Question

Pick any 2 questions and answer it ( answers should be half page long per question):

6. China is currently the world’s second largest economy. It is predicted to surpass the U.S. to become the biggest economy in the not-too-distant future. How does this development influence the strategic balance and the position of the United States?

7. In 1990, Congress imposed a luxury tax on yachts costing more than $100,000, along with similar taxes on a handful of other luxury goods. It was estimated that the new taxes would yield more than $31 million in revenue in 1991. However, the tax actually generated a bit more than half the amount, $16.6 million. Several years later, the Joint Economic Committee estimated that the tax on yachts had led to a loss of 7,600 jobs in the U.U. boating industry. Taking account of lost income taxes and increased unemployment benefits, the U.S. government actually came out $7.6 million behind in fiscal 1991 as a result of its luxury taxes- almost $ 39 million worse than the initial projection. Congress repealed the luxury tax on yachts in 1993. What went wrong?

8. What is the "invisible hand "? Explain how the invisible hand delivers an efficient market outcome.

9. How can a person argue that health care services in America are provided efficiently, but not fairly?

10. Bill Gates is a founder of Microsoft and the world's richest individual. Suppose Microsoft sells more software and Mr. Gates acquires another billion dollars in wealth. Simultaneously, suppose a burglar whose income is well below average broke into Bill Gates' house and stole a million dollars worth of antiques. Using the "it's not fair if the rules aren't fair" approach to fairness, is Mr. Gates' acquisition of additional wealth fair? Is the (poor) thief's acquisition fair?

Answer 1

ANSWER-8

"invisible hand "

• A metaphor for how, in a free market economy, self-interested individuals operate through a system of mutual interdependence.
• Adam Smith introduced the concept in his book An Inquiry into the Nature and Causes of the Wealth of Nations published in 1776.
• Each free exchange creates signals about which goods and services are valuable and how difficult they are to bring to market.

Example: Business productivity and profitability are improved when profits and losses accurately reflect what investors and consumers want. This concept is well-demonstrated through a famous example in Richard Cantillon’s An Essay on Economic Theory (1755), the book from which Smith developed his invisible hand concept.

Cantillon described an isolated estate that divided into competing leased farms. Independent entrepreneurs ran each farm to maximize their production and returns. The successful farmers introduced better equipment and techniques and brought to market only those goods for which consumers were willing to pay. He showed that returns were far higher when competing self-interests ran the estate rather than the previous landlord's command economy.

An Inquiry into the Nature and Causes of the Wealth of Nations was published during the first Industrial Revolution and the same year as the American Declaration of Independence. Smith’s invisible hand became one of the primary justifications for an economic system of free market capitalism.

As a result, the business climate of the United States developed with a general understanding that voluntary private markets are more productive than government-run economies. Even government rules sometimes try to incorporate the invisible hand. Former Fed Chairman Ben Bernanke explained the "market-based approach is regulation by the invisible hand" which "aims to align the incentives of market participants with the objectives of the regulator."

ANSWER- 9

In 2018, the U.S. spent 16.9 percent of gross domestic product (GDP) on health care, nearly twice as much as the average OECD country. The second-highest ranking country, Switzerland, spent 12.2 percent.

At present, the US healthcare system is of vital interest to the nation's economy and government policy (spending). The U.S. healthcare system is characterized as the world's most expensive yet least effective compared with other nations. Growing healthcare costs have made millions of citizens vulnerable. Major drivers of the healthcare costs are institutionalized medical practices and reimbursement policies, technology-induced costs and consumer behavior.

How does US healthcare work?

In the States, there is no NHS. If someone gets ill, it's likely they will have to pay for their treatment.

The US government does fund two kinds of health plans though: Medicare and Medicaid. They are especially designed for the elderly, disabled, poor, and young.

However, many Americans have their healthcare paid for by their employer. It's often included as a fringe benefit in job packages.

But some aren't as lucky. According to the US Census Bureau, in 2007 almost 46 million people in America didn't have health insurance.

It's thought the figure's rising as the country copes with a recession and many continue to lose their jobs.

A recent study published in the American Journal of Medicine says the biggest reason for bankruptcy is medical debt.

What are the major problems in the US healthcare system?

• The US health-care model relies on a direct-fee system and private health insurance. ...
• Other problems in US health care include the restrictive practices associated with managed care, racial/ethnic and gender bias in health-care delivery, hospital errors, and medical fraud.

Three Ways to Transform American Health Care

1. Consolidate Services for Better Quality, Lower Costs. There are about 5,700 hospitals in the United States
2. Eliminate the Perverse Fee-for-Service Payment System.
3. Embrace Technology.
4. Moving into the 21st Century.