American economics history exam Assignment Example | Topics and Well Written Essays - 750 words

American economics history exam - Assignment Example The action of Federal Reserve to raise interest rates hoping to slow the rapid rise in stock prices depressed interest-sensitive spending in institutions such as automobile purchases and construction. In addition, it resulted to the crash of the stock market, thus reducing the American aggregate demand substantially. The U.S. government has centralized great power and responsibility in one institution, which is the Federal Reserve in making significant decisions in relation to the economy. The significance of having a well-defined and secure property rights as it gives people the exclusive right of using their resources as they see fit (James 16). The fact that individuals are the dominion of their property, they take full account of the entire costs and benefits of employing those resources in a specific manner. The process in which they weigh costs and benefits produces efficient outcomes; therefore, translating into more prominent standards of living. However, in the last decades, during the history of modern economics, economists did not see the importance of property rights. Property rights impact the efficiency of resource allocation whereby the limit expropriation and facilitate market transactions. Moreover, they enhance investment incentives by limiting expropriation risk and reducing motive of diverting private resources in order to protect property. For an instant in U.S., the government has developed policies that protect the individuals’ property r ights in order for these individuals to trade in assets and improve collateralization of those assets. In the American history, between 1870’s to 1930’s, there were battles on business property because the judiciary saw that it was necessary to protect the general welfare (James 17). The problems with the Articles of Confederation were that the Articles were not precisely accurate or exact in an absolute sense. It is in the sense that when the Articles are viewed in a