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Current economic situation in the US: Interest rates, Inflation, and Unemployment

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Discuss the current economic situation in the U.S. as compared to five (5) years ago. Include interest rates, inflation, and unemployment rate in your explanation.
Explain the changes in interest rates, inflation, and unemployment rates that your research yielded. Explain one reason for each of the changes in interest rates, inflation, and unemployment rates that you identified in Question 1.
Identify two (2) strategies based on fiscal and monetary policy that would encourage people to spend money in order to create economic growth.
Explain how the two (2) strategies that you identified in Question 3 could affect the unemployment, inflation, and interest rates.

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Solution Summary

Use of monetary and fiscal policy to affect interest rates, inflation rates, and unemployment rates. Research on the values of these parameters from 2008 to 2012. Discussion of the current state of the US economy.

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What we are seeing in the economy now is a recovery from the "great recession." It was not long ago that some thought recessions were in fact a thing of the past. It appeared that fine tuning of monetary and fiscal policy could smooth out the business cycle. So while GDP may fluctuate, there would be no dramatic swings. For 15 years, this appeared to be working. This was a surprise to many theorists, as recessions are part of economic models. They are thought necessary to bring down prices after periods of rapid growth.However, it all fell apart when the housing crisis hit in 2007. So, it is useful to look at what happened in 2007 as you think about the last five years. Unemployment rates soared as businesses laid off workers during the recession, and are now coming back down. Inflation and interest rates fall, as there is less demand for loans and goods when business is contracting.

The Bureau of Labor Statistics (BLS) collects information used to calculate unemployment through surveys employers data. The unemployment rate is based on the number of unemployed corrected for the for the normal increase in the number of people working for pay or seeking work due to population changes and changes in the paid labor force relative to the population. The unemployment rate is a lagged economic indicator. This is because employers tend ...

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