Please discuss the economic principles and indices found in recent macroeconomic articles:
Mankiw, Gregory N. 2012 , Principles of Macroeconomics 6th edition. Mason- OH:South-Western, Cangace Publishing .
Mankiw, Gregory N. 2003, Macroeconomics, 5th edition. Worth Publishers, New York, NY
Williams John C. 2013, FRBSF Economic Letter: The Economy and the Fed Policy- Follow the Demand- Economic Research. http://www.frbsf.org/economic-research/publications/economic-letter/2013/february/economy-fed-policy-follow-demand/
New York Times(Associated Press). Job- Loss on a 6 -year low. September 26, 2013
The article in question focuses on the shortfall in aggregate demand for labor- which has led to a persistent rise in unemployment as a result of the recession. The US economy was severely hampered by the housing bubble and the market crash of 2007. This severing in the economy has also led to households defaulting on their mortgages, having difficulty staying afloat, as job losses increased- leading to a rise in the amount of debt borne by the public. Output growth has been sluggish with a real GDP (per capita) at 1.6 percent lower than it was 5 years ago.
But with the slow addition of jobs in the market the writer claims that unemployment has reduced by less than 0.5 per cent over this last year. The government's restrictive measures have also reduced aggregate demand for labor thus impinging on growth. The restricted access to government services has also reduced household disposable income, and job growth. The persisting ills of the US economy have also spilled over other advanced economies, especially in Europe, and this in turn has hampered the US export industry.
A reduction in aggregate demand for labor is a contributing factor to rise in unemployment. In response to this hiccup, the government policy is to provide extended unemployment insurance to those affected- which in turn affects strides in growth of the labor market. According to the author these services have pushed the natural rate of unemployment above its prerecession levels by about one per cent.
On a lighter note, the article promises that the crisis can be alleviated over time when some programs are phased out. But a mismatch between workers and the available jobs is prevalent and there are no permanent offers of long-term employment. Also, the fact that the Federal monetary policy has kept interest rates at an all-time low- with an increase in sales in the auto and housing industry, gives hope of a rebounding economy. The Federal monetary policy is also trying to curb unemployment by purchasing assets from the public- including those mortgage securities. The idea behind these securities is that it will ease the economy slump, and reducing borrowing interest rates. (Williams, 2013)
Analysis and evaluation
This research article has numerous economic principles that command our attention. An economy thrives when there is an adequate demand for goods and services, and when consumers have adequate resources to meet their needs. The fall in aggregate demand reduces the quantity of goods and services a firm produce, and this fall in production leads to a rise ...
This paper will discuss and analyze a research article written for the San Francisco Federal Reserve Bank. This 'economic letter' discusses in detail the national state of the economy, the recovery process, and what the Federal reserve is doing to forge stability in the middle of a recession. We will also discuss the numerous economic principles that this article covers in detail and discuss how they affect economic growth, especially employment, and how realistic and effective the measures that have been recently adopted and implemented by the Federal Reserve to combat unemployment.