economy has been showing slow, but steady improvement. I expect that it will continue on this pace for the next three quarters as a result of projects that have been made for the unemployment rates, GDP growth, and inflation. The rate of unemployment has steadily decreased with the rate being 8.2% for March 2012, which was a minor increase over February's rate of 8.3%. The rate in November had been 8.6%, so the rate has been slowly rising. March's report from the U.S. Bureau of Labor Statistics noted that 120,000 nonfarm jobs had been added to the manufacturing, restaurant, and health care industries, but the retail industry lost jobs. (Bureau of Labor Statistics, 2012). This in actuality went against economists' projections of 203,000 new jobs for March (Packowitz, 2012).
The GDP growth rate has been slow to improve, with hovering just below 3%. As in past recoveries from recessions, it is normally expected to be around 6%, but because of the unprecedented unemployment rate and a trade deficit of 3.5%, the GDP is taking longer than expected to recover (Thornberg & Shepard, 2012). The risk of the economy recovering too quickly could provoke an inflationary period, so a delicate balance must be maintained.
2. a.
Year 2000
Year 2010
Good
Qty
Price
Qty
Price
Auto
$50,000
$60,000
Bread
500,000
$10.00
400,000
$20.00
Nominal GDP
$10,000,000
$15,200,000
Real GDP
$10,000,000
$10,000,000
The implicit price deflator for GDP
Fixed-weight price index (CPI)
Auto
1.2
Bread
2
b. The cost of bread has doubled over the 10-year period while the cost of automobiles has only increased by 20%.
P0
Q0
P1
Q1
p0q0
p0q1
p1q0
p1q1
Auto
$50,000
$60,000
$5,000,000
$6,000,000
$6,000,000
$7,200,000
Bread
$10
500,000
$20
400,000
$5,000,000
$4,000,000
$10,000,000
$8,000,000
$10,000,000
$10,000,000
$16,000,000
$15,200,000
Lapeyres
Paasche
ii. The Laspeyres index defines the price of goods during a base period and uses...
The Paasche index gives a price for the goods today and compares them against historical prices.
iii. As the senator, I would choose the CPI because it represents the prices of goods purchased by consumers while the GDP deflator represents all goods and services. The CPI would be more representative of consumer spending, which would be important in adjusting the benefits to the cost of living.
3. The expansionary fiscal policy is used during a recession to stimulate the economy. This policy is based on the idea of John Maynard Keynes fiscal policy that was introduced during the Great Depression. He argued that the market and economy is incapable of self-regulation, therefore it was the responsibility of the government to inject money into the economy (Economic Policy). This could be done by increasing government purchases, decreasing taxes, or increasing transfer payments. Transfer payments are most commonly given as welfare payments to the poor, unemployment and Social Security payments to the disabled or elderly. These payments; however are not expected to produce increased economic activity.
a. A person who favors preserving the size of government would favor increasing government purchases. This action puts money directly into the economy by building up infrastructure such as building new bridges and road construction or extending unemployment. People now have money to spend, which continues to stimulate economic growth. The problem; however, with increased government purchases is that the end result is generally a budget deficit, which burdens the future generation of taxpayers.
b. A person who thinks the public sector is too large may opt for decreasing taxes, which will decrease the size of government. This method is often preferred over government purchases. The premise is that by reducing taxes, people will have more disposable income to use for purchases. This in turn should stimulate aggregate production and employment and will ultimately continue to increase income. It is easier to implement tax changes, so this method is preferable by voters and political leaders who would rather pay fewer taxes and keep the size of government down. Cutting taxes, however may lead to budget deficits, but if the economy begins to grow as a result, they are expected to be short-term, as revenues will increase. It is suggested that it is best to cut the taxes of low to middle-income citizens because they are more apt to spend the money received than those with higher income who will be more apt to save the money (Economics Help, 2008)
4. Monetary policy…
Economy Based on the information provided by the St. Louis Fed, the GDP indicators for the U.S. are as follows. The real GDP growth is at 3%. The trend for this indicator is upward, as it has increased steadily over the past four quarters. Real GDP growth was on a downward slide for all of 2010, however, bringing it to a very low level at the end of the year, which
If energy prices rise further, it is likely that private spending will be influenced and economic expansion may be negatively affected. The high and volatile prices of crude oil and natural gas appear troublesome for future predictions (Greenspan, 2005). Another uncertain factor affecting the economy is productivity, which is delineated in unit labor costs, or the hourly labor compensation to output per hour ratio. An increase in productivity over the
The president also promised to work with other relevant sectors to assist homeowners in refinancing their mortgages at low interest rates. On the other hand, Republicans are worried about proposals that would repeat the 2009 stimulus plan despite of President Obama's call for bipartisan support to the bill. They argue that the failed 2009 stimulus plan and its successive policies have shown that huge government deficit spending is not the solution
Economics: The State of the U.S. Economy Cousin Edgar, a global investor, is seeking to capitalize on the thriving gasoline industry and the rising world demand for oil by purchasing several gas stations in the U.S. market. Inspiring his interest is the high price of gasoline, which he reckons will rise even higher in the near future, thanks to the urbanization and industrialization currently being witnessed in the developing economies of
Introduction Nike and Foot Locker are two different companies with highly complementary businesses. Nike is a designer and marketer of athletic footwear and apparel, and is the industry leader in that business worldwide. Foot Locker is a retailer of athletic footwear and apparel. Neither company does any manufacturing – Nike outsources that – but they both are heavily engaged in marketing and therefore have a similarity in terms of marketing and
Compass has the experience in the U.S. with these markets to exploit this opportunity. The military and offshore markets have also been identified by management as strong potential sources of growth in the UK. Another opportunity is with new markets, which include arenas, zoos and other public facilities. This emerging market is relatively untapped, and its size somewhat undetermined, pending the creativity of the catering industry. There appears to be