Macroeconomics 2

Macroeconomics
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 CITATION Chr161 l 1033 (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%, the first time since February 2008.

Question 2:
The U.S economy, via its main depositories, is able promote substantial growth by stabilizing the prices of all goods and services produced. Price constancy or stability is said to be a reducing yet firm inflation rate checked at a given 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 late 20th century, United States has felt some level of instability in both growths of production value and inflation; variables that affect price stability. As of the beginning of the 21st century and the years that have followed, the levels of inflation experienced by the U.

S economy has taken recognizable milestones; way better than it was before and after the world war two. The Federal Reserve (Fed) operates with the sole mission to ensure maximum employment and price constancy/ stability. It also acts as the last lender to the U.S 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 are rising and the purchasing power of the 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 present basket of goods and getting their average.

Gross Domestic Product
This is the monetary value of all the finished products in a country,assessed in a given span of time. It is used as a tool for 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 result 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 number of loans and investment in the economy. The agency responsible for overseeing and setting up monetary policies in the U.S 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:
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
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
The 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 depend 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
Works Cited
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.

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.
Gordon, Robert J. The rise and fall of American growth: The US standard of living since the
civil war. Princeton University Press, 2017.
Jorgenson, Dale, Frank M. Gollop, and Barbara Fraumeni. Productivity and US economic
growth. Vol. 169. Elsevier, 2016.