Macroeconomics (Essay Sample)

Macroeconomics
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Macroeconomics
Current macroeconomic situation in the United States
On analyzing the current macroeconomic situation of the United States, there is a mixture. The United States economy has not fully recovered from the 2009 financial crisis. What the government faces currently is the high rates of unemployment. Despite various attempts by the government to create jobs, many people still lack jobs.
According to the United States Bureau of Statistics, Unemployment rates have been fluctuating with statistics showing the increases and decreases. The year 2003 records the highest rate of unemployment at below 6% in part of the year. In the following year (2004), the unemployment rates remained below 6% all year round. In the years 2005 and 2006, there was an improvement as the unemployment rates fell below 5%. In October the same year, the unemployment rate was recorded at its lowest rate at 4.4%. Based on these data trends in unemployment, it would be safe to say that the government is succeeding in reducing the number of jobless people. Reducing unemployment rates will boost the GDP growth since more people will have greater purchasing power
When considering the actions of the government, it is evident that it is not concerned about inflation. The main reason the government finds no need to worry about inflation is that the rate at which the American economy is expanding is slower CITATION SuB07 \l 1033 (Su, 2007). That means that even if the government raises interest rates or reduces spending then the chances of plunging into another recession are minimal. That gives the government the confidence to tackle the issue of high unemployment rates at the expense of the economic expansion.
Appropriate Fiscal policies and Monetary Policies
The unemployment problem in the United States can be solved either with the introduction of fiscal or monetary policies. Expansionary fiscal and expansionary monetary policies can greatly help the situation of unemployment CITATION Far09 \l 1033 (Langdana, 2009).
An example of the expansionary fiscal policy includes increased spending by the government on sectors such as the healthcare and infrastructure. This could include the construction of roads that increases demand for building materials while at the same time creating jobs for the American citizens. An alternative policy would be for the government to reduce taxes. This move will increase household spending since the disposable household income will increase. With this, there will be an increase in aggregate demand, which forces firms to recruit more employees hence solving the unemployment issue.
An...