Monetary Policy, Fiscal Policy, Business Cycles, and Economic Growth Assignment

Monetary Policy, Fiscal Policy, Business Cycles, and Economic Growth - Assignment Example Owners of multinational companies in Malawi will receive reduced dividends. Some multinational corporations’ employees in Malawi will either be laid-off or receive lower salaries (Hansen, 2013). 6.b). If the president of Malawi imposes a mandatory minimum wage of $5.00 per hour, workers in multinational companies will receive better pay. Consequently, the level of poverty will reduce in the country. Multinational corporations will incur more cost especially salary expenses. Due to higher costs profits for the companies will reduce thus shareholders will receive lower dividends. Multinational corporations might lessen the number of employees to reduce the salaries expenses they incur (Hansen, 2013). 7. Western states like the United States and United Kingdom resort to deficit spending by borrowing money to stimulate economic growth or recovery in times of economic recessions. The main disadvantage with deficit spending is that it leads to interest rates. High-interest rates reduce the ability to borrow. High-interest rates discourage entrepreneurs to invest. Consequently, low investment rates mean that the production capacity of a country is reduced the general output of the country decreases hence. Reduction in the output of a country reduces the rate of economic growth in a country. Deficit spending means that the government spends more than the private sector. States tend to utilize resources inefficiently. So these actions might lead to wasted resources. Deficit spending and increased borrowing increases an economy’s inflation rate. Increasing inflation rate reduces the value of a currency and adversely affects its competitiveness with other currencies. Inflation wi ll also lessen the amount of savings (Hansen, 2013). 8. Listening to Laurence Kotlikoff of Boston University, I was interested in the argument he brought forward regarding the government’s concealment of its debt obligations. Kotlikoff pointed out that United