment rate reached a minimum of 5.5% from 7.5% at the start of term of President Reagan. The real median income for families increased to nearly $41,000 at the end of term; this was significantly higher than 10 years before and 10 years after President Reagan’s term. Inflation touched a minimum of 2% in 1986 and ended at 5% in 1989 compared to 11% at start of term in 1981. The growth of government spending was 1% during president Reagan’s term compared to 3.5% before him and 4.5% after him. Real income tax revenues increased by 16.3% even after top income tax rate had been reduced from 70% to 50% in 1983 and to 28% in 1986. The nominal federal revenues increased from $517 billion in 1981 to $1.031 trillion in 1989. On the downside, however, Reaganomics was used when US was at peace at the time, yet the national debt increased from 26.3% of GDP in 1981 to 42.3% in 1989. Secondly, the savings rate fell from 8% to 6.5% during president Reagan’s term as a result of his economic policies. Thirdly, the rich got even richer and the poor got even poorer. Reaganomics largely believed that if more wealth was given to the rich, they would re-invest this money, which did not really happen. Given the positive and the negative outcomes of Reaganomics, it can be said that while Reaganomics did work well for the years it was in force, it wasn’t a very sustainable economic policy as it relied mainly on increasing national debt to cover for the economic growth. Q2: Show graphically the effects on macro economy of a sharp rise in OPEC oil prices in a. the short run. b. the long run. How do you account for the differences in your answers to parts a and b? A sharp increase in OPEC oil prices occurs due to a supply shock that is a sudden drop in supply of oil. Below figures show its effects in the short and long-run. Short-run effect of a sharp increase in oil price is illustrated in figure 1 below: Figure 1. Short-run effect of Sharp increase in oil prices In the short-run, the supply shock causes price levels to increase due to inflation caused by high oil prices not only on oil dependant industries but also on transportation of goods and services. This leads to a drop in total output as well as price levels have increased but the wages have not in the short-run – leading to stagflation. Thus, the short-run effect is an increase in price levels and a decrease in total output. Figure 2. Long-run effect of a sharp increase in oil prices Due to increase in inflation in the short-run, unemployment starts to increase. Wages start to decrease. This leads companies to start hiring people. Also, the short-run effects bring about economic policy changes by the governments that are targeted to increase the output and to reduce inflation – which could be an increased government spending and/or decrease in interest rate. As the inflation comes under control, the real wages start to increase. This leads to an increase in demand in the long-run and the net effect is that

Describe your Out of Class Experience Essay Example | Topics and Well Written Essays - 1000 words

Describe your Out of Class Experience - Essay Example school period is something not many people do normally and especially when the examinations are near and usually the norm is to be found strictly in reading zones. This was a new experience for me and also for the few friends I was with as i had never done anything like this as I am always busy in the libraries and engaging in group discussions just before an exam which builds up the pressure and tension making remembering harder. This was the exact opposite during this experience as I got to remember even without much reference to class notes and discussions. The insight I got from this whole experience was that education is possible anywhere as long as one puts their mind to what they are studying or being taught and is relaxed. It was during my summer holiday break last year, when i had an opportunity to experience another out of class experience by attend a seminar that is related to my course in school and that was being held near my home town. The seminar was a five days affair with five different motivational guest speakers most of whom were born in that town and had become successful in their careers. The aim of the seminar was to motivate and encourage the students pursuing this course and who are from my home town not to dwell on their backgrounds but think about the future and how they could change that whichever way they wanted. These were ideal speakers as they had experienced almost all the trials, tribulations and joys that are present in this town and hence the far they reached and whatever they had achieved by the time the seminar was being conducted was possible for the students residing in this location. This got me to start dreaming big about my future and how all the challenges I was currently facing in school and in life as a result of the geographical locations should not be a hindrance but act as a stepping stone towards a bright future. I even got one of the speakers to be my role model to help me in achieving this dream and