...14, 2010 Week 6 Assignment Introduction The current macroeconomic situation has been an issue of many talks in the United States and worldwide. Everyone is trying to change the situation, but no definite answer has been found. 1] What is the “current macroeconomic situation” (e.g worrying about inflation and/or recession) in the U.S.? The macroeconomic situation in the United States is not stable due to the financial instability, especially in the macroeconomic arena, because imports and exports are really down. The case for macroeconomic policy stimulus has been stronger in the United States than in Europe or Japan and both US monetary and fiscal policy have already acted forcefully. Going forward, the scope for policy support to decelerating activity depends on inflation developments. Soaring oil, food and other commodity prices have led to a sustained pickup in headline inflation rates and increases in producer price inflation suggest further impending cost pressures. In these circumstances, a ratcheting up of inflation expectations remains a potent threat. Another contributing factor is the devaluation of the dollar and other currency, such as the Euro or yen. Inflation has eroded the prices of commodities and goods, and the threat of possible recession has also contributed to the problem. This can be avoided by issuing anti inflationary measure to protect further damage in the macroeconomic world. 2] What...
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...Current Macroeconomic Situation, Fiscal and Monetary Policies Current Macroeconomic Situation, Fiscal and Monetary Policies Introduction As the leading world economy, the United States and has been in a recession since 2008 and the leading outcome of this recession has been no other than unemployment. The newsflash among media and television about this recession has resulted in unemployment, and how to remedy this “current macroeconomic situation”. No one seems to have an immediate solution on how the economy will get better. The news and media do a lot of finger pointing and giving various unpleasant names to the situation such as calling it “the decade of depression”. Our inflation rate is about 2.3%, which is currently lower than the past rate that was 3.4%. As of July 2012, unemployment rate has been around 9.3%, compared to the prior average years back of about 5.6%. Research We all know that if there is unemployment, consumers do not spend as much money and businesses suffer, from that but honestly speaking, not many of us know what these unemployment figures mean or represent for sure. We can assume or estimating what it means without understanding since we were not aware of what it was before or one is not personally affected by the unemployment saga. So it gets to be a bit mind-boggling when some industries throw these percentages out there and expect us all to know what they mean and as a way to get...
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...What is the "current macroeconomic situation" in the U.S. (e.g. is the U.S. economy currently concerned about unemployment, inflation, recession, etc.)? What fiscal policies and monetary policies would be appropriate at this time? The information that’s being reported on the news by the news, web, and paper states the U.S. economy is current conditions greatly concerned about unemployment, which is due to the present recession. The current macroeconomic situation is instilling fear in many, because of the unstable and uncertainties of how we’ll recover and things remission from such state of being. The grime view and predictions the media is reporting it as the “decade’s depression”. Unemployment Rate in the United States decreased to 7.40 percent in July of 2013 from 7.60 percent in June of 2013. Unemployment Rate in the United States is reported by the Bureau of Labor Statistics. The United States Unemployment Rate averaged 5.82 Percent from 1948 until 2013, reaching an all-time high of 10.80 Percent in December of 1982 and a record low of 2.50 Percent in May of 1953. To be frank, there many people that do not understand these figures; and most will be assuming or estimating what it could possible mean for them without a real reason. According, to the Trading Economics, “The Gross Domestic Product (GDP) in the United States expanded 1.70 percent in the second quarter of 2013 over the previous quarter. GDP Growth Rate in the United States is reported by the Bureau...
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...The Current Macroeconomic Situation in the United States Name: Institution: Abstract The policy makers in every economy play an imperative role in regulating the macroeconomic activities with the intention of maintaining the economic stability. In essence, economic stability is vital for improving the social welfare of citizens, as well as the economic growth. The current United States economic outlook is not good. The average American is not doing well though there has been an improvement in market performance. The 2009 financial crisis continues to affect the United States economy. High unemployment level is the major economic issues that the country is still experiencing. The unemployment rate is still high although there has been a small improvement in job creation. As a result of unemployment, the consumer confidence as well as business sentiment continues suffering. At present, inflation is not a critical threat to the United States. The Gross Domestic Product is flat. In fact, the growth of real GDP has been excessively slow. The monetary and fiscal policies can help the policy makers in solving the present unemployment problem facing the country. In particular, the policymakers ought to consider implementing both expansionary monetary and fiscal policies since the current level of unemployment is essentially cyclical. With regards to the expansionary fiscal policy, the policy makers should implement it through taxation...
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...edu. ii Contents 1 Global Imbalances 1.1 Balance-of-Payments Accounting . . . . . . . . . . . . . . . . 1.2 The Current Account . . . . . . . . . . . . . . . . . . . . . . 1 1 5 1.3 The Current Account and the Net International Investment Position . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 1.4 Valuation Changes and the Net International Investment Position . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 1.5 The Negative-NIIP-Positive-NII Paradox: Dark Matter? 1.5.1 1.5.2 . . 20 Dark Matter . . . . . . . . . . . . . . . . . . . . . . . 22 Return Differentials . . . . . . . . . . . . . . . . . . . 23 1.6 Who Lends and Who Borrows Around the World? . . . . . . 26 1.7 Exercises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 35 2 Current Account Sustainability 2.1 Can a Country Run a Perpetual Trade Balance Deficit? . . . 35 2.2 Can a Country Run a Perpetual Current Account Deficit? . 39 2.3 Savings, Investment, and the Current Account . . . . . . . . 41 iii iv 2.3.1 CONTENTS Current Account Deficits As Declines in the Net International Investment Position . . . . . . . . . . . . . 2.3.2 2.3.3 41 Current Account Deficits As Reflections of Trade Deficits 42 The Current Account As The Gap Between Savings and Investment . . . . . . . . . . . . . . . . . . . . . . 42 2.3.4 The Current Account As the Gap Between National Income and Domestic Absorption . . . . . . . . . . . . 44 2.4...
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...Introduction The current state of the world economy is quite uncertain. Economic statistics that governments and other financial institutions use to project the economy imply that the world economy is shrinking. Since 2008, the state of the American economy has not been attractive. For instance, the United States economy has not registered any significant growth for the last three years. The 2011 second quarter results indicated that gross domestic product improved by 1%. At the same time, there was slight increase in business fixed investment sector. This was mainly attributed to good performance in software and equipment. In general, the economy seems to be headed for recovery (United Nations, 2010). There were increased product and services exports as well as over growth in consumer spending. Overall federal government spending increased. This was as a result of increased government spending in military. The issue of oil and turmoil in oil producing countries especially in North Africa has contributed negatively to the economy. High energy costs mean that most sections of the economy will experience high production costs. Final products will be more costly to the consumer and thus leading to reduced consumer spending. A broader look at the state of the economy reveals that the economy is headed for a recovery. Most core sections of the economy have begun to register growth meaning that soon the economy will bounce back (United Nations, 2010). Macroeconomic Snapshots and...
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...Business Economics ECON 545 Professor Ermias Weldemicael Week 6 Macroeconomic Analysis Situation B William Samarin August 15, 2014 Situation B Introduction In situation B, Cindy wants to start her own business where she installs solar panels. She has based her choice on what she perceives as the economic benefit of the cost savings of solar, both for businesses and homeowners plus the positive environmental impact of using solar. She has also heard that both the state and Federal government is offering incentives and rebates for the installation of solar panels to aid in the purchase of a solar system. The macroeconomic impact of her business decision needs to look at the effect of the solar industry on the gross domestic product of the United States, unemployment in the field, the fiscal policy impact, business cycles in the industry, and monetary policy and interest rates as well the international trade impacts of solar installations. Without an understanding of these areas, starting a new solar installation business could be a risk. Gross Domestic Product and Solar Gross domestic product is the market value of the final commodities and services that are produced by any country during a specific time period. In most cases this is measured over a single year (Hubbard, 2012). The gross domestic product (GDP) impact of the solar energy industry is seen in the creation of jobs in the specialized production of solar panels, the installation of solar systems...
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...we might be able to find a better understanding of how our government can influence our economy. In the field of economics there are several varying sets of ideals of how policies should be implemented. Two of those groups are the Keynesian theorists and the monetary theorists. These two groups offer different perspectives of what is “right” in the world of economics. Each option provides its positives and negatives, but it is up to each economist to determine which negatives are worth giving up. The Keynesian theorists believe in correcting economic downturns with fiscal policy actions. Actions that would please Keynesian theorists would include changes in government spending, changes in the amount of taxes, and changes made to investments in long term productive growth. During the most recent fiscal crisis, these theorists were happy with the stimulus package that was created by the government. The government in 2009 introduced an economic stimulus package that increased government spending which caused the government deficit to increase and with the multiplier of government spending tried to increase demand. Keynes held the opinion that the state needed to play a larger role in the economy in order to eliminate some of the uncertainty involved in the classical economics...
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...School of Business ------------------------------------------------- Syllabus ECO/372 Version 4 Principles of Macroeconomics Whenever there is any question including about what assignments are due, please remember this syllabus is considered the ruling document. Group Number: GA11BSB08 Course Start Date: 07/17/2012 Course End Date: 08/14/20112 Course Schedule: Workshop 1 – July 17, 2012 Workshop 2 – July 24, 2012 Workshop 3 – July 31, 2012 Workshop 4 – Aug. 7, 2012 Workshop 5 – Aug. 14, 2012 FACILITATOR: Farooq A. Khan COURSE LOCATION, DAY AND TIME: Gardena Learning Center, Tuesday @ 6PM REQUIRED READING: Students are required to read all materials available at the Course Materials site for this course on https://ecampus.phoenix.edu/portal/portal/public/login.aspx | Course Syllabus School of Business ECO/372 Version 4 Principles of Macroeconomics | Copyright © 2012, 2008, 2007, 2006 by University of Phoenix. All rights reserved. Course Description This course provides students with the basic theories, concepts, terminology, and uses of macroeconomics. Students learn practical applications for macroeconomics in their personal and professional lives through assimilation of fundamental concepts and analysis of actual economic events. Policies Faculty and students will be held responsible for understanding and adhering to all policies contained within the following two documents: University policies:...
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...demand to the left. Unemployment can also affect the supply of labor which could leave a negative mark on the economy. Unemployed people often become discouraged during unemployment and will give up looking for jobs thus shifting the aggregate supply to the left. Employers could even use the threat of unemployment to cut an employees’ wages which would make people work hard for less money. Keynesian macroeconomics is often described as “demand-side” theory to distinguish it from classical or “supply-side” theories (“Demand, Supply, and Unemployment”), 2014. In the Keynesian theory it is believed that what certain businesses produce they expect to sell. For example, in a restaurant, if its customers purchase less meals then the restaurant will decrease its production. The level of the restaurant’s production will be determined by its demand. If the restaurant did not have the equipment or necessary personnel to produce meals for its customers then the number of meals produced would be limited by the quantity that the restaurant is able to supply. Classical macroeconomics is just the opposite and the theory supports that low production and insufficient spending will not constrain the economy or employment. The federal government creates regulations, laws, and policies that benefit and protect the American people and may have an economic impact such as creating jobs. Unemployment affects the government’s ability to generate income and can reduce activity within the economy...
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...Industry Macroeconomics Paper Shawna Gulledge 04/06/2014 ECON 545: Business Economics Professor Stephenson Introduction My friend, Rick, has been in the auto industry for quite some time now. He runs a small company where they manufacture auto parts. Rick wants to expand his business to fill the need of increasing demand from multiple car manufacturers. He wants to be smart about the timing for when to buy and when to sell, or when to expand or when to hold back. The economy is an ever-changing consideration that greatly influence business owners across the country. Although Rick runs a small business, there are several macroeconomic components that Rick must consider before allowing his business to grow. These concepts include Gross Domestic Product (GDP), business cycles, current employment rates, international trade, demographics, interest rates, and monetary and fiscal policy. Relevant Economics Principles Before he decides to expand, Rick must consider what stage in the business cycle the economy is in. We know that there are four stages of a business cycle: expansion, peak, contraction, and trough and refers to GDP and unemployment. (Simpson, 2014). Here is an example of what a business cycle looks like. In 2008, the United States suffered a major recession (slump) and even though it has been six years since, we are still in the recovery stage but have great potential for this year with the rise in employment. (Hofschire, 2013). The GDP in the United States at the...
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...Macroeconomics: The Study of Our National Economy Macroeconomics: The study of Our National Economy “Our new economic approach is rooted in ideas which stress the importance of macro-economics, post neo-classical endogenous growth theory and the symbiotic relationships between growth and investment, and people and infrastructure”. (Brown) As we have seen here in the past few years, but more so in the last year, the economy is ever changing. Macroeconomics is the backbone of America and without a stable economy we have serious hurdles in front of us to overcome. John Maynard Keynes developed the Keynesian Theory, which has become the foundation of our government’s economic decisions. During the course of this paper I will outline Keynesian Theorists and Monetary Theorists approach to promote long-run macroeconomic stability, the impact of persistent budget deficits on the trade deficit, options available to policy makers when national savings presents opportunity to improve the trade deficit, appraise the position of the supply side as it relates to government deficits and evaluate recent national economic policies as they relate to the magnitude of the trade deficit. In essence, the inner workings and use of macroeconomics as a financial tool of study to determine how a national economy is managed and sustained. To begin, Keynesian theorists approach to promote long-run macroeconomic stability is somewhat unique. Economist who agree...
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...United States vs. Canada [Econ 101 – Summer] United States vs. Canada Introduction Macroeconomics is the field of the economics that deals with how individuals change their economic behavior when there is change in the market-wide policies. One of the two applications that are widely studied in the macroeconomics is the Fiscal Policy, Monetary Policy and aspect of Monopoly. The fiscal policy is implemented by the government of the U.S. The monetary policy is reviewed during the schedule of 8 meetings per year, during which it is analyzed and discussed that how economic and financial developments taking place in the country and determines the appropriate stance of the monetary policy. However, monopoly disables new and young businesses to grow or take birth with such heavy financial requirements for entering in the markets. This paper deals with the current economic situation, especially at the macro level, faced by the United States of America, the world’s largest economy and then it is compared with the economy of Canada and several aspects are discussed in the later part of the paper. Discussion United States The past twenty years has seen a great shift in economics of this country. In the early 1990’s the U.S. economy was struggling and was a major topic of the previous presidential election. Fast forward twenty years and an economic boom and bust later, the presidential election again was based on a struggling economy. By taking a closer look...
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...Daniel Bibonge Amsini Econ 412 December 18th, 2014 The US and its Current Account Deficit America's current account deficit has been fluctuating over the past 20 years. From 1991 it rose to a record high of about 6% of GDP in 2006 and it began to fall a year later to finally reach a level of 3% of GDP in 20091. Capital inflows finance the current account deficit. Economists are wondering if such large inflows are sustainable. According to economic theory, a current account deficit is not necessarily harmful as it stimulates a period of inward investment that can actually boost a country’s employment and investments. The current account deficit is still considered too large even at 3% and there is fear that it is caused by the recession. However economists believe that the US current account deficit may actually contribute to its development and attract foreign investors. The current account deficit is actually a good arsenal for the development of a country. For example, Japan invested a lot in the UK and this caused the emergence of new jobs in addition to the increased investment. The following paragraphs will enlighten more about how the current account of the US can affect its economy. 1 Feenstra, Robert C., and Alan M. Taylor. "National and International Account." International Macroeconomics. New York: Worth, 2012. 172-77. Print. A current account deficit (CAD) occurs when a country has an excess of one or more of the four factors (goods, services...
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...International Trade Speech Welcome all reporters to the White House. I have been appointed with the task of getting everyone familiar with the current state of the U.S. microeconomic situation. I will focus on international trade and foreign exchange rates in an attempt to clarify the United States position now and in the future. Macroeconomics involves thinking about the economy as a whole, rather than the actions of an individual and focuses on output, money, and expectations of the economy. Imports are goods or services brought into the Unites States from another country. Exports are goods and services sold to other countries from the United States. When the U.S. runs a surplus on imported items it means that the United States are bringing in more goods then they are able to sell to other countries. When this happens the U.S. runs a trade deficit. This can be good for consumers because when there is a surplus of products then the price of those products will begin to drop in an attempt to sell the goods faster. This is the case when the quantity of items is not being sold fast enough, the longer a product is held the more money it costs, by lowering price the products will sell which will lower storage cost as well as free up space for new items. Many may argue that a surplus in imports can be a good sign because it proves that the United States is on the rebound since Americans are able to purchase more goods from foreign countries. One of the biggest imports that is driving...
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