Current macroeconomic situation - Assignment Example

Download file to see previous pages... As much as the United States government is striving hard to curb recession, it is also trying to solve the problem of unemployment and inflation (Blundell and Roulet, 2013).
Following the US statistics, there is a decrease in unemployment rate to approximately 7.8%. The implication of this is that there is a rise in the number of employed civilians thus, the gap between the employed and unemployed population is narrowing.
With the existing tools such as The Federal Reserve, USA’s government is struggling to control inflation and recession. Members of the Federal Reserve meet privately after every six weeks to determine the direction the economy should take. One of their chief reasons for gathering is to come up with policies that can assist to put the inflation at equilibrium (Rosmy and Faruk, 2013). Moreover, they also struggle not to lead the economy into recession again. The Federal Reserve achieves this by the use of fiscal policy such as lowering and rising of tax, raising the military expenditure, increasing spending on infrastructure and reducing the public spending.
Furthermore, the US government is trying to capitalize on expansionary fiscal policy to heighten the liquidity system with a lot of care not to exaggerate it. They are cautious not to release more money than required, into the economy, because it will lower the value of the dollar and stimulate inflation.
Interest rates are drastically reducing and loans are difficult to obtain. This has no impact on businesses because the parties that require huge capitals, only from loans, cannot be granted the opportunity to get them. However, it is advantageous for investors because when the rate of interests is low, they are encouraged to borrow funds from other financial institutions to boost their businesses (Rosmy and Faruk, 2013). The government’s move to encourage investments increases the employment opportunities.
The GDP of the United States America has experienced ...Download file to see next pagesRead More