Essay on Economic Impact Of Public Financing

712 Words Dec 20th, 2016 3 Pages
Question 1: Economic Impact of Public Financing
Public financing comes with a host of benefits and repercussions to the national economy, but is dependent on the level of government funding. Proponents of government funding the national economy posit that the programs supported by the government are invaluable and designed for the public interest, which may include infrastructural development and the education sector (Reinhart and Rogoff 574). Thus, government spending promotes economic growth. Excess government funds are transferred to more productive sectors in the country for increased national output. An increase in government spending on the economy tends to have a ripple effect because people have more money to spend in general, which helps stimulate the market.
Opponents to government funding posit that excessive government funding can be burdensome due to increased government deficits (Reinhart and Rogoff 576). A high government deficit implies that the largest portion of the nation’s output will go towards settling debts, which will eventually slow the growth rate. Thus, a moderate government spending is necessary for optimal growth.
Question 2: Banking Laws Passed in 1980 and 1999 and its Impact on Bank Consolidation
The banking law that was passed in 1980 provided immense benefits to the banking sector by allowing the sector to be deregulated. Deregulation of the banking sector allowed these financial institutions to be more responsive to market drifts and…

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