Overall, there are many economic indicators that show consumer income inequality is growingwhich is an issue that poses a serious threat for the future of the United States.
If this occurs with stagnant consumer incomes, the middle class will lose a great deal of buying power and commodities like food, cash, and household staples will rise in price dramatically. Because interest rates have been so low for many years, it is very likely that we will see massive inflation on the U.
In fact, the unemployment rate has decreased by 1. At the end of the day, the most important factor is that money is changing hands between parties for goods and services. When the government fosters this type of activity it leads to rapid economic growth. In other words, the rich for are much richer, and the middle class is slightly poorer.
The President can overcome this by providing incentives for small business startups and investors to build new businesses. Unemployment Factors The most recent statistics from the Bureau of Labor Statistics peg the unemployment rate at 6.
Wealth is created by adding value to the economy and this can typically only be achieved though entrepreneurial ventures. Recommendations to the President From a Keynesian perspective, our team recommends that the President encourage the federal reserve to raise interest rates and take steps to control the money supply.
If trends continue at the current rate, we will eventually see a large amount of inflation that will outpace the minimal growth of consumer incomes. The problem is that low interest rates cause the money supply to grow, which can cause inflation down the road. As a result, the success of corporations is providing a trickle down effect to individuals in the form of higher incomes and stable employment.
This is especially important in the technology sector where emerging technologies like 3D printing, drones, and nanotech could become huge global markets.
Expectations Expectations for economic growth and leadership are very high in the United States. When higher rates of consumers are employed, it provides families with more disposable income that can be spent on consumer goods. In addition, education costs have risen, which is causing all time high rates of student loan debt that continues to grow each year.
In turn, this will finally cause U. Consumer Income Despite the fact that the stock market has more than doubled in market capitalization over the last 6 years, real consumer income is still below levels. It also enables people to buy homes that will help stabilize the housing market.
The availability of credit and financing from banks has also improved significantly and this is allowing business and investors to grow their capital at very impressive rates.
This situation is causing the majority of wealth to be trapped at the with a small segment of the population and not being reinvested into economic development. Keeping interest rates low can benefit the economy on paper because it provides individuals and business with more capital that can be flow into the economy.
Interest Rates Interest rates have been extremely low for the last decade and have remained low throughout the recent recession.
Another issue is that more people are receiving federal assistance in the form of food stamps, welfare, health insurance, etc. Stock market analysts have high expectations that this bull market will continue to push the U. The market crash has allowed big businesses to pay lower salaries because the cash strapped middle class has fewer options for stable employment.Here is the best resource for homework help with ECO Macroeconomics at University Of Phoenix.
Find ECO study guides, notes, and practice tests from ECO Week 3 Aggregate Demand and Supply Models Team B_FINAL DRAFT. 7 pages. ECO ECO Week 2 Individual Assignment Fundamentals of Macroeconomics. Aggregate Demand and Supply Models Team B ECO/ March 26, Aggregate Demand and Supply Models Many factors within a nation’s economy have the ability to effect one-said nation’s aggregate supply and aggregate demand models.
Aggregate Demand and Supply Models Economic Critique Ken Drake, ECO Macroeconomics September 10, Jason Foster Aggregate Demand and Supply Models Economic Critique In the United States the economy is currently in a recession, although signs are indicating that the economy is slowly recovering.
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