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Economic Policy - Global Environment

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Economic Policy - Global Environment. See attached file for full problem description.

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1. There are two ways of measuring GDP, the expenditure approach and the savings investment approach. The expenditure approach involves adding up the market value of all domestic expenditures made on final goods and services in a single year.
Thus we have AE = C + I + G +(X-M) where AE= GDP
which is
20+ 0.8Y+200+ 100 = GDP
Where Y equals GDP-T
The equilbrium GDP will occur where
20+ 0.8(GDP-50)+200+ 100 = GDP
20 +.8GDP-40+300= GDP
0.2 GDP = 280
GDP =1400

The MPC is the percentage of income people spend. It is calculated by MPC = ΔC / ΔYD
To calculate MPC we need to know how consumers spend the last dollar they receive.
If consumers spend 80 cents out of the last dollar, then MPC = $0.80/$1.00 = .80.
We are given a consumption function C = 20 + .8Y. This means that 20 is not dependent on income, and consumers also spend an additional .8 of each dollar earned. This is the MPC.

GDP can also be calculated from the savings investment approach, which uses the equation GDP = C + S + T. We calcalate savings using the equation I = S - (G - T)
Thus we have
200 = S -(100-50)
S = 200 + 50 = 250
So GDP = 20 + 0.8 (GDP-50) + 250 + 50
GDP = 320 + .8 GDP -40
.2 GDP = 280
GDP = 1400

If G is 120 and T is 70, we can calcuate GDP by using either of the formulas with the new numbers.
GDP = 20+.8 (GDP - 70) + 200 + 120
.20 GDP = 340 -56
GDP = 1420
This represents an increase in GDP, caused by the AD curve shifting outward from AD2 to AD1. See the attached file chart.

For part c, you simply need to solve for the G variable, given GDP. Thus the equation you're solving is:
1750 = 20 + .8 (1750) + 200 + G

2. We have to calculate required ...

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Take a position on public policy, global sustainability, and global economics. Be able to support your position with evidence. Opinion may be required.

It is argued that many environmental regulations are too costly. Do the economic effects of environmental public policy outweigh the costs?

Some policies have little or no direct monetary costs. These policies remove subsidies to special interests and restrict or deny access to national resources. Many environmental policies involve some very real costs that must be paid by some segment of society. In general, states with the strictest environmental regulations also had the highest rates of job growth and economic performance. Nations with the highest environmental standards also had the most robust economies and rates of job creation. Only 0.1% of job layoffs were attributed to employers to environment-related causes. In summary, we can draw several conclusions from our examination of the impact of environmental policy on the economy. Environmental public policy does not diminish the wealth of a nation; rather, it transfers wealth from polluters to pollution controllers and to less polluting companies. The environmental protection industry is a major job-creating, profit-making, sales-generating industry. The argument that environmental protection is bad for the economy is unsound. Not only is it good for the economy but environmental public policy is responsible for a less hazardous, healthier, and more enjoyable environment.

While this is certainly one view of environmental public policy, there are certainly rebuttals to this position, also based on notions of sound science and economic evidence.

Take a position on public policy, global sustainability, and global economics. Be able to support your position with evidence.


I am looking for ideas and opinions to get my thoughts flowing that is supported by research. Thank you.

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