Principles of Economics - Essay Example

The recession that began in 2007 was caused by the ‘sharp downturns’ in the housing, stock and labor markets. This resulted to changes in the global economy as well. The recession led to increased inflation, high interest rates, high rates of unemployment, contraction of the economy and reduced consumer confidence. Finally, interest rates was the main contributing factor to the recession as banks offered low interest rates causing the demand for loans and mortgages to increase which contributed to the skyrocketing levels of inflation in the past five years.

Strategies that the federal government could implement that would encourage people to spend more money Decisions made by the federal government have a profound impact on peoples spending which in turn affects the employment activities in the economy. The first policy that can be employed by the government is through supporting economically competitive areas. As a result, this increases the income levels in such communities thereby increasing their level of spending. This move will lead to a reduction of costs across regions and improve the overall environmental, housing and transportation needs.

Examples of such initiatives include the EPA’s Smart Growth Program and the HUD’s Sustainability Office both aimed at improving the living standards of the citizens (Smart Growth America, 2013). The second policy is by putting in place a mechanism that ensures an accountable and safer transportation system to promote efficient trade thereby creating job opportunities. Examples of policies that support this include the Complete Street Act and the Clean, Low-Emission, Affordable, New Transportation Efficiency Act (Smart Growth America, 2013).

A Situation in the Past 50 years in which the Government Used Anti-Trust Policies to Stop a Monopoly from Occurring The best example of such a situation is the Microsoft Corporation case that is regarded as the most recent situation where the anti- trust law has been applied accordingly. The law is based on universal ethics consideration and the Microsoft Corporation is said to have violated it as it failed to establish the effects of its outstanding success on its competitors and society in general (Mankiw, 2007).

One thing is certain, although the company may have had ethical issues; their innovations have totally changes technology in the world. The justice department strongly believes that the company used monopoly in operating system software to eliminate its rivals and establish dominance in the market. In the long- run this will have detrimental effects on the consumers resulting from fewer choices and less competition. The government points out that Microsoft has undertaken in actions to promote its Windows monopoly which violates the anti- trust laws.

The government also maintains that the company has used its market leadership to monopolize the internet browsing software market. In addition to, the company is said to have violated the anti- competitive acts (Mankiw, 2007). The company’s defense is based on the fact that it is simply trying to develop its products and that its activities are and there is no basis of consumer indignation being claimed by the government. In conclusion, Microsoft Corporation has been facing the anti- trust legislation for a couple of years now.

It has been observed that this may have led to some sought of restrained trade