Current State of Our Economy

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In the first weeks of this course we learned about business cycles. There are four phases to a business cycle- a peak, recession, trough, and expansion. A peak is when business activity reaches a temporary maximum with full employment and near-capacity output. A recession is a decline in total output, income, employment lasting six months or more. A trough is the bottom of the recession period, with output and employment at their lowest. Following a recession is a recovery and expansion. This is when output and employment are rising and the economy is reaching toward full employment. (Brue, Flynn, & McConnell, 2009, pp. 521-523). Currently, I feel that our economy is in the recovery phase of the cycle. We have hit the lowest points of unemployment and in total output and income; and on our way to improving this. When asked the question, “Do you think that we are still in a recession?” I stopped to reflect on the discussions throughout this course, and the state of the economy as I see it. I do not believe that we are completely out of the recession as of yet, but on the way to recovery. It seems that Obama’s $800 billion stimulus package should benefit many people- wage employees and self employed, first time home buyers, home owners looking to improve their homes through energy efficiency, students, vehicle buyers, unemployed, and middle classes alike. The stimulus package has given tax breaks to the middle and lower classes, the unemployed do not have to claim the first $2,400 in their income, and students’ loans are being forgiven and The American Opportunity Credit has increased from $1,800 to $2,500. (Converge Staff, February 26, 2009). These are just a few things that the stimulus package has offered. Home buyers were also given a large tax credit as were vehicle buyers. All of these plans increased spending which helps the economy. However, the package has not done much to solve the foreclosure rates or the negative equity problems. The Unemployment...
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