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Macro Article Analysis - Research Paper Example

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The article is about the increasing unemployment problem in the US and which worries the Americans whether they are workers, consumers, producers or businessmen. The title of the Article is “Worries Grow over Jobs”1, which connotes that a number people on the US still does…
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Macro Article Analysis
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Download file to see previous pages The key economic elements are of unemployment include the government spending, inflation and growth targets, private investment, interest rate, consumption and budget deficit. The economic factors could be related to unemployment in a number of ways. Government spending can be used to increase output in the economy but sometime growth creates inflation. Inflation is an evil that has to be avoided as it is an indirect way of taxing people when prices of commodities are high. Government therefore has inflation targets in relation with growth targets that must be met in order to help its citizens afford to buy and consume products and services in satisfaction of their needs. The government would be most interest in raising GDP growth as a way of increasing unemployment rate for its people and which would have the effect of increasing the purchasing power of its citizens. To increase the output, the same can be done by increased private investment, consumption spending and net exports. However at the present the US government is still suffering from budget deficit which represent accumulated result of higher consumption level than income or low saving rate in the past.2 To influence increase private spending, interest rate may be made low by monetary authorities but in the case of United States, it is already very low and yet growth in the economy at pre-crisis level is not fully forthcoming based on the article.3
The graphical analysis of the paper could be understood using the AS-AD model4 where the government could actually manage growth in the economy while attaining desired macroeconomic targets like the promotion of unemployment. To increase growth, government must be able to shift aggregated demand (AS) curve to the right as shown in Figure 1 below. However to do the same there must be increased government spending, private investment, consumption, and net exports.5 Given the present situation of the economy ...Download file to see next pagesRead More
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