The Dodd-Frank Act - Coursework Example

Through the act, banks have implemented ways to create reserves that ensure the economy is not under threat during recessions. The consumers are aware of their involvement with finance as operations between the parties are transparent. Banks provide ideal information for credit, mortgages, and advice on risky investments making consumers have good decision-making in the economy. Business cycles are the fluctuations that an economy experiences over a particular period. In the United States, it is usually measured by the national bureau of economic research (NBER) often noted by expansion and recession.

  The cycle begins with the development that shows an economic growth of high income, reduction of unemployment, and increased productivity while depression refers to the contraction of the exceeding highlighted indicators. For expansion, it is the time from one trough of the previous cycle to the peak of the current cycle, and the vice-versa is true for recession. Economists believe that workers should be compensated according to the output of the firm or the economy. Hence, as labor productivity increases, wages should rise in equal measure that has not been the case in the United States (Basu, & Foley, 2013).

  Inflation has been on the rise while wages are relatively constant over the past few decades; hence their consumption power is reduced as they cannot purchase the bundles of goods as before. Due to this, workers have to worry about their products in the economy.