Principles of Economics Essay

1447 Words6 Pages
The Economy, Monetary Policy, and Monopolies Luis Ormeno Sarah Uhimchuk Principles of Economic 05/23/2012 1. Analyze the current economic situation in the U.S. as compared to five (5) years ago. Include interest rates, inflation, and unemployment in your analysis. The economy of the United States is the world's largest national economy. Its nominal GDP was estimated to be over $15 trillion in 2011 (Lindeen, 1994), just about a quarter of nominal global GDP. The economy of the United States is a mixed economy and has maintained a stable overall GDP growth rate, a moderate unemployment rate and high levels of research and capital investment. It has been the world's largest national economy since at least the 1890s. It was also the world's largest economic entity between 1941 and 2004. The labor market in the United States has attracted immigrants from all over the world and its net migration rate is among the highest in the world An interest rate is the cost of borrowing money. Among the many industries affected by fluctuations in interest rates, real estate and banking are perhaps the most directly impacted. When interest rates increase, borrowing becomes more expensive, dampening consumer demand for mortgages and other loan products and negatively affecting residential real estate prices. Interest rates rise or fall largely because of the amount of money in circulation at any given time. The Federal Reserve Bank of the United States affects both short term and long term interest rates by manipulating money supply through open market operations, changing reserve requirements for banks, or changing the rate at which it loans out money to banks. 2. Propose two (2) strategies that the federal government could implement that would encourage people to spend more money in order to create employment

More about Principles of Economics Essay

Open Document