Write a short essay about the current state of the economy in the United States.

Question

Write a short essay about the current state of the economy in the United States.

You can find the latest official unemployment and inflation figures on the Bureau of Labor Statistics website.

You can use other relevant sources as well. You must cite at least one source of information.

This assignment must be submitted as an MSWord attachment.

Include in your analysis the answers to the following questions:

What is the current unemployment rate? What is the current rate of inflation? Are we in an inflationary gap, recessionary gap, or right where we need to be? (Assume a 51/2% natural rate of unemployment) What fiscal policy options would be appropriate for solving the current problem (if any)? Explain which policy option(s) you would favor.

Explanation / Answer

Answer:

US economy is one of the biggest developed economies in the world but the GDP growth rate has decreased from 3.2 % (July 2017) to 2 % in the 1st quarter of 2018. The reason can be changes in the political situations of the country which has affected the economic conditions though the economy has shown positive changes in 2nd quarter and the GDP growth rate is accepted to increase.

The unemployment rate is 3.9% (April 2018) and the inflation rate is 2.9 %. The unemployment rate is bit high which has raised the inflation rate in the economy. Overall there is no inflationary or recessionary gap in the economy but also the economy is not where it needs to be as there is need to reduce unemployment rate in the economy. Government can increase its expenditure in development works to reduce unemployment rate.

When the actual rate (3.9 % ) is higher than the natural rate of unemployment (2 %) (as given in question) it leads to inflation in the economy.

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