We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.
Nobody downloaded yet

Macroeconomics - Essay Example

Comments (0) Cite this document
Macroeconomics Macroeconomic factors such as unemployment rate and inflation play a pivotal role in the national economy of the country. Rapid inflation takes away the benefit of rising GDP or in other words brings down the real GDP growth rate and thereby real income of the people…
Download full paper
Read TextPreview

Extract of sample

Download file to see previous pages... Both are equally bad for the national economy. Current GDP, Inflation and Unemployment Rate The US GDP in year 2012 is estimated at 15.68 trillion. Real GDP in the US increased by 3.6 percent annually in the third quarter of 2013 over second quarter and the inflation rate is estimated at 1 percent in the month of October, 2013 that is lowest since October 2009. Similarly, unemployment rate is estimated at 7 percent in November 2013 down from 7.3 registered in the previous month (US Inflation Rate). Unemployment Rate in Past 10 years The following graph taken from the Bureau of Labor Statistics provides unemployment rates for last 10 years period in the US (Source: http://data.bls.gov/timeseries/LNS14000000). It is interesting to note that during boom period of economy between 2003 and 2007, unemployment rate continued to slide. Post financial crisis it began rising rapidly and went up to almost 10% during 2009 and 2010. As of now it is hovering around 7 percent. Inflation Scenario in Past 10 years The US Federal Reserve states, "Inflation is a general increase in the overall price levels of the goods and services in the economy" (Federal Reserve). The Fed takes into account several price indexes while calculating inflation. The monetary policy is governed by the Federal Reserve and it aims at achieving maximum employment, low inflation and moderate long-term interest rates. The following graph shows inflation rates for last 10 years in the US. Source: http://www.tradingeconomics.com/united-states/inflation-cpi It is amply clear that inflation rates vary significantly in last 10 years. During financial crisis, it touched to as low as -2 % in 2009 and prior to that it was at its peak at 6 percent in 2008. For last several quarters, the inflation rates are hovering between 1% and 2%. The Federal Reserve employs tools of monetary policy to control inflation and bring down unemployment rates as its major objectives. Monetary Policy Influences Inflation and Unemployment Usually, the Federal Reserve influences the federal funds rate that banks charge each other for short-term loans. These changes in short-term rates are eventually passed on to the businesses and households for their borrowing needs. Short-term rates also influence long-term rates such as residential mortgage rates, car loans etc. When the federal fund rate is reduced it triggers demand for goods and services. More demand for goods and services tend to generate more employment reducing unemployment rate that exist. Higher demand of the goods and services will also push the wage increase. Post 2007 financial crisis, the Federal Reserve took drastic steps to stabilize financial system and thereby the US economy. In this process, short-term interest rates were brought to near zero. Low interest rates aim at supporting businesses and households to finance new spending and thereby boost the economy and reduce the unemployment rate. However, in this process, there is possibility that inflation rate would also start going up. As far as inflation rate is within the targeted rate, the Fed rate will keep using the tool of lowering the interest rate to boost the economy and generate the employment. The moment inflation starts exceeding the target rate, the fund rate will move in the reverse direction to cool down the economy and thereby control the inflation rate (Monetary Policy). Post 2007 financial crisis, when the economy was shattered the Fed resorted to the ...Download file to see next pagesRead More
Cite this document
  • APA
  • MLA
(“Macroeconomics Essay Example | Topics and Well Written Essays - 1000 words - 2”, n.d.)
Retrieved from https://studentshare.org/macro-microeconomics/1496647-macroeconomics
(Macroeconomics Essay Example | Topics and Well Written Essays - 1000 Words - 2)
“Macroeconomics Essay Example | Topics and Well Written Essays - 1000 Words - 2”, n.d. https://studentshare.org/macro-microeconomics/1496647-macroeconomics.
  • Cited: 0 times
Comments (0)
Click to create a comment or rate a document
Industry A has 20 firms and a Concentration Ratio (CR) of 20%. Industry B has 20 firms and a Concentration Ratio of 85%. Addressed in the paper are the names of these industry types, characteristics inherent, potential long run adjustments and implications of the anticipated adjustments.
4 Pages(1000 words)Essay
Money & how it is created – Economics is the study of money in simple terms. Money can be notes, coins, credit / debit cards, deposits, gold and even land or such possessions which has some purchasing power. We
3 Pages(750 words)Essay
It further explains the rational expectations of labour markets to predict behaviour of economy, from a macroeconomic view. Through these models and theories, factors contributing to
8 Pages(2000 words)Essay
The actual or realized expenditure is the amount households, firms and government spend on goods and services, i.e. GDP (Y), while planned expenditure (E) is the amount they would like to spend on the same goods and services. Now the three major determinants
4 Pages(1000 words)Essay
When the UK Government monetary policy committee will increase the interest rate, the demand for credit will be higher and the consumption pattern will decline as the consumers will be moving toward savings rather than consumption spending. It
4 Pages(1000 words)Essay
On the other hand demand-side economics deals with the overall demand of the commodity. Earlier it has been the weather conditions that led to the increase in wheat prices but
2 Pages(500 words)Essay
Persistent rise in prices tend to make the volatility of the inflation rate to increase. This makes it even harder to place a money value. a) Amount issued by the central bank of Fiji in Fijian dollars=$1,000,000. If there is none of currency
3 Pages(750 words)Assignment
On the other hand South Korea recorded the most impressive growth in its livings standards since 1960 because it posted a growth of 1304.5%, while the United States posted a growth of 166.2% since 1960. In
1 Pages(250 words)Essay
In that context, President Obama needs to look into some aspects of the American economy, which have not only traditionally constituted the essentials of American economy, but a neglect of which has really diluted the American economy. America badly needs to restore its
2 Pages(500 words)Essay
There are several macroeconomic variables like the rate of interest, the national income, the savings and spending rates and the existence of trade in the country, that are have their effect on these indicators. These indicators and their relationship with the
10 Pages(2500 words)Essay
Let us find you another Essay on topic Macroeconomics for FREE!
Contact us:
Contact Us Now
FREE Mobile Apps:
  • About StudentShare
  • Testimonials
  • FAQ
  • Blog
  • Free Essays
  • New Essays
  • Essays
  • The Newest Essay Topics
  • Index samples by all dates
Join us:
Contact Us