Question

Analyze how public spending programs such as Medicare and spending on public education affect the consumption incentives.

Answer 1

In any country, consumption can directly be linked to economic progress. As people in the country consume more goods and services, producers increase their overall expenditure and it leads to high progress in the society wherein the gross domestic product which is the value of all goods and services created in the country begin to rise considerably.

Further, the living conditions, infrastructure as well as life style of people also increase and are widely seen as a positive sign of development in the country.

To do this, it is important for governments to increase the employability of people as well as maintaining their overall productivity each of which is being handled by increasing the investment on Medicare as well as on public education.

By increasing the expenditure on Public Education system, the government creates ample opportunities for all sections of the society to be able to enrol as well as enhance their skills which they have. This enhancement allows them to earn more as they are easily a part of the employment markets. Once their net disposable income changes and increases, they are allowed to spend more and the consumption increases having a ripple effect on the gross domestic product and living conditions in a country which have been explained in the sections above.

Also, maintaining and spending additional amount of money on health care allows for the productivity of a nation to remain stable. This helps in saving it from any sudden decline in the supply of labour and once that is maintained, producers prefer spending additional to expand business and in turn the cycle of positive returns for an economy wherein additional employment brings in additional returns is recreated.

Thus, we can conclude by saying that expenditure on public education system, as well as on health care administration helps in increasing employability and productivity in the nation, thus increasing income as well as consumption which has positive outcomes for all.

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