Paper Topic:

Principles of Economics

What needs to be done to stimulate the economy and how can the common person contribute to fixing the problem . How will this affect the economy and stock market

Customer Inserts His /Her Name

Customer Inserts Grade Course

Customer Inserts Tutor 's Name

29 .03 .2008

What needs to be done to stimulate the economy and how can the common person contribute to fixing the problem . How will this affect the economy and stock market

Lets first start with a question that although is trivial , but will help us

understand the answer to this question , a little better . What is economic growth ? Economic growth is the increase in the inflow of money within the economy . In other words , it is also the increase in the government 's holding of money . Now , there are a lot of ways an economy can be boosted in to make the country more efficient . Some people mistake the growth and the stimulation of the economy as the increase in taxes . It is not incorrect to say that the increase in the government 's revenue is highly based on the increase in the tax rate through out the country . This increase in the tax rate is not only on the products of the government-based organizations or factories , but even the private investors and the citizen-owned company 's products have to undergo the same tax rate . This increase in tax-rate , no doubt increases the government tax revenue , making them more capable of spending and investing more on the country 's infrastructure and to work on the areas that might boost the economy . But there is something very important that happens while they are at the point of increasing the tax rates

They overlook the fact that the increase in the tax rate reduces the consumer investments . This reduction in the consumer investments decreases the demand of the products . By this I mean that their purchasing power is decreased , not directly , that is their salary is not decreased , but the prices are increased due to the increase in the tax rates . This reduction in the consumer demand then allows the economic growth to go in the negative direction

This is just one approach that most people have about the economy . Some people mistake the economic growth 's key factor to be consumption . Well they are highly incorrect . The economic growth of any country is not dependent upon how many products and goods have been consumed in the market . But , instead it is dependent on the production of those goods and services . It is the production that helps the economic growth . The manufacturing of the cars on the streets is not something made by nature and given to us to use . Instead it is the workings of both , the businesses and the individuals that is the production and then the consumption of the manufactured cars to make the transportation system of the country more efficient . Hence , by this we can conclude that , the economic growth of a country...

16 pages

59.0 KB

Free sing-up