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Money and the Prices in the Long Run and Open Economies
Analyze the history of changes in GDP, savings, investment, real interest rates, and unemployment and compare to forecast for the next five years
The GDP of the United States in 2010, approximately five years ago, stood at $14.96 trillion. Fast forward five years to the present day, the GDP of the nation currently stands at $17.42 trillion. Looking forward, according to Trading Economics (2016), it is projected that the growth of the GDP rate will be in the scope of 2.00% in the year 2020. Therefore, it is forecasted that by 2020, the GDP for the country will be $20.33 trillion (Trading Economics). With regard to savings and investment, it is imperative to point out that the United States has been incessantly having trade deficits for the past four decades, owing to the high importation of oil and consumer products. As a result, the savings and investment of the United States have deteriorated significantly as a percentage of GDP and have just about completely collapsed since the financial crisis. Private savings hardly keeps up with total government deficits and in general, the nation saves very little. As a result, there are minimal domestic investments and the United States is substantially dependent on foreign investors to constitute the difference (Cole, 2014). In accordance to Trading...
was an average of $-13309.01m from 1950 until 2016, attaining an unprecedented high of $1946m in June of 1975 and the highest low record of $-67823m in August of 2006.
In a historic analysis, the unemployment rate of the United States had improved as it has declined from about 10% in the 2010 fiscal year and presently stands at about 4.7%. This is a massive improvement as it is deemed to be the lowest unemployment rate reading since 2007. In the long-term, the unemployment rate of the United States is forecasted to trend at around 6.20% in the year 2020 (Trading Economics, 2016). Lastly, the real interest rate of the United States has consistently increased from 1.2% in 2011 to 1.8% in 2014 and has presently slightly declined to 1.77%. Trading Economics (2016) projects that the real interest rate of the U.S. will increase to 2.25% in 2020.
Discuss how Government Policies Can Influence Economic Growth
Activities and policies implemented by the government can have a great impact on the growth of the economy. In particular, it is imperative to note that government policies impact the economy not only in the short-run, but also in the long-run. Government policies come in the form of monetary and fiscal policies. To begin with, the government sanctions monetary policies in order…
References
Arnold, R. A. (2007). Macreconomics, Concise Edition. Ohio: Thomson South-Western.
Cole, A. (2014). Losing the Future: The Decline of U.S. Saving and Investment. Tax Foundation. Retrieved 16 June 2016 from:http://taxfoundation.org/article/losing-future-decline-us-saving-and-investment
Ross, S. (2015). What impact does the balance of trade have on GDP calculations? Investopedia. Retrieved 17 June 2016 from: http://www.investopedia.com/ask/answers/061515/what-impact-does-balance-trade-have-gdp-calculations.asp
Trading Economics. (2016). United States Balance of Trade. Retrieved 16 June 2016 from: http://www.tradingeconomics.com/united-states/balance-of-trade
Trading Economics. (2016). United States Fed Funds Rate. Retrieved 16 June 2016 from: http://www.tradingeconomics.com/united-states/interest-rate/forecast
Trading Economics. (2016). United States GDP Growth Rate. Retrieved 16 June 2016 from: http://www.tradingeconomics.com/united-states/gdp-growth
Trading Economics. (2016). United States Unemployment Rate. Retrieved 16 June 2016 from: h http://www.tradingeconomics.com/united-states/unemployment-rate
Open Market Operations Monetary policy may involve several facets, including reserve requirements, discount rate and interest rate targeting. The U.S. Federal Reserve's long-time strategy has been to use interest rate targeting through Open Market Operations primarily to keep the economy in its attempts to keep the economy in a state of equilibrium. Today, open market operations (purchase and sale of U.S. Treasury and other federal agency securities) are the principal tool used
U.S. Economy The May 2007 economy presented a rosy picture: the lowest unemployment rate of the Bush Administration 4.4% (Bureau of Labor Statistics.gov. 2012. PP. 1), the peak of housing values, strong GDP growth of 3.6% (Trading Economics.com. 2012. PP. 1), a stable inflation rate of 2.2% (Trading Economics.com. 2012. PP. 1), and a normalized non-emergency FED Funds of 5.25% (Moneycafe.com. 2012. PP. 1). Yet, the collapse was imminent as the
Tail Economics Book Analysis: The long tail. How endless choice is creating unlimited demand In the past, economics' was dominated by vendors that sold a large quantity of only one or two items. The Internet has changed the shape of product offerings. The new economic model, first made popular by Chris Anderson in an article published in Wired magazine, examines the new economic model. This model is based on each vendor
Federal Reserve in stabilizing the economy using monetary policy tools. The paper is divided into six major sections. The first section introduces the Federal Reserve by highlighting its objectives, roles, and composition. The second section explains its role and effectiveness in stabilizing the current U.S. economy. The next section discusses some important economic indicators which the Federal Reserve can analyze for better economic stabilization. The fourth section is dedicated
global economy relate to food security and food bank use in Canada. There has been some exploration in the academic literature of the links between the changes in the global economy and food security. There have also been a couple of attempts to examine the linkages between the global issue of food security and the individual issue of food bank usage. This paper will examine this literature to examine
While this investment has flourished to this point despite strained cross-strait relations, deterioration in the China-Taiwan relationship would threaten Taiwanese investment in China. Taiwan's firms have already been warned by their Ministry of Economic Affairs to increase their level of risk assessment on account of increased risk that China's government poses to Taiwanese investments (Central News Agency, 2007). More important, however, are the damaging effects on total FDI that deterioration