To What Extent Is Government Borrowing a Cause for Concern?

In: Business and Management

Submitted By anitahasani
Words 436
Pages 2
The level of government borrowing is an important part of fiscal policy and management of aggregate demand in any economy. When the government is running a budget deficit, it means that in a given year, total government expenditure exceeds total tax revenue. Governments usually borrow to finance spending without increasing taxes.

Government borrowing is a bad thing as it increases national debt and there is a big opportunity cost on the interest paid on the borrowing, which in the UK is around £51 billion. This money could have been spent elsewhere which may have benefitted the economy in a more productive way; however it is argued that it is unlikely that the government can improve the economy without going into a deficit. It may also be a big problem in the long run as the government may increase taxes to finance the borrowing. If taxes go up in the UK, this means people have less disposable income meaning aggregate demand decreases, which in the long run decreases growth and tax revenues which is seen as self-defeat, though it is unlikely that the government will do this as it is also politically unpopular.

The Government deficit can be seen as not such a bad thing if it’s being used to stimulate AD, the opposite of increasing taxes. This means that there is more growth to the economy as tax revenues increase due to there being more jobs as this increases the amount of money the government get from income tax and VAT. This shows that the borrowing could be seen as a valid investment which in the long run may generate more income. Also different circumstances sometimes dictate that the government needs to borrow money. For example cyclical factors may necessitate borrowing e.g. when there’s not enough demand and the borrowing is used to kick start the economy to get it out of a recession. However this is only done if the money is used productively.

A…...

Similar Documents

To What Extent Was the Russo Japanese War the Cause of the 1905 Revolution?

...Anna Stanley To what extent was the Russo Japanese War the cause of the 1905 Revolution? Russia was in an extremely delicate state before the 1905 Revolution. There were many causes behind leaving Russia’s population increasingly alienated, provoked, and feeling let down by the Tsar. .. ..The Tsars plan to use a successful war in the far East as an opportunity to divert peoples attention from the deteriorating conditions back home hopelessly backfired. There was mass humiliation in defeat and the Russo Japanese war irrevocably revealed the inefficiency, weakness and corruption of the Tsarist state. ..However, the Russo Japanese War wasn’t entirely to blame for the 1905 revolution. Nevertheless, there was a great impact caused by the Army’s embarrassing mistakes. ..The army highly underestimated the capability of the Japanese. Firstly, the Army lost the battle of Mukden, One of the largest land battles to be fought before WW1. Russian casualties amounted to nearly 90,000. The Russians had also lost most of their combat supplies as well as most of their artillery and heavy machine guns. ..The Russian Army was also defeated in the battle of......

Words: 816 - Pages: 4

To What Extent Did the Great Potato Famine Cause a Change in Irish Nationalism

...In considering the process of change in the development of Irish Nationalism between the years 1815 and 1922, how far can the Potato Famine (1845-49) be seen as a turning point? Irish nationalism has been said to have changed hugely during the period of 1815 to 1922 in which the movement of nationalism took many changes in directions to complete a vast range of goals including fair rent and Home Rule. These changes were caused by different turning points along the way of which the Potato Famine has been said a key one. The Potato Famine did cause change to an extent but was not alone in the changing in direction of the Irish nationalist movement as other turning points contributed such as Catholic Emancipation, and the first Home Rule bill which both changed the objectives and strategies of the nationalist movement to an extent. The Potato Famine can be seen as a turning point in the change of Irish Nationalism as it was the first time the country had collectively focused on campaigning for cultural nationalism and this suddenly came about due to the catastrophic changes the famine had on the majority of the classes in Ireland, especially amongst the lower-class. It not only created a deep-seated hatred towards Britain amongst the Catholic population, but also had the devastating effect on the Irish population. It led to the death of approximately one million people and, by 1850, to the emigration of a further one and a half million. It accelerated a prolonged reversal......

Words: 2389 - Pages: 10

Population Change: a Cause of Concern

...Metropolitan Statistical Area. The population analysis should consider 4 parts, population, sex, race and age distribution. Total Polulation According to the histogram, the total population in Virginia is growth 4.50% from 7,799,258 to 8,150,120. The Radford County and Montgomery County’s people is increase. The Radford County’s population is increase 2.79% from 16,062 to 16,511 and the Montgomery’s County’s population is increase 5.15% from 90,155 to 94,800. On the contrary, Giles County and Pulaski County’s people are decline. Giles County’s population is decrease 0.25% from 17,193 to 17,149, and Pulaski County’s population is decrease 0.71% from 35,015 to 34,768. Population change is sometimes a cause for concern within a region. Population growth rates differ from region to region, but industrialized and unindustrialized regions have stark and noticeable differences between their population rates. The trend of the population is growth but there are some elements to effect the population change, such as industrialized standard and the gather of high standard education institutes. Industrialized regions have a very low population growth rate. Less industrialized regions have relatively higher populations with about half the growth rate of highly industrialized regions. Household Units Household Units | Giles County | Radford County | Pulaski County | Montgomery County | Virginia State | 2009 | 8162 | 6414 | 17301 | 36737 |......

Words: 1103 - Pages: 5

To What Extent Do You Agree That the Human Causes of Desertification in the Sahel Are More Important Than the Physical Causes?

...To what extent do you agree that the human causes of desertification in the sahel are more important than the physical causes? Desertification is when formerly productive land becomes a desert due to a combination of natural and human factors. It’s a long term change that results in land degrading or becoming poorer, vegetation dying and soil becoming exposed to erosion by wind and rain. The Sahel is an example of where desertification has happened. The sahel is a semi arid region of north central Africa south of the sahara desert. It passes through countries such as Ethiopia, Sudan, Somalia and Chad. The sahel has been turning in to the desert since the late 1940s, this has been caused by drought, population increase, overcultivation, over grazing and cutting firewood. There is only one physical cause of desertification in the Sahel and that is climate change. There have been frequent and very intense droughts that occurred from 1968 to 1974 and then again from 1979 to 1984. Without water for a long period of time the vegetation will die and the soil will turn to dust thus making it more easily eroded by the wind. The intense and frequent droughts are said to be caused by global warming which leads to higher temperatures and an increased evapotranspiration, therefore you could say that the droughts are caused partially by humans as they burn the fossil fuels causing global warming. The other four causes of desertification; population increase, over cultivation,......

Words: 475 - Pages: 2

To What Extent Will the Coalition Governments Proposals Bring About an Effective Reform of Parliament?

...To a certain extent, the coalition government’s proposals will bring about an effective reform of parliament. However, some people have questioned the effectiveness of the reform of parliament under this coalition, for example suggesting that The referendum on AV may have lead to an even more hung parliament. On the one hand, Primeministers, known as the incumbent, can no longer call elections to suit their own interests. This was due to the establishment of fixed term elections introduced by Cameron in 2011. The reform reduces media speculation, which makes parliament more stable and fairer for parties not in government. This is also a fairer system as Primeministers would usually call an election when their party was significantly higher in the opinion polls than all other political parties, making the chances of them re-gaining power much stronger than they may have been 5 years down the line at a set date. On the other hand, some people have suggested that 5 years is too long, noteabely Nick Clegg who wanted 4 years between elections. There have also been concerns about whether campaigns will become dragged out and leborious like America’s 18 month season. Also the fixed term elections don’t necessarily make for a better government and shown by the USA, for example. The flexibility of non-fixed term election system allows for a dissolution and new election if the Government has an inadequate majority. The value of this has been shown in 1951, 1964 and the second......

Words: 690 - Pages: 3

To What Extent Was the Canadian Government Treatment of the First Nation of the Prairies Justified

...To What Extent was the Canadian Government Treatment of the First Nation of the Prairies Justified The rights of the Natives did not truly recognized by the government. Since white people came to this territory, they did no consider the Natives as a part of the residents. However, it was the Natives who were the first to live and develop on this land. The Canadian government had signed treaties with the Natives and moved them to the prairies, where the crops could hardly grow on. They also forced Natives’ children to go to residential schools. However, Canada was just formed and needed money. Although the government of baby Canada needed land to build a railway with minimal amount of money, it could have achieved it without the cruel treatments to the Natives. One of the treatments was the numbered treaties. After the governments signed the treaties with the Natives, they obtained large area of land with very low price. The government promised that they would give Natives a part of the land and agriculture tools. However, the tool, supplies, animals, and instruction guaranteed by the treaties proved inadequate. For instant, the seeds were sent too late in the year and farmers were not allowed to use threshing machines. The Natives had no ways to plant crops under these harsh conditions even they were successful famers. The soil was also very barren on the prairies, which could not compare to the fertile lands around the Great Lakes. The land had not been fully cleared......

Words: 903 - Pages: 4

To What Extent Did the Wilhelmine Government Meet the Needs of the People?

...social policies, the government was also demonstrating repressive action towards the working classes; for example a number of outbursts of violence with the police. This harassing action was often because of the anti-socialist laws that were introduced. From analysing the situation, it is believed that the underlying motive behind the introduction of social policies could well have been that Wilhelm and the government simply wanted to alienate the working class by pushing them towards Socialism. A second instance when Wilhelm certainly did not meet the needs of the Working class occurred under Bulow’s administration. The government embraced Sammlungspoltik in 1897 – which in simple terms meant ‘to gather together’ the people. However whilst originally it may have seemed as though Wilhelm had the interests of the Working class in mind, on reflection his objective in fact laid elsewhere. He saw that if the hostility between Junker and the working class industrialists could be bridged, a formidable front could eventually be presented to social democracy. As strong supporters of the SPD and the growing Unions, there was some hope for the working class; however in reality this was meaningless. The poor living conditions for the majority of the lower class under the Wilhelmine government were abysmal, and triggered the development of diseases, such as cholera and typhus, often breaking out on large scales due to the overcrowded towns and cities. The Wilhelmine government did......

Words: 3053 - Pages: 13

Plastic Bags: Cause for Concern

...Plastic Bags: Cause for Concern Todd Kuchelmeister May 30, 2012 As man continues to develop and his knowledge grows he will continue to be the dominate species on earth. His ability and desire for finding ways to make his life easier have produced many new and innovative things. From electricity to automobiles to fulfilling his dream of putting men on the moon, man has always strived to overcome those things which had earlier seemed impossible. However, with all new the developments that man has accomplished most have come with a downside for the environment. Electricity depending how you produce it has a downside, Nuclear energy comes with radioactive rods that take thousands of years to lose it radioactivity. Coal fired plants cause destruction of to the ecosystem and the emissions pollute the air. Solar and Wind are still in their infancy but their current issues seems mainly to be in the sheer numbers needed to produce enough electricity for an average sized city. One of mans greatest inventions was plastic, its invention back in 1855 called Parkesine has developed into mans most widely used products. Its invention has made man’s life not only easier but safer as well and is even used in the effort to keep people alive. However, as with all of man’s greatest inventions it has a dark side. Polyvinyl Chloride or PVC has phthalates that leech out of the PVC and into our bodies ("Life less plastic," 2007)....

Words: 1361 - Pages: 6

To What Extent Does Parliament Effectively Control Government Power?

...Government is, in theory, accountable to Parliament, however it is difficult for this to be the case when government makes up a large part of Parliament. So when examining how effective Parliament is at controlling the power of the executive, all of the below has to be considered. The role of select committees and departmental select committees are very important in the control of government’s power. These committees scrutinize government policy, as well as raising public awareness of it, in great detail. The line of questioning is very different, and considerably more in depth, than if the queries were raised in the House of Commons; this is because evidence is gathered in advance and the committees demand answers with substance, opposed to filibustering or rhetoric. Evidence has shown that 40% of committee recommendations to government has then been applied to policy. However, it is not so much that the recommendations are a control of the executive, but the fear the committees induce in the government; the government knows that, if they make a policy that is not in the public’s interest, they will be exposed. That being said, in a legal sense, select committees have no control or power over government, which could be argued makes them ‘watchdogs without teeth’. The committees are also, in part, made up of MPs belonging to the governing party and may not want to scrutinize their party as it may be damaging to their career prospects. The House of Lords cannot block......

Words: 833 - Pages: 4

To What Extent Does the Prime Minister Control the Decisions Made by Their Government

...The extent to way in which the prime minister controls cabinet varies, and can vary greatly, as Prime ministers have great amounts of scope in which they can manage and control the cabinet and the system surrounding it. The main reasons for the control the Prime Minister has over Cabinet are due to the powers he/she has over the Cabinet itself. The first is that the Prime Minister chairs cabinet meetings, and manages the agendas, as well as summing up the decisions at the end. This means that the PM has a great deal of control over the meetings, and can direct them in a course that suits what the PM wants. Combine this with the fact that the Prime Minister convenes cabinet meetings and decides when they are called and sets their length – it means that in effect, the PM determines the role and significance of the entire cabinet. Cabinet meetings have declined over the past decades, from around 100 a year to only 40, under Blair they rarely lasted more than an hour, which, when taking into consideration the size of Cabinet and the sheer amount of issues that are discussed, indicates that Blair put little importance on Cabinet meetings. Brown has changed things so that they last longer, but not by a great deal. They are now places where discussion isn’t encouraged and dissent not tolerated, and many of the decisions made there have in fact already been approved of, but merely require formal approval. Thatcher, at first, manipulated the Cabinet to great effect for......

Words: 562 - Pages: 3

To What Extent Should Governments Protect Local Newspapers from the Forces of Globalization?

...industry’s inevitable economic and political problems arise. Thus, governments should support local newspapers to the extent that it is economically reasonable. Resultantly, this action will lead to a diversified media economy, preservation of accurate local viewpoints, and the maintenance of ideological democracy in Canada without creating an unnecessary burden on the Canadian government. By supporting local newspapers with reasonable subventions, the competition between companies will increase. The existence of a free-market environment forces companies to produce quality newspapers instead of the stagnation brought upon by the “monopoly company mindset”. From an economic standpoint, the existence of multiple companies also allows for a leeway for failure. The bankruptcy of a media outlet that services a large portion of the population would be dangerous. Responsive government intervention to restore the company or substitute the newspaper would be an unnecessary cost. A further result would be the immediate limitation of the people’s “right to information”. As government is divided into national, regional, and municipal sectors to better represent the people, local newspapers must provide similar functions. Local newspapers provide more community focused viewpoints. In such a large country, the events affecting individual locals can be vastly different. These newspapers allow communities to express their concerns without being overpowered by the general view of Canadian......

Words: 589 - Pages: 3

To What Extent Is the Uk’s Government Becoming More Presidential? Discuss

...To what extent is the Uk’s government becoming more Presidential? Discuss A presidential system is a republican system of government where a head of government is also head of state and leads an executive branch that is separate from the legislative branch. The United States, for instance, has a presidential system. Whereas, a prime ministerial system adopts a fused system, in which the three branches of government are fused together and the monarchy is head of state. The Uk, for instance has a prime ministerial government, where Queen Elizabeth is head of state and David Cameron is the Executive. One could argue that the Uk’s government has become marginally presidential, as the need for a cabinet has become less over time. However, the UK are still a fused government in which powers are shared within parliament, unlike a presidential system. The tendency of Prime Ministers to distance themselves from their party and government has increased, developing a personal ideological stance. Prime Ministers such as Blair and Thatcher are key examples. Both Prime Ministers have developed their own stances: “Blairism” and “Thatcherism’. Blair, for example, had really bad attendance at Parliament and his Cabinet Ministers have been quoted as saying that: “Cabinet meeting sometimes lasted only fifteen minutes.” also, Blair decided a lot of his policies within the Pm’s office, rather than discussing it with his cabinet. For example, the decision to go to war with Iraq was seen as...

Words: 1122 - Pages: 5

To What Extent

...the Victorian era where females were strongly oppressed, in particular for their sexuality. They were not granted the same freedoms as the male gender, as seen in Cousin Kate since the “neighbours” brand the “cottage maiden” as an “outcast” and “unclean thing” , whereas the “great lord” is able to continue with his life despite the destruction he caused for the narrator. Women were expected to adopt traditional roles within society – e.g. get married, reproduce and care for the family home. In Cousin Kate, the narrator is not married yet she has a “fair - haired son”. Thus, she has not conformed to the expectations enforced by the Victorian society of time period. Although many of her poems have themes that suggest a concern with rights of women (including Cousin Kate ), Rossetti was not interested in women’s suffrage (the campaign to get women the vote). However, she did demonstrate a clear sense of devotion towards women when she began volunteering at the St. Mary Magdalene Penitentiary in Highgate, a charitable institution for the recovery of “fallen“ women (1879)....

Words: 793 - Pages: 4

To What Extent Is Lexical Borrowing Necessary to Fill the Gaps in the Native Lexicon?

...Essay:To what extent is lexical borrowing necessary to fill the gaps in the native lexicon? | A language or a dialect cannot exist on its own. Since the beginning of human history multilingualism has always been a common use among people speaking another language because it was the only way to communicate between them. From the moment two cultures are in contact, there are exchanges of ideas, information, goods… and vocabulary. In ancient times, the Greeks created the concept of democracy, and the word that designates it, was borrowed later by the Latin before being used in English. English draws several words from the vocabulary of French cookery (chef, menu, entrée); the French borrowed musical vocabulary from the Italian (allegro, concerto), but with the birth of industrialisation and of new technologies, most other languages now borrow from English. In countries where more than one language is spoken, the phenomenon of borrowing is very frequent. Those different languages are spoken in very close territories, so that their speakers have contact with each other and by hearing the language of the others, they end up by integrating some words of the other language. Borrowings or loanwords, less numerous than words of the mother language (except with the Creoles) though, are extremely common in the vocabulary of many languages: this is an unconscious process and a constituent factor in the life and evolution of languages. In my essay I will show how necessary are the......

Words: 2098 - Pages: 9

To What Extent Should We Let Government Control Our Economy?

...The government’s role in economy has been heavily debated since many generations. Even though the debate have been going on for a very long time, it is still frequently evoked, especially when a financial crisis happen. The views on what roles the government should have in the economy range from capitalism, which is a belief that the economy should be controlled by individuals (hrw ESL dictionary 85), to communism, which is a belief that a social organization such as the state should control economy.(558) Most people adopt a view somewhere between these extremes, yet even those moderate views vary greatly. Because society put emphasis on productivity and profit, most economic systems in the world tend to be oriented toward capitalism instead of communism. Many believe that capitalism is immoral because it is based on profit, which they claim to be the result of egoistic actions. I personally think that it is not the system that is unethical, but more how it is used and what is done with it. It can be compared to a neutral instrument such as a knife, which can be used either to cut food or kill. There is no morality in the knife itself. In this essay, it will be argued that, unlike most beliefs, capitalism is a morally acceptable economic system. To support this claim, three premises will be used. First of all, the market economy on which capitalism is based upon, promotes mutual help and fair exchange. Also, under such a system, when an individual is pursuing his own......

Words: 1780 - Pages: 8