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Effect of Construction on Economy - Assignment Example

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The paper 'Effect of Construction on Economy' is a perfect example of a Macro and Microeconomics Assignment. Fiscal policy is one of the intervention tools that are employed by the government to make the economy grow. Government spending on projects makes the economy grow. The construction will create more opportunities for work and will be plenty of money in circulation. …
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Extract of sample "Effect of Construction on Economy"

Effect of Construction on Economy Student’s Name: Instructor’s Name: Course code and Name: University: Date of Submission: Effect of Construction on Economy Fiscal policy is one of the intervention tools that are employed by the government to make the economy grow. Government spending on projects makes the economy to grow. The construction will create more opportunities for work and will be plenty of money in circulation (Barro & Sala-i-Martin 2004, p. 78). Creation of jobs will increase the disposable income available at any of the household in the country and hence raising the standards of living of the people. The government has other alternative of making the economy to realize a positive growth but the growth resulting for construction will be the best. The economy will expand as donor look for ways of pumping money into the project. If people have money in their pockets, they are likely to spend it on education, health care, nutrition, and security through the provision of better homes. A working nation has to be healthy, and possess required potential energy; construction will empower many individuals, who will be in a position to meet expenses which they were not able to accomplish previously (Novales, Ruíz & Fernández 2010, p. 456).  Government spending is one of the key ways of stimulating the economy to grow in order to obtain a positive rate. Idle money that was kept away without being invested will be invested in the construction project and, therefore, giving the citizens an opportunity to see how the taxpayers money is used. Impact of Increased Exports of Oil and Minerals Increased export of oil and minerals will bring about balance of trade. There will be no incidence where the country will be faced with a shortage of foreign currency to buy anything since they will get the money from the export. When the imports are more than the export a country is said to be experiencing imbalance of trade, on the other hand, when the exports are more than the imports then the country is experiencing balance of trade. This balance of trade will make the currency of the country to gain more value in the international market making it to be very attractive to investor (Allan 2005, p. 34). Oil and mineral salts will be a good avenue of forging foreign ties with countries in possession of other types of valuable resources. The improved infrastructure will cut down costs of transportation and enhance business. The country will be better placed to compete on the international scene as compared to others which do not have such kind of resources (Ransome 2010). Countries that rely on horticulture and agriculture cannot compete favorably with countries that posses oil and mineral salts. Impact of Increased Tourism Increased tourism activity will open the country to more international trade; bilateral and multilateral. People who come as tourists will end up investing the country. The education level will go up as investors will want to put up learning institutions that can cater for growing demand of education. A growing economy creates an urge of investments in every corner of the country and no one wants to be left behind. Increased tourism activities will make the country to be well prepared to take on any adversity owing to increased foreign exchange. Tourism is like an intangible good which is being exported, and this means that more foreign exchange will lead to balance of trade like in the case of oil and minerals (Weil 2005, p. 72). Increased tourism activity will lead to the creation of jobs as people move to provide services to tourists. Jobs created in the tourism sector are very many. Tourists need lodging and hotels which will in turn employ very many people both from the formal and informal sector. Summary The investment plan will lead to growth of the country in an enormous way. The plan is said to be exogenous due to the fact that more of the expected investment funds are supposed to come from international donors. It may not be a good thing to rely heavily on international donor since the economy will be run by foreigners who will put their interest at heart. There will be a lot of interferences from countries which availed the money (Atkinson 1999, p. 89). The country should source for local investment before jumping to international investment, which will hold the economy hostage and dictate how things should be done. The economy need to be diversified to ensure that it does not stagnate in case one area is hit by a snag. The country economy will be strong looking at the resources that are involved and keeping in mind that they are not to be depleted soon(Andersen & Taylor 2007).     Output 2011 2012 2013 2014 2015 2016 2017 Base 67,985,835 111955175 12033175 134956175 1432275075 168935975 186726975 Construction 5,691,340 1,545,000 505,000   -1,350,000 1,053,000 1,997,000 Oil 1800000 2100000 2200000 1850000 1100000 9975000 5600000 Minerals 5500000 750000 950000 800000 5000000 1200000   Tourism 30978000 8683000 6268000 5668900 20910900 5563000 3486000 Total 111955175 125033175 134956175 143275075 168935975 186726975 197809975     Income 2011 2012 2013 2014 2015 2016 2017 Base 28,856,050 30718450 31595150 3393083 38291483 3000000 2500000 Construction 223000 93000 1043300 3197000 1033030 337000 934686 Oil 240000 120000 259400 260000 146080 455000 274416 Minerals 550400 119700 282933 529200 279690 656000 140200 Tourism 849000 544000 750000 374500 164770 467000 431000 Total 30718450 31595150 33930783 38291483 38744053 3825000 27894672     Employment 2011 2012 2013 2014 2015 2016 2017 Base 1,831,850 2000000 1000000 1000000 678000 120000 324000 Construction 100000 33000 26000 97000 800000 284000 18000 Oil 193000 21000 26000 174000 409000 165000 34000 Minerals 647000 72000 97720 67000 135900 39900 59000 Tourism 39900 65000 54000 12000 143600 457000 43000 Total 28568900 2190000 1203720 1370000 1234800 3456800 1345000     Imports 2011 2012 2013 2014 2015 2016 2017 Base 27,878,600 1400000 1200000 1300000 1400000 12000000 1800000 Construction 104000 33000 44400 27200 597190 39200 24040 Oil 71200 125000 46000 695900 344600 92000 34000 Minerals 110000 25300 4812800 84300 396400 60000 13500 Tourism 35990 153300 128000 3913000 673790 40300 32100 Total 2867800 1867000 2067900 2345000 145000 1345000 2300140     Exports 2011 2012 2013 2014 2015 2016 2017 Base 29,573,460 4000000 6000000 5687000 345200 786000 234000 Construction 229970 324500 738000 219400 173430 91300 204975 Oil 694100 99900 12600 701130 343850 23400 59800 Minerals 23322 337100 484130 56500 104300 56500 104300 Tourism 35990 15330 12800 391300 673590 40300 32100 Total 3045678930 2400100 1205600 6783400 10056700 4560000 2340000   Conclusion The country has a great plan which needs to be implemented with a lot of keenness to avoid getting into a mess. There is a problem when more funds to be used are just coming from international investors. Local alternatives should be explored before anything else. Oil, tourism and mineral salts are very good resources that can see that the economy has improved tremendously.                References Allan, K 2005, Explorations in classical sociological theory: seeing the social world, Ontario, Pine Forge Press. Andersen, LM & Taylor, HF 2007, Sociology: understanding a diverse society, Cengage Learning, New York.   Atkinson, BA 1999, The economic consequences of rolling back the welfare state, MIT Press, London. Barro, JR & Sala-i-Martin, X 2004, Economic growth, MIT Press, London. Novales, A, Ruíz, J & Fernández , E 2010, Economic Growth: Theory and Numerical Solution Methods, Springer, Mexico City. Ransome, PE 2010, Social Theory for Beginners, The Policy Press, New Delhi. Weil, DN 2005, Business & Economics, Addison-Wesley, London.   Read More
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