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Success of the US Government and the Federal Reserve: An Evaluation - Coursework Example

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"Success of the US Government and the Federal Reserve" paper evaluates how successful the government and the federal reserve have been in running the American economy over the last 3 years, and describes the main macro-economic policies used by the American government and the Federal Reserve…
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Success of the US Government and the Federal Reserve: An Evaluation
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Download file to see previous pages Now the question arises regarding the vastness of the concept of economic development. It is not possible for anybody to judge everything individually especially in a situation in which many of them are interrelated. For the sake of simplification we consider the following four perspectives:

Price stabilization is possible through controlling inflation and cushioning the economy from shocks. A stable price rate maintains a low cost of living as well as the competitiveness of the domestic exportable in the global market.

After the recession of 2001, the US economy recovered from it and showed a good pace. The post-reform period faced a healthy growth rate. There was an efficiency gain through enhanced global competition. The problem started with further oil price shock in 2005. But despite the oil price shock the inflation rate remained controlled in 2005. But over time we could find a growing inflation rate in the American economy. This may be said to be attributable to the budget deficit of the government. The government continued to mount up the budget deficits instead of a surplus. In the fiscal year 2007, the budget deficit of the Bush administration accounted for $354 billion. So we can say that the budget management of the government was poor at that time and that was a major cause of the problem of inflation. The oil price shock also worsened the situation and the American economy started to face chronic inflation causing a decline in the purchasing power of the US $. (McKeever Institute)

The matter that fueled up inflation in the United States is the minimum wage law by the government. In the 1990s the minimum wage rate was set to $ 3.80 which has become $ 7.25 now (almost doubled). A higher wage rate always ensures a higher cost of production and hence a higher level of inflation. (Infoplease)

The strong US army and growing expenditure on it is another cause of US inflation. The peacekeeping process initiated by President George W Bush has caused a hike in public expenditure. ...Download file to see next pagesRead More
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Success of the US Government and the Federal Reserve: An Evaluation Coursework. https://studentshare.org/finance-accounting/1722833-how-successful-has-the-govenment-and-the-federal-reserve-been-in-running-the-american-economy-over-the-last-3-years-describe-and-evaluate-the-main-macro-economic-policies-used-by-the-american-government-and-the-federal-reserve-over-the-last-3-years.
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