Economic Critique Essay

Maintaining a stable economy is no small challenge for any nation however possessing the ability to change and invent mod and created slipway of maintaining makes for a thriving economy. This newsletter result summarize the different economic factors that affect mass guide and supply such as un utilisation, expectations, consumer income, and interest sends within the coupled States. Additionally, what fiscal policies argon recommended by the fall in States g everyplacenment and whether or not these policies argon effective and getting them back on crossbreed are discussed. UnemploymentIn the current state of unemployment as of July 2013, twenty eight states come had amplifys, eight states decreases, and 14 states have had no change in unemployment place, U.s. Bureau of Labor Statistics (2013). It was also reported that in June 2012 the rate was lower by .8 percent from 7.4 percent. While unemployment range started to shoot to a high not seen in years, in 2008, the econ omy almost went into a ecological niche. After President Obama took office he signed the retrieval Act in 2009. This act was the catalyst that sprung the economy out of its downward spiral and drove unemployment rates down. The act created more American jobs for out-of-work Americans bringing in 3.5 million jobs, Executive Office of the President (2013).Unemployment is systematically fluctuating and as of recently, the rates have been going down. Due to the government bail-outs and the Reinvestment Act also of 2009, more and more jobs have been created. Construction, road repairs, transit system enhancements and the auto industry in the U.S. have been invested in to restore jobs to the country. As of July 2013 some 7 million jobs have been added to the economy via private sectors contribution of employment for a span of 40 months. This just goes to show that the Recovery Act and the Reinvestment Act have do a sizable impact positively on unemployment to present.ExpectationsConsu mers expectations of the economy and where it stands plays a vital occasion in the consumption using ups. According to Fazel It has been argued that customers expectations rough the economys next should have an impact on consumers decisions about how much to consume and how much to save. While consumers expectations seem to be a strong predictor for future consumption expenditures, there are potential statistical problems with the use of current available estimates of consumers expectations. Consumers are not liable(predicate) to drip or borrow m angiotensin converting enzymey when the economy is unstable and uncertain thereof the consumption expenditures are down. This is a particular problem for a government trying to stable or maintain stability of its economy. The unite States has generally done a good job at tutelage their citizens vested in their economy.Consumer IncomeThe United States is one of the greatest countries in the world with a population well over 300 hun dred million citizens. It is the producer of the largest gross domestic product of the world. The primary factor bestow to this besides the market value of all final goods and services produced within a country in a given period of time is Consumer income. According to the BLS.gov (2011) consumer income is generated through hourly wages, salary, tips, and former(a) forms of income. In the United States these income brackets can be divided into several classes, which include the Super-Rich (est.0.9%), Rich (est. 5%), eye Class (majority 46%), Working Class (est.40-45%), and the Poor (est. 12%) (BLS.gov, 2011). We as a society buy a compartmentalisation of goods and services with our income resources, which contribute to the United States economy.The graph below demonstrates an average household income for typical U.S Household. Household Income by Quintiles According to the New York Times Data All Households Lowest 20% Second 20% Middle 20% Fourth 20% Highest 20% Top 5% Households (in 1000s) 113,146 22,629 22,629 22,629 22,629 22,629 5,695 Lower limit $0 $0 $18,500 $34,738 $55,331 $88,030 $157,176 Median number of income earners 1 0 1 1 2 2 2 owner occupied 62.4% 49.0% 58.8% 68.9% 80.5% 90.0% 92.8% Renter occupied 29.2% 48.3% 39.7% 29.9% 18.7% 9.6% 6.9% Non-familyhouseholds 31.93% 58.92% 40.02% 29.96% 19.12% 11.64% 9.36% Family households 68.06% 41.06% 59.97% 70.04% 80.87% 88.35% 90.61% Married couple families 51.35% 19.03% 38.89% 51.00% 67.05% 80.08% 85.59% Single-male family 4.32% 3.08% 4.64% 5.69% 4.89% 3.30% 2.47% Single-female family 12.38% 18.94% 16.43% 13.35% 8.93% 4.24% 2.54%InterestInterest rates in one of the major components of why the United States economy is where it is stands today. Interest rate is the cost of borrowing money. The Federal support has lowered interest rates to stabilize the economy. This is one of the fiscal policies they have applied to correct this problem. Yes, the recession of 2007 has caused for lowered interest rates in 2013. The economy has been on a downturn and one of the ways to turn this downward flow around is to lower interest rates. Applying low interest rates volition help households across the states save money in addition to businesses finance new spending ( wherefore Are Interest Rates Being unploughed at a Low Level? 2013). Furthermore, because of the heavy(p) of interest rates, the United States dollar is depreciating. Another policy the government has created is monetary incentives for businesses in hopes of getting them to utilise more employees. This process will work however maybe not in the timeframe people pauperization it to happen. Overall, the Federal Reserve plays a vital role in that depreciation however, it has to for the economy to recover. Unemployment, expectations, consumer income, and interest rates all have an effect on the aggregate demand and supply. For example, high unemployment means there are less people working and less money to spend, therefore there i s less demand on the economy.Additionally, unemployment could cause lower demand of labor which also effects aggregate demand and this shifts cause the aggregate demand to curve to the left. Next, expectations could increase the aggregate demand if households and businesses feel more comfortable about the stability of the economy, they will be more inclined to invest their money and make large purchases. Consumer income can increase or decrease aggregate demand simply by if a household has disposable income. Consumer expenditure is the largest factor to aggregate demand. When a household has disposable income, it is morelikely the household will spend or invest those funds. If consumption increases, the quantity demanded of goods and services increases therefore the demand for supply increases. On the other hand, if consumption decreases, the quantity demanded of goods and services and supply decreases. Finally, interest rates also play a role in the possible shift of aggregate dema nd. The higher the interest rates are for borrowing, the less likely households and businesses will want to borrow. When interest rates increases, investments decreases and conversely, when interest rates decreases, investments increases. Unemployment, expectations, consumer income, and interest rates can have a positive or negative effect on the aggregate demand and supply.In conclusion, maintaining a stable economy is enormous challenge that must be dealt with extreme care. The United States have created new ways of stabilizing its economy even though it was on the verge of a recession such as creating jobs for the unemployed and incentives for businesses hiring new employees. The different economic factors that affect the economy are unemployment, expectations, consumer income, and interest rates. The United States has done a good job in managing these different factors. Lowering interest rates will help the economy create revenue because consumers are more willing to borrow and spend money. The United States has incorporated these policies in effort to stable their economy. Thus far, they are the right track.References(2013). Retrieved from http//whitehouse.gov/economy(2013). Retrieved from http//www.bls.gov/home.htm(2013). Retrieved from http//www.cnbc.com/consumer.htm, Retrieved on 08/26/2013 (2013). Retrieved from http/www.bls.gov/ers/unemploymentFazel, S. (2005, Spring). Consumers Expectation and Consumption Expenditures. Journal for Economic Educators, 5(), 1-5. Why Are Interest Rates Being Kept at a Low Level?. (2013). Retrieved from http//www.federalreserve.gov/faqs/money_12849.htm