Economics Essay

765 WordsApr 18, 20134 Pages
The current state of unemployment for the United States is currently down by7.6% which is a total of 11.7 million individuals who are unemployed. Unemployment affects aggregate supply and demand by shifting the curve to the left, it reduces the supply of labor in the economy. People would then be more desperate for a job and willing to work for less, causing some employers to make threats in cutting wages. The current state of consumer income has increased 1.1 percent in February 2013 after decreasing 3.7percent in January. These changes reflected bonus payments and divided distributions in anticipation of income tax changes. Consumer income can increase or decrease aggregate demand when a consumer have disposable income, it gives them more money and the opportunity to spend money. When the economy falls and job losses occur or decrease in salaries, consumers have less money to spend and they began to save rather than spend. Economically, the current state consists of, but not limited to, increase employment rates, a decrease in deficits, and increase in surplus. In addition, the expectations of aggregate demand would imply that given any amount of nominal income will allow consumers to buy more real goods at lower prices than they would at higher prices. The current state of interest rates in the United States are at its lowest. Interest rates determine the cost charged for the use of money, these rates are set by the Federal Reserve, governments and banks. The current prime rate is 3.25 percent, Federal funds are 0-0.25percent, and treasury it 0.24 percent to 3.10 percent. Interest rates affect the aggregate supply and demand when an increase in interest rates cause a decrease of the aggregate curve but a decrease in interest rates causes an increase of the aggregate curve. Changes in interest rates can induce changes in consumption and investment

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