economic health memo

Fluctuation in the economy is referred to as the business cycle. When the real GDP is rising, business is very good. When the real GDP is falling, businesses ar in trouble. The real GDP measures the amount of goods and services produced in a certain time period and the total income of everyone in the economy. When the economy is bad, much of the decline is in conjunction with the diminish in spending. Fiscal policy refers to the g everywherenments choices regarding the popular level of g everywherenment purchases or taxes. Policymakers use the tools of monetary and financial policy to influence the aggregate film. The Fed alters the bills add on by changing the amount in reserves through the buying and selling of g everyplacenment bonds. When there is an increase in the bullion leave it shows that government spending is increased as well with humiliate unemployment rate and toweringer inflation. When the money supply is decrease there is less of government spend ing, increase in taxes, higher(prenominal)er(prenominal) inflation and subvert unemployment. If monetary and fiscal policymakers fan kayoed aggregate prerequisite and move the economy up on the short-run aggregate-supply curve, they can expand output and humiliate unemployment for a while, but only at the cost of a to a greater extent rapidly rising price level.

If policymakers contract aggregate demand and move the economy down the short-run aggregate-supply curve, they can lower inflation, but only at the cost of temporarily lower output and higher unemployment. (Mankiw 2009) At the present moment in ou r economy, it appears that the government is! spending less money. Inflation is high, but unemployment is high as well. Gas and food prices have sky rocketed over the past year. People ar not spending money the way they used to. People argon not shopping, formulate big purchases or taking as many vacations either. to the highest course people are saving more, spending less. Many are afraid that with todays economy that they may tress back their job and be stuck. I think that over the nigh few years that...If you want to get a plentiful essay, order it on our website: OrderCustomPaper.com

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