Government Activities Essay

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Government Activities
Nicole Ferrante
ECO/372
December 15, 2014
Laurie Klosk-Gazzale

Government Activities There are several activities that affect the subcategories of economics such as government, household and businesses. A few examples that affect these subcategories are purchasing of groceries, massive layoff of employees and decrease in taxes and these activities can be interrelated to government, household and businesses. There is a flow of resources from one entity to another and can be considered as a “snowball” effect.
Purchasing Groceries
Purchasing of groceries affects government, household and businesses in several different ways. Businesses have several decisions to make as to what to produce, how much to produce, what to sell the products for and where to sell the products based on the household. If the households do not want the product, cannot find the product, or cannot afford the product, than this affects the business negatively. However, if there is a high demand for a product, the business can offer the product at a premium. Offering a product at premium affects the government because, the higher the price, the more tax revenue is generated. The more money the government has, the more money it has to spend and vice versa. A current event that is happening now around the purchasing of groceries is in Venezuela. Venezuela is suffering from a declining economy and is suffering from storage of basic goods. According to Reuters, “Now, though, he struggles to make ends meet as inflation running at over 60 percent eats into his meager income and he spends hours in lines to buy scarce flour or medicines.” (Ulmer, 2014). The article went on to say, “Groceries eat up to half of her minimum wage salary, equal to $776 dollars at the strongest official currency rate but just around $27 dollars on the black market.” (Ulmer, 2014). Because people are having a hard time purchasing groceries, people have a lower quality of life, government is now earning as much as it can from taxes and jobs are scarce.
Massive Layoffs
Massive layoffs of employees also affect the government, household and businesses. Businesses are affected because their products are no longer needed either at all, or at the same quantity. Households are affected because someone in their family may be without a job. If someone is without a job, the less the household has to spend on items they need rather than they want. The government has a reduction in tax revenue from two different places; the taxes and the goods that are no longer being produced. The government also has to pay out more money for unemployment claims and that can get expensive. Samsung is facing this problem currently. According to Smart Company, “Samsung Electronics is reportedly looking to slash around one-in-three jobs in its IT and mobile division, following a disastrous 59.65% collapse in its third-quarter profits. According to the Korea Times, around 6700 jobs out of 28,000 are set to go, with many long-serving executives at the division set to lose their jobs. Some employees will be moved to other divisions of the company based on performance reviews.” (Sadauskas, 2014). If Samsung decides to move others to different locations, then they have be forced to move families out of their homes.
Decrease in Taxes
Decreases in taxes also affect the government, household and businesses. If there is a decrease in tax, the government has less money coming in and less money to spend. This in turn either leaves businesses with more money to hire more help, pay off debts or even upgrade equipment. If businesses had more money to hire people then more households would be affected because now more
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