U of E

Understanding the Economy:

This task is set about comparing the different eras within the U.S.A financial despair. The two eras of which we I have been asked to compare is Regan and Obama. The state of the global economy is in a dire situation, although gradually recovering day by day, this started within 2008 with the demise of Lehman brothers which in turn had an effect with the economy all over the world. The article of which has to be examined and divulged is by Paul Krugman. Within this text I will be Comparing the two recent economic crisis’s which have affected the country, and how at the time how countries have dealt with the crisis.

This global crisis has affected the US today so much that the Credit rating of the Country has been downgraded from AAA to AA, which shows what sort of situation they are in. The way in which this article has been compared the two eras is based on unemployment within the public capacity, expenditure on good s and the way in financial policy has been taken into account either Keynesian or Monetary.

As some of the stats show the government employment had risen 3.1% in the Reagan era whilst in the Obama era it has gone down 2.7%. This all starts with the reason for unemployment within an economy. Many people have the theory of having the idea of reducing jobs therefore ensuring inflation doesn’t override the system leaving the working class people with less money and prices increasing. Therefore the comparison within the two governments spending is that they cut government jobs to collect the public spending money and ensure they don’t have the risk of inflation. This theory was changed by Reagan by introducing lower taxes which therefore meant more people had more to spend on their reigniting the production process and increasing economic growth, this served well to the wealthier Americans, but also created new job opportunities for the less fortunate. (http://economics.about.com/od/useconomichistory/a/economy_1980s.htm)...