ECON2302 Principles of Microeconomics - The American Recovery and Reinvestment

ECON2302 Principles of Microeconomics

OPTION 3

 The American Recovery and Reinvestment Act of 2009 (ARRA) was passed by President Obama and Congress in response to the recession of 2007-2009. The primary components of this bill included tax cuts and increased government spending, with an emphasis on infrastructure spending such as roads and bridges. Included in the bill was a “Buy American” provision which required all manufactured goods (a few exceptions did apply) purchased with ARRA funds to be made in the United States. The intention of this provision was to increase jobs in the United States by preventing foreign companies from reaping the rewards of the new spending projects.

1. Are attempts to protect U.S. firms from foreign competition, such as the Buy American provision, good ideas? Explain.

2. Explain why some American companies might be opposed to this provision.

 3. Explain whether or not you believe the Buy American provision would create jobs in the United States.

4. What do you think will be the economic consequences of a Buy American provision?

 5. Do you believe the government should get involved in this aspect of private business, even when the available funds are coming from the government? If so, why? If not, why not?

6. Watch the following 2 videos:

Why Buying American Made Matters

John Stossel – Buy American

Which of these videos make more economic sense than the other? BE SPECIFIC! What points does the better video make that the other fails to adequately address?

OPTION 4

Some politicians have recently proposed ideas that would encourage or require more businesses to operate as “co-ops” or “worker-owned” businesses. In such businesses, the workers and the bosses get paid the same amount of money and have an equal say in the management of the business.

1. Do you believe that more businesses should be run in such a manner, as cooperatives in which the owner and employees make roughly the same amount of money?

2. What are the potential drawbacks to the owners of such an idea? What about drawbacks to the workers?

3. If you like the idea of “worker-owned” businesses, should the government require businesses to operate in such a manner? Why or why not?

4. Why do you think some politicians may want to pass laws that would require more businesses to become cooperatives?

5. Please watch the following two videos and answer the following questions. Capitalism: A Love Story – Workplace Democracy and Cooperatives Why Capitalism Works

6. Which of these two videos makes the most sensible economic conclusions? WHY? Be specific.