Demand and Supply in the Macroeconomy

ECON 372

Demand and Supply in the Macroeconomy

The current state of our economy in the United States is no secret to anyone. In the United States over the past couple years, the economy has been lower than ever and not increasing as it should. Gas prices are at an all time high, home prices are at an all time low, and unemployment rates continue to stay on the rise. We’re still the largest and most powerful country in the world and our GDP holds steady at $47,200. That is an increase of 1.9% for the first quarter in 2012. The consumer spending rate has increased, although still not at a high for the United States. The current consumer spending increase was the largest that the U.S. has seen since late 2010. Although, the economy is picking up, it’s still at a low and that is due to Unemployment rates, Consumer Income, Expectations and Interest rates.

Current Analysis
Unemployment
Unemployment is one of many causes for a bad recession and or trying to get out of one, so what is affected by the unemployment. There are many factors affected by unemployment which when one is affected a second one is right behind and so on which turns in a snowball effect. Let’s look at how unemployment affect these factors.
First there are four different types of unemployment, a structural which is caused when an organization lays-off workers due to low demand for their goods and services, or the restructure of the organization in order to save money. A frictional unemployment is due to a potential unemployed worker look for a job which matches his or her background. Seasonal unemployment is when people are laid off because the position they were working was temporary and only during a peak season like Christmas. Finally cyclical unemployment which is what we are experiencing now caused by a country’s recession. All these put