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Current state of the economy

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1) What is the inflation rate? Is inflation a worry, or are we in a period of stable prices?

2) What is the unemployment rate? Will a high unemployment rate cause deflation? What is the current structure of the labor market? How does the current structure affect the threat of cost push inflation or deflation?

3) What is the growth rate of GDP? Can you find predictions on the future growth rate?

4) What is the income distribution? How has this changed over recent history?

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1) What is the inflation rate? Is inflation a worry, or are we in a period of stable prices?

The current rate of inflation is lower than recent years. It seems to be holding steady at 1.6%. The rate has remained relatively steady over the past few years after a pretty wild ride of highs up in the 3-4% range (2007 and 2011), to as low as 0.1% in 2008). For the past three years is has shown minimal changes.

As an economic indicator, inflation rates help people determine fast prices are changing, using the Consumer Price Index. Consumers buy now rather than later when prices are rising gently, which is good for the economy. Prices of gas and fuel and food are not included, due to the volatility. Rates are considered good if they remain at or around 2% according to the Federal Reserve. Inflation can also help determine where a country is in the business cycle. When recessions occur, it often is accompanied by higher inflation. Inflation rates are determined on a monthly bases and include the prices on shelter and commodities, however the core inflation rate does not include those prices mentioned previously. Food, energy, transportation, and medical are also major indicators of key consumer prices.

http://www.usinflationcalculator.com/inflation/current-inflation-rates/

http://www.tradingeconomics.com/united-states/inflation-cpi

2) What is the unemployment rate? Will a high unemployment rate cause deflation? What is the current structure of the labor market? How does the current structure affect the ...

Solution Summary

A discussion of several aspects of the current economy, its elements, and forecasts. References provided for each section.

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