Current Macroeconomic Situation In The United States
Fiscal & Monetary Policy Given the Current Macroeconomic Situation in the United States
DeVry University
Economics
Instructor: Professor Bergan
June 16, 2013
The macroeconomic situation in the United States can be determined by looking at what part of the business cycle the economy currently falls within. According to McConnell, Brue & Flynn (2012) “Business cycles are alternating rises and declines in the level of economic activity, sometime over several years” (p. 527). A typical business cycle consists of a peak, a recession, a trough and an expansion. To determine what point in the business cycle the United States currently falls into it is important to look at several factors such as gross domestic product (GDP), income, …show more content…
Knowing what the current macroeconomic situation is will determine what fiscal and monetary policies would be appropriate. In looking at the GDP from 2007 to 2013 first quarter on the Bureau of Economic Analysis website the GDP has gone from 0.5 to 2.4 with a low of -8.9 in the fourth quarter 2008. This would indicate that the United States is in a period of recovery. Looking at incomes over the period for 2007 to 2013 first quarter the average weekly income according to the Bureau of Labor Statistics website has gone from $620 to $773. This would also indicate that the United States is in a period of recovery. In looking at unemployment rates on the Bureau of Labor Statistics website from 2007 to 2013 first five months the percent of unemployed workers has gone from 4.1 in 2007 to a high of 8.5 in 2009 and 2010 back to 6.8 on average in the first five …show more content…
G-10). Since the United States is in a period of recovery expansionary fiscal policy would be the most appropriate to continue to help the economy reach its optimum level of full-employment without causing inflation. The use of expansionary fiscal policy would put more money in the hands of consumers by increasing government spending and decreasing taxes. Increasing government spending in the form of subsidies and transfer payments allows consumers to have more money to spend on products. Cutting taxes is an important fiscal policy tool that works to also allow more money for consumers to spend. The tax cuts must be large enough and last long enough for people to feel comfortable in spending the extra money instead of saving
DeVry University
Economics
Instructor: Professor Bergan
June 16, 2013
The macroeconomic situation in the United States can be determined by looking at what part of the business cycle the economy currently falls within. According to McConnell, Brue & Flynn (2012) “Business cycles are alternating rises and declines in the level of economic activity, sometime over several years” (p. 527). A typical business cycle consists of a peak, a recession, a trough and an expansion. To determine what point in the business cycle the United States currently falls into it is important to look at several factors such as gross domestic product (GDP), income, …show more content…
Knowing what the current macroeconomic situation is will determine what fiscal and monetary policies would be appropriate. In looking at the GDP from 2007 to 2013 first quarter on the Bureau of Economic Analysis website the GDP has gone from 0.5 to 2.4 with a low of -8.9 in the fourth quarter 2008. This would indicate that the United States is in a period of recovery. Looking at incomes over the period for 2007 to 2013 first quarter the average weekly income according to the Bureau of Labor Statistics website has gone from $620 to $773. This would also indicate that the United States is in a period of recovery. In looking at unemployment rates on the Bureau of Labor Statistics website from 2007 to 2013 first five months the percent of unemployed workers has gone from 4.1 in 2007 to a high of 8.5 in 2009 and 2010 back to 6.8 on average in the first five …show more content…
G-10). Since the United States is in a period of recovery expansionary fiscal policy would be the most appropriate to continue to help the economy reach its optimum level of full-employment without causing inflation. The use of expansionary fiscal policy would put more money in the hands of consumers by increasing government spending and decreasing taxes. Increasing government spending in the form of subsidies and transfer payments allows consumers to have more money to spend on products. Cutting taxes is an important fiscal policy tool that works to also allow more money for consumers to spend. The tax cuts must be large enough and last long enough for people to feel comfortable in spending the extra money instead of saving