Discussions Wk2
Wk 2 Dis 1
What are the challenges that the US economy will be faced with given a higher debt limit for future economic growth?
The debt limit is steadily rising within the United States causing many challenges for both consumers and business owners. As stated in the text, (Amacher & Pate, 2012) “Economic growth is defined as an increase in real output per capita. An increase in real output per capita means that the average person has more goods and services and a higher standard of living than before.” (chap. 5). Economic growth is hindered when the government increases the debt limit while interest rates remain at an all-time low. In order for the economy to grow we must have a balanced approach. If the U.S. increases the debt limit it forces citizens to pay more in taxes, especially with interest rates low, in order to pay for the debt. This causes a decrease in household income and reduces the amount that people can spend in the economy.
Describe what would happen to GDP, the unemployment rate and the inflation rate if there is a decline in global growth.
If there is a decline in global growth it would have a negative impact on the employment rate. The decline would cause businesses to lay off workers which in turn would lead to people spending less in a market economy. Inflation rate could either rise or fall when there is a decline in global growth. When both unemployment and inflation is high the government steps in to correct the issue by means of stabilization policy (Amacher & Pate, 2012).
Wk 2 Dis 2
Inflation is an important policy issue because it causes a redistribution of income and wealth, and discourages saving and investment. Discuss how inflation affects borrowers and lenders, asset prices, and households on fixed incomes. Inflation, which is the rise of average level of prices, is an important part of macroeconomics. Price stability is one goal that is important in a market economy. Inflation can cause a lender to lose money if
What are the challenges that the US economy will be faced with given a higher debt limit for future economic growth?
The debt limit is steadily rising within the United States causing many challenges for both consumers and business owners. As stated in the text, (Amacher & Pate, 2012) “Economic growth is defined as an increase in real output per capita. An increase in real output per capita means that the average person has more goods and services and a higher standard of living than before.” (chap. 5). Economic growth is hindered when the government increases the debt limit while interest rates remain at an all-time low. In order for the economy to grow we must have a balanced approach. If the U.S. increases the debt limit it forces citizens to pay more in taxes, especially with interest rates low, in order to pay for the debt. This causes a decrease in household income and reduces the amount that people can spend in the economy.
Describe what would happen to GDP, the unemployment rate and the inflation rate if there is a decline in global growth.
If there is a decline in global growth it would have a negative impact on the employment rate. The decline would cause businesses to lay off workers which in turn would lead to people spending less in a market economy. Inflation rate could either rise or fall when there is a decline in global growth. When both unemployment and inflation is high the government steps in to correct the issue by means of stabilization policy (Amacher & Pate, 2012).
Wk 2 Dis 2
Inflation is an important policy issue because it causes a redistribution of income and wealth, and discourages saving and investment. Discuss how inflation affects borrowers and lenders, asset prices, and households on fixed incomes. Inflation, which is the rise of average level of prices, is an important part of macroeconomics. Price stability is one goal that is important in a market economy. Inflation can cause a lender to lose money if