Alf Money and the Prices in the Long Run and Open Economies Essay example

3167 Words Jun 14th, 2016 13 Pages
ALF Money and the Prices in the Long Run and Open Economies
Name
Institution

Contents

1.0 Introduction 3

2.0 History of Economic Changes and comparing it to Forecast for the next Five Years 3

2.1 Changes in GDP 3

2.1.1 Economic Forecast 4

2.2 Changes in Savings 4

2.2.1 Economic Forecast 4

2.3 Changes in Investment 5

2.3.1 Economic Forecast 5

2.4 Changes in Unemployment Rates 6

2.4.1 Economic Forecast 6

2.5 Changes in Real Interest Rates 7

2.5.1 Economic Forecast 7

3.0 How Government Policies Can Influence Economic Growth 8

4.0 Influence of Monetary Policy 8

5.0 Influence of Trade Deficits or Surpluses 9

6.0 The market for loanable funds and the market
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Nevertheless, the United States personal savings rate reached an all-time high of a rate of 17 percent in 1975 and a record of low of about 1.90 percent in the year 2005 (Key economic indicators: The United States, 2015). In the United States, financial experts measure the rate of personal savings by corresponding it to the rate of personal income saved to an individual's net disposable earnings during a particular period.

2.2.1 Economic Forecast As per the economic forecasts for the United States, there will be a positive trend for personal savings for the five years. The percentage increase will be 5.42 in 2016, 5.47 in 2017, 5.51 in 2018, 5.56 in 2019 and 6.06 percent respectively (The United States | Economic Forecasts | 2016-2020 Outlook). The average increase in personal savings for the next five years is 5.604

2.3 Changes in Investment There have been numerous changes in investments into US economy through FDIs (foreign direct investments) and the investments that the US makes in overseas markets. America continued to be a debtor nation for a considerable period. Also, there were fewer restrictions and trade barriers for foreign investments. This activity increased the rate of FDIs as compared to the outward investments from the United States. Throughout, its history, the United States attracts investments from abroad. These investments are both direct investments

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