This essay discusses the functioning of the US economy and it also discusses the functioning of economies in general. The essay discusses how the US government can affect the health of its economy. It also discusses the various economic indicators. It does an analysis of the US monetary policies and how such policies can affect the rates of inflation ultimately.
The essay also provides a synopsis of how trade can affect US productivity. The essay further discusses the importance of markets within the economy. Finally, the essay discusses how the US government can help the economy to expand and grow.
The USA has a globalized economy, which means that our prices and money ultimately will affect other countries. This is an open economy with a free flow of goods and capital across borders, so the way we set prices and manage our fiscal policy will have an impact on people around the world.
In an open economy, prices and money are determined by the interactions of supply and demand in a global marketplace. In other words, you can not control the amount of money that is flowing into your country through trade with other countries because it will be based on the laws of supply and demand.
Main Essay Body
Discussion on US economic indicators
The essay in context discusses the various economic indicators. The GDP or the Gross Domestic Product is an important economic indicator. There have been significant alterations in the GDP in the past years. The US is witnessing a steady growth of its GDP value for the past 9 years.
In 2008-2009 there was a marginal decrease in the US GDP value. According to recent forecasts, it is understood that the US GDP value is stated to grow steadily in the years to come. The past and future data on GDP highlights that the future GDP measures taken by the US government appear to grow steadily.
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How US government can affect the country’s economic growth?
This section of the essay discusses how the US government can influence the growth of its economy. There are regulating authorities in the US government that chalks out policies to manage its economy. The function of the government is to support the various objectives of US economic growth. The US government also works on policies to maintain low inflation and low unemployment. The US government uses fiscal and monetary policies to achieve its objectives.
How monetary policies can control rates of inflation?
This section of the essay discusses how monetary policies can control the rates of inflation. It is understood that the monetary policy which enhances the money supply makes the rate of inflation high. Economists believe that effective monetary policies can control both the long and short run of inflation rates.
How surpluses or deficits in trade can affect GDP and productivity?
This section of the essay discusses how surpluses or deficits in trade can influence GDP and productivity. Trading economies including that of the US involves both imports and exports. The trade balance is something which is calculated by subtracting the imports from the exports.
Exports are known to add money to existing economies and hence they boost the overall exports. Imports on the other hand subtract money from the economy and hence reduce the overall exports. Whenever an economy has more total exports than total imports then it is known to have a trade surplus. On the contrary, if an economy has more total imports than total exports then it has a negative value in the exports, and then it is said to have a trade deficit.
Whenever both the trade surplus and the trade deficits are of equal value then the nation is said to have balanced trade. A nation that has a high GDP value means that its output is high. In this context, it is important to understand that net exports are vital in the calculation of GDP whereas the trading deficits can impact economic outputs.
Productivity in the context of trading economies implies that if economies consume fewer resources to generate a high amount of goods and services then it is known to be productive. On the contrary, if a trading economy uses a high amount of its resources to generate less amount of goods and services then it is low in productivity. Experts think that for any economy trading boosts productivity.
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Things that the US government needs doing to boost economic growth
Top economists in the USA think that the US government can encourage the growth of its economy by diminishing or getting rid of tariffs. Some tariffs obstruct or hinder the benefits from global trades.
In recent times the US is engaged in a trade war with countries like China and such trade wars are resulting in loss of productivity as well as economic growth.
According to US economists, some tariffs can increase the costs of materials, parts that cause the people in the US to pay higher cost prices. Many in the USA consider this thing to be not good for the US economy.
Conclusion
When it comes to the economy, there are a number of factors that affect how an open market works. This essay tries to cover the forecasts as also the history of various economic indicators. It also discussed how the US government can grow its economy. The essay also highlights how the various US monetary policies can affect the rates of inflation ultimately.
It also pointed out how trading can affect GDP and productivity. Finally, the essay discusses how the US government can take steps to make sure that the economy grows.
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