econ-Journal20 - obvious targets for savings would be...

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NY   Times:   Anticipating   Cuts   in   Military   Spending,   Budget  Planners Sharpen Their Pencils  Date: November 2, 2008 “Buying new armaments and repairing worn-out weapons, protects  jobs and corporate profits, and therefore benefits the economy over  all”, Loren B. Thompson of the Lexington Institute said. It is obviously  true as Government spending has a major influence in the economy  growth as it helps increase the aggregate demand. What is about the  contrast way? What will probably happen to the government spending  when the economy is in the recession?  While the recession period  has been officially defined, the U.S. Government is struggling with the  choice whether or not they have to cut off spending on Military. “The 
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Unformatted text preview: obvious targets for savings would be expensive new arms programs, which have racked up cost overruns of at least $300 billion for the top 75 weapons systems, according to the Government Accountability Office ” (NY Times). Theoretically, ceteris paribus, cutting off this $300 billion will reduce a considerable amount of jobs and profits, thus increasing the unemployment rate and outcomes. However, in fact when “all else are not equal”, this cut-off might be a solution to balance the spending by investing in other important fields. In so doing, the relative great amount of money cut off will be used to fix the economy problem....
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This note was uploaded on 03/10/2011 for the course ECON 101 taught by Professor Duc during the Spring '05 term at Linfield.

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