Answer to Question #117225 in Macroeconomics for Rubi Lopez

Question

Was the government shutdown justified? Why or why not?

Answer 1

Government shutdown was not justified due to a series of negative impacts. The shutdown is expensive as it pauses programmes and government operations which become costly to revive. Impacts such as increased rates of unemployment, low gross domestic product(GDP), and high costs of borrowing are felt by a country on shutdown. Adverse effects on the federal workforce which involves recruitment and retention of quality staff, prolonged furloughs and payment freeze are adverse effects. Shutdown leads to downgrading of a country's credit rating, disruptions in the global market including overall trade and economic policies with a not worthy decline in markets. A series of regulatory bodies which allow for certain commercial segments to operate within legal compliance are rendered redundant. Short-term spending habits, eminent changes in crime rates, fluctuations in stock prices and long term effects on staff morale are among the effects. Government involvement in fiscal brickmanship is not an effective way of addressing fiscal changes since it delays tough decisions.