Blog Post #2
What was the intent of the expansionary policy?
During the Great Recession from 2007- 2009 many people were suffering from job losses. A lot of people were not only out of jobs but no longer had benefits their jobs came with. Some benefits include Health Insurance. Families were suffering from day to day lives like paying the bills and feeding their family. On top of families suffering, businesses were also suffering because of pay cuts and layoffs. Some businesses had to just shut down their operations because they could no longer afford it. The American Recovery and Reinvestment Act of 2012 was passed for the purpose of helping the people who suffered from the recession get back on their feet and get back into the workforce. The act also included a stimuli to help promote economic growth. The recession left its mark on the nation for two long hard years, many people felt they weren't going to make it out but the economy isn't a positive slope all the time, it has its peaks and its downfalls just any normal economy would.
Discuss examples of stimuli included in this act
Tax credits were mentioned a lot in this article. It played a big role in the expansionary policy. There were many acts put into place that involved tax credits. Some examples are The Tax Relief and Job Creation Act of 2010, The American Taxpayer Relief Act of 2012 and the Tax Increase Prevention Act of 2014. All of these were put into place not only to help the economy but to help citizens were currently out of job. These incentives helped the unemployed people get back out there to look for a new job.Another thing that happened to help people get back into the workforce was a change in health insurance plans. Premiums were lowered so more people could afford to have health insurance. This was very helpful because now people didn't have as much of a risk factor hanging over their head. It left less worry for people in and out of the workplace. There were also benefits in 2009 for the unemployed. Some of these benefits were that the first $2,400 unemployed people were receiving was tax free. This really did help people get back on their feel because now they had more money in their pocket.
Theoretically, what impact do such policies have on the economy?
Of course these acts in particular were put in place for a short term benefit just to help the people who were suffering from the recession. In most inferences, when acts are put into place it is rare for it to a long term affect on the economy. Like I mentioned earlier, the economy is never a steady line, it is always fluctuating on us. Most recessions are not long term just like when the economy is doing well there is bound to be a downfall at some point. People spend more when they have more and people spend less when they have less. The acts that involved taxes were put into place to make consumers feel like that they could spend the money they still had because taxes weren't going to be a huge issue. People more health insurance because premiums became cheaper. The prices in the economy suddenly lowered because they were trying to get people to spend money still even though theoretically, it was low. The long term affects of course mean that when prices start to rise back up and the economy is out of the recession, pay will increase. This means that the price of things will go up and people will pay for it. The government will suffer from this because they weren't previously collecting as many taxes so as prices increase, government debt will also increase.
https://www.irs.gov/uac/The-American-Recovery-and-Reinvestment-Act-of-2009:-Information-Center
The American Recovery and Reinvestment Act of 2009: Information Center. (n.d.). Retrieved April 26, 2016, from https://www.irs.gov/uac/The-American-Recovery-and-Reinvestment-Act-of-2009:-Information-Center
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