Eco 372 - Week 3 - Economic Critique
Describing the current state of U.S. economics, we will discuss several factors to include unemployment, future expectations, consumer income, and interest rates. We will identify the existing effect of the economic factors on aggregate demand and supply. In addition, we will identify current recommended fiscal policies by government leadership. With this information, we will then evaluate the effectiveness of the current fiscal policy recommendations from both the Keynesian and Classical model perspectives. To better understand what the state of the unemployment situation is in today’s current economy, it was determined that a good place to start was with the Bureau of Labor Statistics …show more content…
As home values plummeted, scores of construction-related businesses folded, causing a catastrophic butterfly effect that resounded throughout the economy. With almost every industry affected, businesses began to fail and began to lay off scores of workers. These massive layoffs had devastating effects on local, and the national economy (Censky, 2012). In many cases, workers saw their salaries decrease by 50 percent or more. Additionally, the job market was flooded with skilled workers, vying for very limited positions, and businesses were able to capitalize on the situation by driving wages down. Ultimately, strained consumer income and limited buying and investment power are all results of the factors listed above (Tulupman & Liu, 2013).
The latest interest rate in the United States reported at 0.25%. From 1971 until 2012, the United States interest rate was around 6.2% attaining an unparalleled high of 20.0% in March 1980 and a record low of 0.3% in January 2011. In the United States, distribution of the power for interest rate decisions is between the Board of Governors of the Federal Reserve and the Federal Open Market Committee. The Board chooses on changes in reduction of rates after commendations succumbed by one or more of the regional Federal Reserve Banks. The Federal Open Market