Macro economics Essay Example | Topics and Well Written Essays - 1500 words

Macro economics - Essay Example Underemployment and unemployment has had very damaging effects to the social and economic fabric of Europ. Underemployment is an immense social evil and a colossal economic waste. Unederemployment leads to an enormous degree of personal hardship and misery. It also destroys familial relationships, breeds racism and sexism and paves the way to social disintegration. Undermployment is the primordial factor for the alarming growth of inequality and poverty. The aggregate expenditure of the United States in the 1980s were focused on pension provision, education public works, defense spending and healthcare. Education expenditure in most developed countries constitutes 6% of GDP. Private expenditure in education adds two/thirds of a percentage point. United States private spending in education equals 1.6% of GDP. Higher levels of education expenditure reflect the importance attached to education at the policy level and also at the individual levels. Education is helpful for economic and social progress. Between 1970 and 1988 real spending in education had increased by 50% in the US. Numerous public works projects show a favorable benefit-cost ratio. Lifestyle improvements in transportation and communications help citizens enjoy a better lifestyle. Defense expenditures help protect democracy in America and around the world. A portion of the aggregate expenditure also goes to the payment of interest on the national debt. As a result, consumption outlays usually dominate the Federal budget and state budgets. (Joyce and Mullins, 1991) B. DISTRIBUTION OF US AGGREGATE EXPENDITURES The table indicates that, as a component of total state spending, state education and health/hospital spending have experienced a slight relative increase over time, while highway spending has declined dramatically, and public welfare spending has experienced a large relative increase. For local governments, the shifts have been toward health and hospital spending and away from education, highway and public welfare spending.The state's share of total spending has increased slightly overall. State spending on education and public welfare has increased significantly over the 23 year period since the 1970s. The expenditures for capital outlays, health and hospital spending, and highway spending has diminished. In addition, the state share of revenue and taxes should decline, as should the state share of expenditures. There are shifts for states with in four areas: 1) state taxes as a percent of total state general; 2) state aid to local government as a percent of local general revenu