Economic Final Project Paper

3300 Words Dec 24th, 2012 14 Pages
Running Head: ECONOMIC FINAL PROJECT PAPER

Economic Final Project Paper
University of Phoenix
ECO/372-Principles of Macroeconomics
Professor Wawa Ngenge
March 23, 2009

Economic Final Project Paper The current economy has hurt many retail businesses. Every month another retail giant closes its doors. Retail stores which we never would have imagined have gone bankrupt. Retail sales have declined greatly. Major cause of this declination is because many people are unemployed and cannot afford to purchase anything. Retailers are forced to discount prices to increase sales, but discounting still hurts margins. Retailers are assuming a very
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Fiscal policy at this time is focused on keeping the economy out of a deflationary state. The government and feds have been pumping billions and billions of dollars of both cash and credit into the system in an effort to increase spending and stimulate the economy. President Obama has also recently decreased taxation on household incomes and increased spending in many areas of the economy such as infrastructure and federal student aid. Although large amounts of capital are being infused into the market, consumer spending is down and is expected to continue to decline. This will have a major impact on all areas of the retail sector. In addition, the tightening of credit markets and an ever-increasing unemployment rate is only fueling the fire. While the Obama administration is attempting to revitalize not only the retail sector, but the entire U.S. economy through increased spending and reduction in taxes, inflation is starting to become a concern. The more debt that is dumped into the economy, the weaker the value of the U.S. currency. One concern is a possible period of Stagflation, where productivity will continue to be stagnant, but prices will continue to rise. This could be a major blow to an already struggling retail sector (Gross, 2008). Many of the current problems with the retail sector, and the economy as a whole could be avoided in the future with monetary reform. The boom and bust

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