Business Economics Essay Example | Topics and Well Written Essays - 1500 words

Business Economics - try on ExampleEuro crisis is supposed to result in negative product for the next upcoming six months. isolated from US, the British are encountering the problem of double dip recession (Winnett, 2011). Currently OECD is giving warning to the US government about an emerging economic meantime that the country might take hold to encounter soon. OECD claims to infer such a result from the composite index of the leading indicators. such(prenominal) alerts have been issued for the seven major economies. It is mostly using CLI instrument to get early signals of downturn from the upswings and downswings within the periodical growth cycle. Such an instrument will surely help OECD to send out early alerts to the economies (Major economies globally mien towards slowdown OECD, 2008). Symptoms for such a slowdown will be continuous fluctuations in business cycles. Such fluctuations will linger for a long period of time. Slowdown in the euro zone will leave out out t he confidence of investors especially in the financial markets. This could be the main reason behind railroad siding contraction in the major economies. United States is already experiencing cyclical slowdowns. Such a trouble had non touched US economy in the last 10 years (Major economies globally heading towards slowdown OECD, 2008). Preannounced liquidity shocks have been hitting the US economy. Due to such shocks US economy is undergoing unexpectedly big price changes. In recent times jumps in US treasury bonds have been identified (Jiang and George, 2011). early in 1999, OECD had predicted much slower growth in the overall industrialization process for the United States. wherefore there has a decrease in the short term rate of Federal Reserve be on (Wessel, 98). As per OECD, such a slow and weak growth for the United States is likely to continue work 2013. This will continue along with high unemployment (Winning and Parussini, 2011). The current economic crisis and the Federal government There are two schools of ruling on how the USA government should deal with its current economic problems. One thought deals with the policy of significant deficit reduction that the Greek and Irish governments have implemented. And the other one deals with the satisfying Keynesian stimulus package. The later aspect includes a reform of the tax system in sanctify to make taxation more progressive (Kitromilides, n.d.). Policies of deficit reduction Policies During the financial crisis and huge debt crisis situation, governments of Greece and Ireland have interpreted some policies to surmount those crises. In the face of the huge accumulation of budget deficit, debt crisis, in 2010, the both the governments have taken policies to reduce these crises. At first both the governments have taken steps to reduce ordinary expenditures and increase tax rates. This was a policy of fiscal consolidation plan. Along with this both the governments have asked for the financial assistance to IMF and EU. At the same time these governments have taken steps to initiate long-term geomorphologic reforms, such as, increasing competitiveness of the economies by improving employment and growth scenarios, enhancing private sector investments, and most importantly boosting the R&D sector of the economies (Kitromilides, n.d.). Explanations on effectiveness These policies are still under the scrutiny, precisely they have been successful in the short term. The policy of reducing public expenditure