The Great Recession

Only available on StudyMode
  • Download(s) : 47
  • Published : March 18, 2013
Open Document
Text Preview
A) The United States of America is the largest and still the most important market in the world. But it did crash a couple of years ago and it’s now trying to recover from this. The Gross Domestic Product (GDP) is usually a quite good indicator of the standards of living of a country. It can be measured in two ways: The total expenditure on goods and services or by the total of income earned by producing goods and services. The actual GDP of the United States is 14 62 trillions of US dollars, that is a growth of 2.7% from last year. But to have a better idea of the standard of living of a country, it is more relevant to take a look at the GDP per Habitat, which is 47, 400$. The GDP growth is 3.1% now so it’s higher than the inflation rate. And if we take a look at the past two years, the GDP growth was always positive so the government were quite successful in this domain.

The inflation is another figure interesting to look at, because it reflects the value of a currency. In fact, inflation is the rise of price in a country. The American dollars value is important for plenty of country because it is the money use to trade oil as an example. But also because America is a leading economy so his dollar is used as a reference everywhere in the world. Two years ago, the inflation rate was negative in America, which mean that the good in the country were getting cheaper. But now the inflation rate in the U.S is 2.11 per cents. The Federal Reserve applies some policy to manage the inflation rates. Usually banks try to control the inflation rate and the aim is around 2-3% so the American government succeed to control the inflation rate because the actual inflation rate was the one aimed by the government.

For an economy to be at full employment, around 96 or 97% of the population has to be employed. Some type of unemployment is normal and it is impossible to get rid of them. The Structural unemployment is an example, it’s the unemployment due to technological changes or changes in the structures of a company for instance, like when machine replace real employees. There are also some people moving from one job to another but while those people are not reemployed yet, they are unemployed and this is called frictional unemployment. Finally the seasonal unemployment is when someone loose is job temporarily because of the season. As an example, someone how shovel snow for living might loose is job during the summer. Those three types of unemployment together create the 3-4 % of unemployed people when an economy is at full employment. The united state of America is nowhere near the full employment. In fact, this government is actually experiencing is lowest unemployment rate in the past two years at the moment and it is around 8.8%. But in general for the past two years the unemployment rate was above 9%. In America, the problem seems to be demand-deficient unemployment. It means that companies are not hiring enough employees. The problem is that for the past two years, the unemployment rate had been higher than 9 % so the demand-deficient unemployment can become structural unemployment because the longest people are unemployed, the more they loose their skill and It is more likely that they will get replace by machines because technology is evolving really quickly. Government has to solve this problem as quickly as possible and he is working hard to creates job but after the credit crunch, unemployment was so bad that event with all those effort and those small ameliorations in the figure of unemployment, the government is still unsuccessful because 8.8 per cents of the population is actually unemployed. But the improvement of the country is bigger than it looks like because after the crash, a lot of people stop looking for job so they were not counted as unemployed because there were not actively trying the find work. In the past two years, because of the market amelioration, a lot of people started to look for job again,...
tracking img