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ECON WEEK 7 - Assignment Example

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The GNP of US has grown annually at the rate of 3.5 % and over the last 60 years. (Petroff, 2002) But of late, the nation is facing a major economic crisis, of a scale…
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Download file to see previous pages The economy was still in the phase of recovery, when the recent forecast by the International Monetary Fund shattered all hopes of US regaining its status as the world’s largest economy. The IMF forecasted that China will surpass US by 2016 while US will experience “slow and modest economic growth”. (US Economic Forecast, 2013) The factors that have impeded US economic growth include low GDP growth rate, low employment rate, dip in inflation rates, low interest rates and, most significantly, a major current account balance deficit and a higher debt risk. In such a scenario, the government should focus on productivity gain as a source of economic growth through “improvement in skills, economies of scale and improved technology”. (Petroff, 1986, 1990 & 2002) This would help in offsetting the effect of the law of diminishing returns, by raising productivity growth in the face of an uncontrollable population ...Download file to see next pagesRead More
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