Adeela Wilson Econ paper 1

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Adeela Wilson
ECON 101
Mr. Cleveland
25, March 2014
Observation and Analysis of the Class Videos As we all know there are many government issues that are affecting the US economy. There are several discussions presented through social network and media. I would like to address two videos that were viewed. The first video is about Robert Reich in support of government spending. In the video, Reich is being interviewed about his viewpoints about budget cuts and how it could make job crisis worse. Main question and asked of him was President Obama’s emphasis on budget cuts to reach a deal on the debt ceiling. Reich response to this was very critical and he states that government spending would revive the economy and put people to work. The governments plan to use the budget cuts, increasing interest rate, delayed social security check and Medicaid checks which mean consumers will not spend and companies will cut employees and lead to unemployment and this is what will slow down the economy. The second video is about the federal deficit and debt limit and how are government run at a Macro level but is explained in a Micro level to making it easy to understand. In the video they use a small community called United Estates to explaining the debt limits. Its shows how a the community elects a man named Steve who was elected president and given responsibilities to run the communities along with handling the finances. Steve had many idea along with the resident and lead them to debt and when the money ran out the resident decided to vote for a new president the new president sold all the unnecessary projects and said no to new ideas and projects this didn’t get them out of debt but help bring back on track. No mater what the decisions the government leaders make to stimulate the economy there will always be an effect in short run verses the long run. In my observation of the two videos discussed above, was that in the he first video strongly represents ways to stimulate the economy and keep it growing through Reich views. Reich explains this by saying that increases government spending is a strong way to keep the economy growth and stimulating the economic crisis not by budget cuts. Budget cuts lead to more problems and may even lead us to inflations and worsen the job crisis. The example Reich used is that if consumers don’t buy than companies don’t hire which leads to unemployment and causes a crisis in the economy, there needs to be more demand if consumer and business are not buying or spending. Which leads to recession and the government is the last resort to fix the economy. The reported questions that 70 percent of the GDP are consumers, how to we switch a 70 percent buying company to a making company? Reich replays by saying we are not a major export we are an importers and this may change in the future and we have to wait a long time before this changes and we cant wait for the foreign country to appreciate their currency and be equal to the value of dollar and maybe these countries will be come more consumer base, but we just cant wait for them to be consumption based. We are in a job crisis now. Now the government has stepped in and made the budget cut and this will affect out economy and especially the job crisis. In the second vide, it was observed was that the US government is run and how it reaches debit. The example is shown through little town. This video explains how our government reached a federal deficit and debt limit. Our government uses our taxes money to pay for different government projects that where brought in to grow the economy but the government couldn’t afford to pay for these projects and borrowed from the future which was possible printing new money and presenting new ideas to pay for the new projects they have to increase taxes and the increase wasn’t enough and…