The following report will detail out the current state of the U.S. Economy. The report will discuss the following: * Current economic state in regards to unemployment, expectations, consumer income and interest rates * The existing effect of the economic factors on aggregate demand and supply * Fiscal policies that are currently being recommended by government leadership * The effectiveness of those fiscal policy recommendations from the Keynesian and Classical model perspectives. Unemployment rates fluctuate when the supply and demand for human resources are out of balance. The supply and demand are a result of the interaction of economic, policy and structural factors. Economic factors affect both supply and demand. The demand for goods and services increases production which results in the demand for workers, increasing the employment rate.
The common thought among economists is that market-driven economies move in cycles and when they drop below certain levels unemployment may result. The moving of production from high wage countries to low wage countries is another factor that increases unemployment. A declining manufacturing sector will result in not enough jobs to go around along with third world competition. While new jobs are being created in the technology and service sectors it is not enough to make up for the amount of jobs that have been lost due to moving the manufacturing of goods out of the U.S. Structural factor are those that are affected by the aging of the population, migration patterns, skills set available, environmental regulations the technological changes.
The Essay on Construction Industry Growth Economic Unemployment
Put simply, a business's goal is to maximize profits. This requires any company to remain competitive in its market and this in turn requires management to make decisions. These decisions are influenced by the 'business environment'. Macroeconomic factors including economic growth, unemployment, and inflation are part of the business environment and highly influence the decisions of the business. ...
Some individuals are not able to take advantage of job opportunities because they lack the skills required to perform certain jobs. Education and training are both factors that affect the unemployment rate. The lack of education and training that individuals have is a growing concern for many organizations. The job market is shrinking for those people that do not have a higher education. When people switch jobs or are seasonally laid off that also affect the unemployment rate. The expectations that the economy is going to turn around are not mutually agreed upon by the economists. There are many factors including the upcoming election that will affect the economy. The uncertainty has reduced the economic activity more than in previous recessions. Higher uncertainty has increased the unemployment rate by at least 1% since 2008 (Leduc, 2012).
According to the Current Population Survey (CPS) real median annual household income has decreased by 1.3% between December 2011 and January 2012, from $50,673 to $50,020 (Green, 2012).
The rise of consumer prices is a contributing factor to the decline in household income. Other factors that affect consumer income are changes in the average hourly earnings and average hours worked per week. There are a number of different factors that must be taken into account when evaluating the current and future movement of interest rates. Interest rates are most affected by the condition of the U.S. economy. Inflation also is a factor determining interest rates. Lenders will be reluctant to lend money for a period of time if the purchasing power of that money is going to be less when it is repaid. Inflation will cause the rise of interest rates. The federal government will affect interest rates as they are nations largest borrower.
The Essay on What Are The Factors Affecting The Return Of REITs?
What are the factors affecting the Return of REITs? REITs unit holders are subject to similar risks as holders of other diversified asset portfolios. Some of the factors which affect returns on REITs are : 1.Demographics Demographics are the data that describes the composition of a population, such as age, race, gender, income, migration patterns and population growth. These statistics are an ...
Aggregate supply and demand are affected by such factors as unemployment, business/consumer expectations, consumer income and interest rates. Having a high unemployment which is much higher than what is reported and generally accepted puts downward pressure on demand. This is due to the fact that unemployed consumers have less income and thus less money to purchase items. The small amount of unemployment insurance would be spent mostly on necessities instead of wants. Having less demand would naturally decrease the price of supply. However prices are not dropping like expected because of the inflation we are seeing due to the amount of money that has been printed and borrowed.
Second, an economy with low expectations or consumer confidence will also bring aggregate demand down. The vast majority of consumers and businesses are uncertain of their economic situation in the near future. More individuals fear of losing their jobs given the current state of the economy. Therefore, they are “tightening their belts” and trying to save for uncertain times ahead. When consumers feel safe in their job and confident of wages/promotions increasing then they will spend more and save less, the opposite is true today. Next, consumer income will obviously affect aggregate supply and demand. The more money individuals have the more they spend on things they want. Therefore, demand for normal goods would increase and demand for inferior goods would decrease. Consumer income is down in our economy putting downward pressure on normal goods demand and increase on inferior goods demand.
Finally, interest rates effects on aggregate supply and demand are different depending on sectors. Really low interest rates that exist today increase the demand to refinance mortgages and loans. It also normally increases the demand for business loans and home improvement/expansion loans. However, the combining factors of banks holding on to a lot of money and consumers/individuals doing the same thing due to uncertain economic circumstances puts a kind of plateau on demand. The following information is some of the 2013 budget spending proposed by the President of the United States: “In the Budget Control Act, both parties in Congress and the President agreed to tight spending caps that reduce discretionary spending by $1 trillion over 10 years.
The Term Paper on The Indian Economy
... manufacturing practice would allow for a closer match of Aggregate Supply with Aggregate demand * Shifting employment from Agriculture into Industry and ... a concern because it breads uncertainty in the economy for business, consumers and other investors. This is explained as ... inflation, restructure and increase employment and return the budget to surplus. Debt The current Government Debt in ...
This budget reflects that decision. Thus, for all the priority areas we are investing in, difficult trade-offs had to be made to meet these very tight caps. Discretionary spending is reduced from 8.7 percent of GDP in 2011 to 5.0 percent in 2022. $850 million for Race to the Top, which implements systemic education reforms in five critical areas, including early learning and care. The Budget also provides $300 million in new resources to improve child care quality and prepare children for success in school. Implement the new defense strategy to spend $487 billion less in the Department of Defense’s base budget than was planned in last year’s Budget.
Overall defense budget, including overseas contingency operations, is 5 percent below last year’s enacted level” (“Http://www.whitehouse.gov”, 2012).
Economic factors play an important role on the aggregate demand and supply. Due to the way the economic factors fluctuate which are determined by a number of things the market is constantly moving. Fiscal policies are driven by the current status of the U.S. economy which force the leaders to make changes that will improve the economy.
