Econ 545 paper 2

Introduction

It is a good idea to join the economic area but there are some issues that have to be nourished so that you are aware before entry into the field. This is because economy is not static and it keeps fluctuating every now and again and thus, all these have to be within your scope as an economist. For example, the GDP in this year is 28.10 % which means that the economy is really growing faster.

As well the business cycles keep changing from season to season, especially bearing in mind that other countries are posing a stiff competition (Coyle, 2015). This has been caused by improvement in infrastructure as well as technology. This has made most countries to produce almost every product and this has made exportation hard. In addition, the market has become really narrowed.

The fiscal policy and the monetary policy are all working to improve the present economy and this is the only good thing in the economic area. This is the combination of effort between the central bank and the government to see that economy is improved. The level of unemployment is basically lower in the urban area and high in the rural area which makes resources to be unequally distributed and that gives the reason why business is concentrated in the urban areas because of the high population and the fact that their people are employed and thus, most of them are price insensitive.

Microeconomics Analysis

The Gross Domestic Product of US is basically reported by the World Bank, and as at the year 2014 it was worth 17419 billion US Dollar. This is a representation of 28.10 % of the world economy (Mankiw, 2014). The following image is an indication of the growing GDP in the US.

In fact, US is the leading in GDP and this shows that its economy is fine as compared to other states. This can be attributed to good infrastructure which allows for business activities as well as good monetary and fiscal policy. The following is a comparison table for the US previous, actual, highest and lowest GDP rates in the US;

As GDP is a measure of the national income and output, the expenditures of final goods and services within a given period, the following table gives values of GDP as given in the year 2016;

Business cycles, unemployment and inflation

There is a big range of fluctuation in the market. This is mostly caused by economic rising and falling which is due to seasons. In fact, sometimes we are affected by fluctuation in other countries and when their economy goes down, they stop transactions with the Us which is a direct influence on our economy.

The rate of unemployment is higher in the rural and semi-rural areas but it is generally higher in the urban areas, which explains the fact of unequal distribution of resources. Inflation is related to fluctuation and it is caused by competition from other developed and in some cases developing countries because they are starting to improve technologically and it terms infrastructure which is enabling them to start production of goods which they used to import from the US.

Monetary policy and interest rates

Monetary policy is set by the central bank, and it is the one which determines the interest rates. In normal cases, the Dollar influences all the other currencies and it causes profits to the US (Cottarelli, 2014). This is achieved when there are goods exported to other countries so that they can exchange the currencies.

Fiscal policy

This is how the government adjusts expenditure and taxation to influence economy and to reduce poverty through the promotion of strong and sustainable growth (Langdana, 2012). As at now, the government is supporting growth and is mitigating the impacts of crisis to vulnerable groups so as to improve their standards.

Demographics

It is true that most industries are located in the urban areas because they are targeting high population as well as where people are decent and employed. This is because these are the areas which get more sales which make interests to be high (Dwivedi, 2014). Because of the high demand of goods and services in the urban areas, producers are as well many so as to satisfy their needs.

Recommendations and Economic Justification

Thus, seeing that the economy is all working, it will be advisable to join economics but you need to have it in mind that there are times when economy goes down, and this is the moment that most people hate. This is because sales are highly reduced and profit rates are low. However, it takes short moments for the situation to come back to normal.

References Cottarelli, C. (2014). Post-crisis Fiscal Policy. MIT Press, 2014. Coyle, D. (2015). GDP: A Brief but Affectionate History. Princeton University Press, 2015. Dwivedi, D. N. (2014). Macroeconomics: Theory and Policy. Tata McGraw-Hill Education, 2014. Langdana, F. K. (2012). Macroeconomic Policy: Demystifying Monetary and Fiscal Policy. Springer Science & Business Media, 2012. Mankiw, N. G. (2014). Essentials of Economics. Cengage Learning, 2014.