US ECONOMIC STATUS
United States of America current economic status and factors affecting its growth Having study macroeconomics from chapter one to sixteen, it’s now time to put the knowledge learned in class to practicality. It will be a good to start with definition of economics. “Economics is a social science concerned with how individuals, institutions and society make optimal choices under conditions of scarcity” (McConnell 19th edition). With the fact that choices are to be made and costs are to be incurred when one alternative is forgone, economic efficiency must therefore be practiced in order to avoid the economic cost. It is therefore an obligation for the government to keep the economy stable to protect her citizens from economic costs. U.S economy is service based economy and government plays an important role providing enabling environment for people to exchange their services for money does contributing to national income through payment of tax. The government had also maintain the steady GDP for a long time and therefore making the economy stable and the best compared to all other nations in the world. US government had been able to accomplish this achievement in economy by practicing its democratic rights of allowing private sector to make majority of decision and to venture in any business of their choice provided they a bid by the laws. With private sector opening businesses all over the nation and paying taxes to the government, GDP increases and thus boosting the economy. This paper will discuss US economic systems, Role of government in economy, and factors that affect the economy. There are two economic systems i.e. the command system and the market system. Command system is where the government own resources and economic decision making occurs through central economic plan. On the other hand, the market system is where private ownership of property is practice and most of the decisions are made by private investments and businesses. US economy is based on market system. Apart from private ownership, market system is also characterized self-interest, completion freedom of choice and enterprise, market prices, use of money, specialization and technology. The role of the government is to design and implement rule and regulations that safeguard buyers and sellers from exploiting each other. The regulations are called “invisible hand” of the government.
US government takes a lot of responsibilities in maintaining its economy and therefor splits its responsibility to three wings; these are the three agencies that provide statistics on how economy is progressing. These agencies’ are census bureau, the bureau of economic analysis and bureau of labor and statistics. The agencies look into five economy detectors which includes; personal income, consumer price, new home sales and net retail sales. By analyzing the data from the agencies and detecting any problem, government tend to decide what to do by applying economic policies, economic laws and economic principles to attain economic efficiency.
The next and the crucial part of this paper is to look at the factors that affect the economy of the country. To start with, let’s look at GDP. GDP is the sum of gross value added by all resident producers in the economy plus any product taxes and minus any subsidies not included in the value of the products. It is calculated without making deductions for depreciation of fabricated assets or for depletion and degradation of natural resources. US releases its GDP quarterly with the latest release being 3rd quarter release which showing a 2.0 percent increase compared to the 2nd quarter. The release was on October 26th 2012.The exact number for the 2nd quarter was $117.4 billion. 2.0 percent for the 3rd quarter gives an exact amount of 119.748 billion dollars (bureau of economic analysis). According to BEA, The increase in real GDP in the third quarter primarily...
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