Home Assignment #1

Chapter 1

  1. What Share of GDP is spent by the governments in the United States? How is this divided among federal, state, and local government?  The government spends a huge share of its GDP according to Table 1.1. In 2002 the federal government raised 29.6% of GDP and spent 31.8% of GDP. The state had raised 15% GDP and spent 15.5% of its GDP. This is divided amongst each form of government through their own ways of income (taxes, debts, etc.).
  2. Trace the history of government spending in the United States in the Twentieth century. How do you account for the large increase in the size of the government? Do you view this growth as desirable or undesirable?  I believe that the growth of government comes from the reliance of the government after World War Two. I believe this is the reason because in early years the United States played a limited role in the economy where as today the federal government owns corporations and other necessities to income. I believe this is desirable because with a huger government there is more reliance on both kinds of governments to raise income.
  3. What are the major activities undertaken by the federal government? How have these activities changed since 1960? Does this indicate a conscious shift in the priorities of government? Do you view these changes as desirable or undesirable? Some major activities undertaken by the federal government is services that run locally and state to state and are not included in the federal budget. Such examples are services like the USPS which is included in the GDP of Table 1.6 but not other charts in Chapter 1. This does indicate a shift in priorities of the government because now they play a huger role in the economy and must tend to these income generators. I view this as desirable because once again it generates income and raises the GDP.
  4. It has sometimes been suggested that the government’s budget reflects goals and priorities of government. Government spends more in areas that it views as important as it does in areas that have lower priority. Does the government’s budget accurately reflect the priorities of government? Are the government’s priorities what you think they should be? If you could alter the government’s budget, what changes would you make? The government’s budget does reflect its priorities because if we take note that around 1955 when the cold war had begun 5 years later the government’s budget was mostly going to military defense 50% percent of it to be exact. I believe in that era the government’s priorities were correct because without a strong and aggressive military we leave our country at risk. Given that a budget can change we can update our budget to adjust to any problems we face. If I could alter the government’s budget I would focus it the same way it is currently but I would set up more programs to help the homeless.
  5. In a democracy, the government’s decisions are made by majority rule. Is majority rule a good method for allocating resources? What are advantages and disadvantages of allocating resources by majority rule? When would majority rule allocation of resources be most appropriate, and when would it be least appropriate? Majority rule is not a good way of allocating resources because some people are looking out for their own beneficial wants or needs out of political figures. The advantages of majority rule is that many political members use this to help persuade people in a jurisdiction to vote that person. The disadvantage is that in some cases we tend to ignore huger problems just to gain interest. Majority rule would be most appropriate only when voting for our political figures, the least appropriate time for it is when we attempt to vote these people for reasons that only appeal to certain people or for very specific reasons and not an overall outcome.



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