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The Economy, Monetary Policy, and Monopolies

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The Economy, Monetary Policy, and Monopolies

A Robinson

Dr Ralph Cann-Tamakloe

Principles of Economics 100

May 26, 2012

Analyze the current economic situation in the U.S. as compared to five (5) years ago. Include interest rates, inflation, and unemployment in your analysis. The United States is the most technologically advance country in the world, not to mention the largest. Everywhere you look or read the headlines are saying that the U.S. economy is in a great shape. Is that really the case? There has been a spike in the number of houses being sold; interest rates have hit rock bottom, and a record weakening in the federal budget balance. With all those things taking place within our economy, it is still not where it should be nor is it close to where it needs to be.

The unemployment rate in April of 2007 was 4.5% compared to April of 2012 at an 8.1%. Unemployment rates are high compared to five years ago, but are low compared to 2 years ago. The country has been through a lot trying to build its economic status back to where it was years ago. The unemployment rate is the number of people actively looking for a job. Unemployment is an indicator of how other factors of the economy are doing. For instance, if it looks like the economy is attenuation, and the unemployment rate is increasing, then you know businesses aren’t confident enough to start hiring again, and vice versa. When setting monetary policy, the Federal Reserve uses unemployment to determine the health of the economy.

Monetary Policy is a series of actions that the Federal Reserve uses to affect the level of inflation and Real GDP. If monetary policy stimulates aggregate demand enough to push labor and capital markets beyond their long-run capacities, wages and prices will begin to rise at faster rates....

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