I am Angela Freeman, a senior economics student at North Carolina Agricultural and Technical State University. Over time we expect to see a change in our economy, This study evaluates the current United States Business Cycle Conditions. I will cover the forecast for the U.S. Economy years 2018-2019 and the Longer-Run U.S. Growth Prognosis (The Next Decade or Two).
CURRENT BUSINESS CYCLE CONDITIONS
Real GDP keeps track of how swiftly the economy is developing or declining by measuring the change in the value of all goods and services produced by an economy from one year to the next while adjusting for inflation. Real GDP expanded at an annual rate of 2.3 percent in the primary quarter of 2018, In the final quarter, real GDP increased to 2.9 …show more content…
Inflation develops over time and has a lasting impact on consumers. There will be a rise in the cost of goods and services along with a decline in the value of the currency. The primary driver for inflation occurs when the money supply grows at a rate faster than the economy. We are looking at a 2.4% interest rate as of March 2018 for consumers. The ideal inflation rate for the economy is 2%. As inflation continues to increase it can influence economic and financial choices for consumers.
The real wage rate is the nominal wage rate while adjusting for inflation. There will be an increase in real wage when it grows faster than inflation. Purchasing power will decline if inflation is growing faster than inflation. The formula for Real Wage is (Old Wage*New CPI)/Old CPI. Recently the Consumer Price Index has gone down to 249.46 from 249.62. CPI measures the cost of living. As it declines the real wage will increase. If CPI increases the real wage rate will be lowered.
With a decrease in unemployment, you would expect an increase in employment. Employment declined slightly as of April 2018, the employment rate is 60.3% a change from March 2018 with a percentage of …show more content…
Following the increase in the interest rate, real GDP will decline to keep investment and saving in equilibrium. The graph is aligned with the future predictions of the economy, GDP will decline from 2.7% to 2.4% for the years 2018-2019. Changes in the LM curve is contingent upon the money supply divided price level. The LM curve will shift to the left as the supply of money is declining. Even though there will not physically be more t-bills printed there will be money available to consumers other ways such as credit cards.
There is a fall in price level which causes aggregate demand to shift to the left. Eventually, the price of wages and income will fall. As aggregate supply will increase, producers will produce more.
Longer-Run U.S. Growth
CURRENT BUSINESS CYCLE CONDITIONS
Real GDP keeps track of how swiftly the economy is developing or declining by measuring the change in the value of all goods and services produced by an economy from one year to the next while adjusting for inflation. Real GDP expanded at an annual rate of 2.3 percent in the primary quarter of 2018, In the final quarter, real GDP increased to 2.9 …show more content…
Inflation develops over time and has a lasting impact on consumers. There will be a rise in the cost of goods and services along with a decline in the value of the currency. The primary driver for inflation occurs when the money supply grows at a rate faster than the economy. We are looking at a 2.4% interest rate as of March 2018 for consumers. The ideal inflation rate for the economy is 2%. As inflation continues to increase it can influence economic and financial choices for consumers.
The real wage rate is the nominal wage rate while adjusting for inflation. There will be an increase in real wage when it grows faster than inflation. Purchasing power will decline if inflation is growing faster than inflation. The formula for Real Wage is (Old Wage*New CPI)/Old CPI. Recently the Consumer Price Index has gone down to 249.46 from 249.62. CPI measures the cost of living. As it declines the real wage will increase. If CPI increases the real wage rate will be lowered.
With a decrease in unemployment, you would expect an increase in employment. Employment declined slightly as of April 2018, the employment rate is 60.3% a change from March 2018 with a percentage of …show more content…
Following the increase in the interest rate, real GDP will decline to keep investment and saving in equilibrium. The graph is aligned with the future predictions of the economy, GDP will decline from 2.7% to 2.4% for the years 2018-2019. Changes in the LM curve is contingent upon the money supply divided price level. The LM curve will shift to the left as the supply of money is declining. Even though there will not physically be more t-bills printed there will be money available to consumers other ways such as credit cards.
There is a fall in price level which causes aggregate demand to shift to the left. Eventually, the price of wages and income will fall. As aggregate supply will increase, producers will produce more.
Longer-Run U.S. Growth