Unit 4 - Economic Decision Making

Unit 4 - Economic Decision Making

Chapter 13 - The Role of Government

Key Concept

          The government involvement within the economy greatly affects how the economy will operate and react to different economic phases in the business cycles. The amount of government involvement if too much or too little  will generally lead to an economic recession or depression. Deregulating anything has its pros and cons like in the 1980s the government deregulated the airline industry and the business took off with massive economic growth however in the 1980s the government reduced taxes on corporations as well as deregulated wall street increasing the income inequality between the different classes. 

Chapter 14 - Employment, Recession and Recovery

Key Concept

          Types of unemployment were outlined in a previous chapter however in this chapter they are connected to their role in a recession. The different type of unemployment are frictional, seasonal, structural, technological, replacement and cynical. Frictional unemployment consists of people who are between jobs. Seasonal unemployment, consists of people who are unemployed because their jobs changes due to the climate of the country they live in. Structural unemployment is the result of when companies changes certain departments within their companies. When employees are replaced by robots or automation it is referred to technological unemployment. Replacement unemployment is affected by how many more businesses use outsourcing to “replace" current workers. Finally, Cyclical unemployment is caused by reduced employment opportunities during different economic phases. Cyclical unemployment is the issue that is prevalent during recessions. The amount of unemployment directly affects the difference between GDP throughout the years. The higher the unemployment the greater the gap between actual GDP and potential GDP as this is the difference between the products and services that could've been produced if there was full employment and the current employment. 

Chapter 15 - Equity and Income Distribution

Key Concept

Chapter 15 greatly affected the way on how I viewed the middle class and the top 1%. In the textbook there are clear points as to why inequality exists as it does in society today. The documentaries as well as TED talks viewed in class outlines the reasons why and how inequality has escalated to the point its at today. The textbook, documentaries and TED talks have only predicted one thing if inequality increases and that is that the results will not be good but rather grim and if left untreated there will be severe alterations in the everyday life.

Unit 4 - Reflection

          The role of the government is always needed to regulate the economy as that ensures that the economy is on the right track however the right government is needed in order for this to happen. In addition if the wrong government comes into play like the government in favour of deregulating industries and giving tax cuts to the one percent and not paying of the government debts will only increase unemployment and income inequality. As GDP continues to be used to measure the well being of the economy a similar trend of increasing unemployment has occurred asking a lower amount of employees to produce the same or even more than the previous amount of employees. As the top one percent continue to increase their wealth the capitalism that is glorified today will be reversed to the capitalism that is known in the history books during the time frame from which communism, socialism and fascism emerged. If this occurs the world will not be moving forward but instead replaying the same chapters from history but with newer technology.