Can I get your help please? I started on trade deficits;
Describe how trade deficits or surpluses can influence the growth of productivity and GDP.
but not sure about it and need 2 bullets covered.
- 1) Discuss the importance of the market for loanable funds and the market for foreign-currency exchange to the achievement of the strategic plan.
- 2) Recommend, based on your above findings, whether the strategic plan can be achieved and provide support.
- original please and thank you
Running head: Money and the Prices in the Long Run and Open Economies
1 Money and the Prices in the Long Run and Open Economies
University of Phoenix
SAM PIRNAZAR Running head: Money and the Prices in the Long Run and Open Economies
Money and the Prices in the Long Run and Open Economies
Gross Domestic product or GDP as it is referred to is a measure of the final economic
activity, and over the years it has seen changes. These changes include how the economy is
growing, it?s spending habits as well as inflation. To better understand GDP and its history we
have to look at the market value and then add all of the market products into a single measure as
it relates to what consumers are willing to pay for food, housing, healthcare and so on. Over the
past 5 years the nation has seen this increase and this paper will touch on the topic.
There has been an increase in the economic status of the United States in the form of
growth at a 2.9% rate in the third quarter of the year 2016 which is an increase from the previous
quarters of the same year. This can be used to predict an increasing Gross Domestic Product of
the nation in the next years as it can be translated to be as a result of increasing positive
contributions from imports, exports, individual and federal government consumption
expenditures as well as the private inventory spending. It has been the strongest and most
remarkable growth rate to be recorded in the nation after many years of stagnant GDP rates. The
economy of the country seems to be back on track according to the rise in consumer confidence
in retail sales and in the economic state (Trading Economics, 2016). There is an increase in the
unemployment rates according to the weak job creation in the nation. The economy of the nation
has recently been considered to be at or near full employment and this expected to slow down the
hiring rates to a certain degree. This will lead to more Americans falling out of the workforce in
the next years.
When it comes to government policy it can actually influence economic growth, the
Federal Reserve is a central bank that is responsible for regulating the quantity of currency Running head: Money and the Prices in the Long Run and Open Economies
within the United States (Mankiw, 2015). When too much money is printed then the higher the
consumer cost and that will not stimulate the economy. The government is also open to
international trade, these trades yield benefits and allows people to produce so that a boundless
assortment of goods can be consumed by the consumer worldwide. Imports and exports provide
growth in the economy by demanding labor and increasing spending.
Supply and demand determines the price of a product the same way the supply and
demand of money determines its value. When prices are deemed to be to high people will
typically keep their money in their wallets and not spend it. The monetary policy can influence
the long run behavior of price levels by leveling the average of prices in the economy (Mankiw,
2015) so this averages buying and spending. Inflation means that there is an increase in prices
and this is because there has been an increase in the amount of money has superseded the
productivity within the economy. Why prices increase is a cause for debate and perhaps an
increase in productivity can balance the increase in inflation, Central Banks (Federal Reserve)
maintains the monetary stability within the country and they have the ability to increase or
decrease rates and that has a direct effect on the consumer who will spend or borrow money. And
?as inflation rears its ugly head, the first task of the central bank should be to keep it under
control? (Jun 2008) there are no easy answers to this in the long run yet the Central Bank is
expected to solve the problem of inflation.
Trade deficits and surplus can influence the growth of productivity and GDP in many
ways as trade deficits take place when our country imports more than it exports products.
International trade has become important to America as there has been an increase in trade since
the 1950?s and this is in part because transportation has been improved ships can carry more than
before. Jets can now haul long distance and air transportation is cheaper, items that were Running head: Money and the Prices in the Long Run and Open Economies
perishable and produced locally like fruits and vegetables can now reach its destination fresh.
Products that could not be purchased out of season are now available for consumption.
Telecommunications has also played a part in being able to conduct business overseas and the
publics needs for foreign goods as well as domestic affects GDP overall. Running head: Money and the Prices in the Long Run and Open Economies
Trading Economics (2016). United States GDP Growth Rate. Trading Economics.
Retrieved on 10 November 2016 from http://www.tradingeconomics.com/united-states/gdpgrowth.
Mankiw, N.G. (2015). Principles of Macroeconomics (7th ed.). Stamford, CT: Cengage
Central banks cannot do miracles - there are no simple solutions to curb rising inflation, yet
central banks will be expected to find them as political fallout mounts. (2008). The
Banker, Retrieved from http://search.proquest.com/docview/225649410?accountid=458
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