As economic advisors to the U. S. President, we have evaluated the current state of the U. S. economy. There are recommendations we have provided to improve the economy. Our recommendations include the evaluation and analyzing of four economic factors; unemployment, expectations, consumer income, and interest rates and how each affect aggregate supply and demand. Unemployment Unemployment recently has been a major problem in the United States. We have to get our abled workers back to work. Current information from the U. S. Department of Labor in October 2012 reports that the unemployment rate was at 7.
9 percent. To help solve some of the problems with unemployment, we recommend that government provide tax cuts to small businesses. Small businesses are at a disadvantage competing against larger and more powerful businesses. Every penny earned is valuable in small business, to continue day-to-day operations. Providing a tax cut to small businesses will provide more money to invest back into the company. This creates the ability for higher production, which creates the need for more employees, therefore, creates jobs. Outsourcing has become popular with major companies since the 90s.
In 2011, “Wall Street reported major companies cut their workforce by 2. 9 million people in one decade and hired 2. 4 million people oversees. ” (Jilani, 2012).
The Business plan on Uk Music Business Overview
This report will look at each association and organisation in turn and assess their relevance to an artist / writer running their own record label. The report will discuss the various aims, functions, purpose, finances and structures of each organisation while also showing what interest they have in intellectual property. The British Phonographic Industry (BPI) was formally incorporated in 1973 ...
The reason major companies outsource jobs because it is cost saving and allows companies to pay lower wages in countries outside of the United States. Forcing limitation on companies outsourcing, will create more jobs in the United States. In addition, more jobs mean more people are working. Taxes paid from these people, will go back to the government, and help the budget. Expectations
Expectations in the market affect aggregate supply and demand. People tend to make larger purchases and investments based on expectations. In housing market, investors snatched up houses in the price range of $150,000 – $250,000. Some are also snatched people looking purchase rental property or a second home. When Interest rates are low, many people start believing that the low rates are not going to get any lower and are try to catch the market before the low rates start to rise again. Another example of hoe expectations effect the market is the housing bubble burst.
When the market started climbing at an enormous rate, many investors, contractors, and even people looking to get into the real estate business were snatching houses left and right in every price range, expecting to make a lot of money on their investment as the market continued to climb. Expectations are not something that is measureable. Expectations are the consumers fancy on the current or future state of things. Consumers tend to spend more when expectations or high. Expectations are at times easy to sway, and at other times are almost impossible to sway.
Expectations have a great effect on aggregate demand. Expectations rise when tax breaks are giving. Businesses tend to hire and or are more willing to give raises. This is opposite when higher taxes are forced. Businesses may start laying off workers to make up for the higher taxes. consumer income Consumer income is very important. It is gross income minus taxes and living expenses. It represents the capital a consumer would secure form of working or a business to purchase goods, services, and make investments. Consumer income has fallen with the rise of unemployment and inflation.
This slows down consumer spending which impacts the economy. The forecast calls for disposable income growth is to remain flat with 2013 possibly offering some level of wage increase. It will be interesting to see what happens as inflation, which directly to a high degree affect consumer spending. Income growth remains below that of 10 years ago and it is reasonable to expect growth to remain flat at least until 2013 before any forecasted wage increases. (Davidson, Feb 2012).
The Essay on It Goes Without Saying That Interest Rates Influence Our Decisions
It goes without saying, that interest rates influence our decisions, and affect many activities in our lives. Interest rates can be expressed as a percentage of the amount borrowed or saved. People always try to be well-informed about changes in economy and finance. They say that it helps them to make better decisions about their personal finance. It is evident that interest rates affected the ...
Consumer spending makes up 70% of the economy.
To experience any type of growth it will require an increase in jobs to allow for increase in consumer spending. Unfortunately, in this day and time the U. S. is losing jobs. With the increase in government spending and the growth of the deficit, we are experiencing some challenges for the near future where inflation is out of control, people out of work, and the impact on consumer income. Recommendations on consumer income are one; do not give any more bailouts. Do not bail out banks or financial institutions with taxpayer’s money. This decreases consumer confidence, therefore lower consumer spending.
Two enforce immigration laws to ensure taxes are paid on wages earned in the United States. Also lower taxes do not raise taxes. Create training programs that will put people on government assistance, without skills to work and make it a requirement. Finally ensure citizens are paying their taxes not just the 1 percent. Interest Rates The Federal Reserve is responsible for maintaining oversight of the United States monetary system. Interest rates are a tool used to maintain the stability of the U. S. dollar. Interest rates play a role in aggregated supply and demand.
When aggregated demand curve slopes, it is because of the interest rate. When the price level decreases demand increase, also the purchasing power of money increase. This could leave people with more cash to deposit in banks. Banks having more money deposited tend to lend more money to investors. This expands the economy and causes changes in the interest rates. When interest rates change, it effects people worldwide and causes changes in people. These changes affect consumer confidence in the way they spend or borrow money. When interest rates are low, the U. S.
The Term Paper on Australian Monetary Policy Money Rate Interest
... be lent out and will reduce interest rates, supply of money will also increase and level of economy can be stimulated. A curious aspect ... the strongest developed economies. (Asia-Pacific Economic Cooperation, 2002) 1. 2 Inflation The Australian Consumer Price Index (CPI) increased by 3. 1 ... objectives have found practical expression in a target for consumer price inflation, of 2-3 per cent per annum. ...
economy is experience a rise in consumer confidence, thereby increasing consumer spending. The state of the economy rely heavily on consumer spending as it is a very important element to stimulating the economy. The recommendation is to create government enforced low interest rates on loans for larger purchases such as home loans, cash loans and loans for vehicles. Also, enforce higher taxes or penalties on companies that have interest rates above the mandated maximum rate. This will increase the purchasing power of money and consumer confidence to make larger purchases. Therefore, stimulate the economy.
