Current Macroeconomic Situation in the U.S

Current Macroeconomic Situation in the U.S

Content

Introduction…………………………………………………………………………...1

Monetary and Fiscal ………..………….………………….………………………… 2

Current Macroeconomic Situation in the U.S…………………………………………3

Unemployment, Inflation and Recession …….…………….…………………………3

Conclusion………………………………………………………………………....….4

References………………………………………………………………………....…..5

Current Macroeconomic Situation in the U.S

Introduction

The purpose of this paper is to evaluate what fiscal policies and monetary policies would be appropriate at this time for the US economy regarding current concerns of unemployment, inflation and recession.

Monetary and Fiscal

For the purpose of this paper we will use the text definitions of these terms. Fiscal being changes in government spending and tax collections designed to achieve a full-employment and noninflationary domestic output.[1] Monetary being central bank’s changing of the money supply to influence interest rates and assist the economy in achieving price stability, full employment, and economic growth. [2] Fiscal policy is put in place by The US Congress and monetary policy is orchestrated by The Federal Reserve. One way Congress can change spending is to increase unemployment benefit thus pumping money into the economy.[3] The Federal Reserve can change the money supply by buying T-Bonds and Bills from banks hence putting money into economy.

Current Macroeconomic Situation in the U.S

In the aftermath of the dot.com bubble in 2000 the U.S. has deficits that add up a deficit of almost $6.14 trillion based on data published by the Federal Reserve Bank of St Louis.[4] With unemployment extremely high, the housing and commercial real estate markets doing poorly we are in a slump economically. Our deficit is more then 100% of GDP and that is not easy to get out of.

Unemployment, Inflation and Recession

Unemployment and the recession seem to go hand in hand. One thing the...