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Question 1

Full employment refers to an economic state whereby
all available labor resources and personnel are being used in the most
efficient manner possible. It involves maximization of both skilled and
unskilled labor present in an economy at any given time (Matthews).

As of January 2016, the U.S economy had added fewer
jobs than the analysts predicted. The Labor Department estimated that wages had
grown by almost 3% in the past two months. Some analysts say that the U.S
economy has reached a point where the unemployment rate at which the labor
market is no longer showing any symptoms of weakness, but stable enough that
pressures of wages do not necessarily lead to inflation; and the unemployment
rate fell to 4.9%, first time since February 2008.

Question 2:

The U.S economy, through central banks, can promote
growth and financial stability by zeroing on the goal of price stability. Price
stability is said to be a low and steady rate of inflation controlled over an
extended period of time. Ideally, inflation rate should be zero for the most
stable prices. This means that people will invest with confidence rather than
use resources to brace themselves against inflation, thereby, improving the
economy. The reverse is true.

Since the mid-1980s, the U.S has experienced an
unpredictability of both output growth and inflation; variables that affect
price stability. As of the millennium and the following years, inflation record
of the United States has become far better than during postwar 1900s. Under the
Federal Reserve Act, the Fed operates with a dual mandate to encourage maximum
employment and price stability and act as the lender of last resort to the
banking system.

 

Question 3

Financed tax cuts for corporations and individuals
should improve consumer spending and investment. The fiscal boost comes during
rapid growth momentum, with the economy at full employment. Analysts predict a
growth of 2.5% in 2018, from a predicted annual rate of 3.1% in the spring, the
fastest rate of growth in more than two years. The reduced change in growth may
be due to devastating hurricanes.

The economy continues to show strength with a
sustained momentum in the first quarter. The ISM manufacturing index lessened
on smaller delivery times but showed a relatively healthy and stable sector.
The House and Senate Republicans settled on the tax reform plan and approved
version, giving good indications of economic improvement.

Despite domestic challenges and the ever-changing
global economy, the U.S economy is still vital as it represents about 20% of
total global output. Its emergence from a season of turmoil caused by factors
such as widespread mortgage lending, high consumer debt and natural calamities,
the economy is to recover slowly and steadily.

Question 4

Inflation

Refers to the rate at which the general levels of
prices for products is rising and he purchasing power of currency is falling.

 

 

 

Consumer Price Index

Refers to the measure that checks the selected average
prices of a basket of consumer goods and services; calculated by taking the
price changes for each good in the preset basket of goods and getting their
average.

Gross Domestic Product

This is the monetary value of all the finished
products, i.e. goods and services produced in a country in a given span of
time. It is used as a tool of gauging the economic health of a country.

Unemployment Rate

It is the percentage ratio between the unemployed
persons and persons in the labor force.

U.S Budget

Refers to the government’s plan for yearly public
expenditure and revenue. It is the financial representation of government
priorities in the U.S.

Recession

It refers to a period of substantial waning in the
economy whereby GDP falls in two succeeding annual quarters.

Economic Growth

Refers to the increase of a country’s economy to
produce products and improve their market value over time, compared to the
previous periods.

 

 

Question 5

To
calculate current inflation rate, I will consider the average price of motor
fuel between November 2016 and November 2017:

Monthly
motor fuel (Nov 2016): $193.432

Monthly
motor fuel (Nov 2017): $225.322

Inflation rate will therefore be:

{(225.322-193.432) / 225.322} * 100 =
14.153 %

Question 6

GDP Q2 in 2017: 19.250 trillion

GDP Q3 in 2017: 19.501 trillion

Growth is thereby got by:

{(19.501-19.250)/ 19.501} * 100 =
1.287%

 

 

 

 

 

 

Question 7

Graph 1: Labor trends from 2014.  (the space between the employed and labor
force is the number of unemployed civilians)

Question 8

Monetary policies directly influence how high or low
interest rates and affect corporations and individuals’ purchasing power, hence
the demand for goods and services. Generally, Low interest rates results to
easy money. Monetary policies set the opportunity costs for more funds for
banks. These funds consequently have an effect on the interest rates that banks
charge individuals for loans and general market interest rates. Higher interest
rates increase the costs of borrowing and in hand, reduce the amount of loans
and investment in the economy. The agency responsible for U.S monetary policies
is the Federal Reserve (Fed). It is the central banking system of the U.S Janet
Yellen is the current chairperson.

Question 9

Fiscal policies are the measures of government
spending and taxation with influence in the economy. They are:

       
i.           
Expansionary
fiscal policy

This policy is mainly used to stimulate
economic growth. It is characterized by increased government spending and or
lowering of taxes. This puts more money on consumer’s hands and makes them
spend, increasing investments, demands and job creation, and

     
ii.           
Restrictive fiscal
policy

This is mainly used to slow economic
growth. It is characterized by the government decreasing its spending and or
increasing taxes, it reduces the GPD. It is rarely used.

The fiscal policies are set by the Congress and
Administration, overseen by the president and treasury secretary.

Question 10

National debt is the total outstanding debt owed by
the federal government. It stood at more than $20.1 trillion as of Q3 in 2017.
National budget deficit or surplus represents the amount in which the
government’s budget exceeds or is lower than its receipts in a fiscal year,
respectively.

Question 11

Graph 2: Unemployment rates between the State of
Oregon and Wallowa County

 

Question 12

In conclusion, the data collected here seeks to assess
the current U.S economic state by comparing it with various years. Since fiscal
policies, monetary policies and full employment play major roles in gauging the
strength and longevity of any economy, the data here will be important as a
study and reference material.

Current economic dangers may include natural
disasters, unfavorable monetary and fiscal policies that may directly influence
the flow of money in the economy. The economy’s stability and growth depends on
consumer spending, investment and cash flow.

Below is a summary of US economy status:

 

2012

2013

2014

2015

2016

Population
(millions)

314

317

319

321

323

GDP per capita $

51386

52705

54502

56175

57436

GDP $ Billion

16155

16692

17393

18037

18569

Economic Growth
GDP %

2.2

1.7

2.4

2.6

1.6

Domestic Demand
variation%

2.1

1.4

2.5

3.2

1.7

Consumption
variation %

1.5

1.5

2.9

3.2

2.7

Investment
variation %

9.8

5.0

5.5

4.0

0.7

Export variation
%

3.4

3.5

4.3

0.1

0.4

Imports
variation%

2.2

1.1

4.4

4.6

1.1

 

References

       
i.           
Bonoli, Giuliano. Labor
market and social protection reforms in international perspective: parallel or
converging tracks? Taylor & Francis, 2017.Bohn, Henning.
“The behavior of US public debt and deficits.” the Quarterly Journal
of economics 113.3 (1998): 949-963.

      ii.           
Jorgenson, Dale, Frank M. Gollop, and
Barbara Fraumeni. Productivity and US economic growth. Vol. 169. Elsevier,
2016.

    iii.           
Di Tella, Rafael, Robert J. MacCulloch,
and Andrew J. Oswald. “Preferences over inflation and unemployment:
Evidence from surveys of happiness.” The American economic review 91.1
(2001): 335-341.

    iv.           
Gordon, Robert J. The rise and fall of
American growth: The US standard of living since the civil war. Princeton
University Press, 2017.