The Economy, Monetary Policy, and Monopolies

Assignment 2: The Economy, Monetary Policy, and Monopolies
Jaclyn Cunningham
Dr. Bonina
ECO 100
June 19, 2013

1. Analyze the current economic situation in the U.S. as compared to five (5) years ago. Include interest rates, inflation, and unemployment in your analysis.
The current economic situation in the U.S. compared to five years ago is a bit of a change. Our economic growth has averaged less than 2.25% since our economic recovery began, but has been estimated to have slowed down by as much as 1%.
With the economy having budget problems, it remains to faster growth. To reduce the annual deficit, last year did little to nothing and part of the current deficit is just from us having a very weak economy now. Some factors can give a better outlook as to how things currently are. Unemployment, for almost the past three years, hasn’t drastically changed, but it is coming down slowly in a steady pace. In order to have a major turnaround, jobs need to be created significantly. As much as 300,000 or more per month would bring the unemployment down tremendously. Regarding the inflation, the policy makers are able to relax when the annual inflation is between zero and 2%, but consumer prices have risen only about 1.8% over the past 12 months (Sivy, 2013). The economy is slowly improving and getting better, but it can easily be thrown off by unexpected issues and situations. An example is the country of Iran. The U.S. having conflicted issues with then can cause our oil prices to go up (Sivy, 2013). Though there are people who are in a more stable financial place and they have secured jobs with good credit, our taxes, gas prices, and the inflation can go up. That still won’t make things better for the unemployment situation or help those who are underemployed. With the budget reforms not being pushed and driven enough, it will slowly bring the economy to stagnation.
Going back five years ago, our economy wasn’t in the situation it’s in now. It actually was doing well, or so it seemed that way. Towards the end of 2007 our economy was at its peak and then a mild recession came in early 2008 that turned for the worst late in the year. The stock market went down and the credit crisis started to spread not just in the U.S., but most of the world. It didn’t just affect us. The recession began and it put a lot of people of work, homes, and it made it harder for those to purchase homes and approve for loans.
Five years ago to today, the U.S. economy still hasn’t fully recovered. It will take some time for our economy to grow on a steady pace. 2. Propose two (2) strategies that the federal government could implement that would encourage people to spend more money in order to create employment opportunities.
I believe there are a couple of strategies the federal government could implement to encourage more people to spend money to create more employment opportunities. Lowering interest rates will help people to spend. The housing market can make a difference if interest rates were a lot lower more people would feel more comfortable buying. The same goes for vehicles. I also think the more sales people would buy as well. People need reassurance that the economy is going to get better. People are still nervous in investing and spending because of the way the economy is. I think with spending more, the unemployment will drop and more money can be printed which may make a difference in the situation. If our government could lend the economy money at a very low interest rate, it would allow money to be cheap to borrow. Therefore, if the money supplies beings to flow it may create some growth economically, monetary tools. Involving the monetary tools involves the availability and cost of money in the economy. 3. Identify a situation in the past 50 years in which the government used antitrust policies to stop a monopoly from occurring. Include the circumstances of the proposed monopoly and the reason the government stepped in. Predict what would have occurred had the monopoly succeeded.
The government used antitrust policies to stop a monopoly from occurring when it hampered the interstate and the international trade (www.investopedia.com, 2010). Another situation was case study 1: the International Harvester. It produced cheap agricultural equipment. The American Tobacco, they were suspected of charging more than what cigarettes were really worth. They stepped in to put an end to that.
The monopoly could have work because it could have had the potential to build reliable infrastructure. If more people were involved, it may have grown. 4. Proposed two (2) methods of identifying groups of consumers who should receive a discount for a product or service without alienating consumers.
Two methods of identifying who should receive a discount for a product or service with alienating consumers are loyal consumers. They’re method is to make sure that their products are what the customers are looking for. 5. Suggest three (3) reasons a monopoly may or may not be efficient in any economy.
It may be efficient because it can possibly help the economy boom again, it may help create more opportunities for current businesses and for businesses to come and it can possibly help deliver low-cost services for consumers competing against other consumers.

References 1. Sivy, M. (2013). What the Current Economic Outlook Means for American Families.
Retrieved from: http://business.time.com/2013/01/16/what-the-current-economic-outlook-means-for-american-families/ 2. Irwin, N. (2012). Why 2013 should be a good year for the U.S. economy. Washington
Post. Retrieved from: http://www.washingtonpost.com/blogs/wonkblog/wp/2012/12/26/why-2013- should-be-a-good-year-for-the-u.-s.-economy/

3. Investopedia. (2010). A History of U.S. Monopolies. Retrieved from: http://www.investopedia.com/articles/economics/08/hammer-antitrust.asp

References: 1. Sivy, M. (2013). What the Current Economic Outlook Means for American Families. Retrieved from: http://business.time.com/2013/01/16/what-the-current-economic-outlook-means-for-american-families/ 2. Irwin, N. (2012). Why 2013 should be a good year for the U.S. economy. Washington Post. Retrieved from: http://www.washingtonpost.com/blogs/wonkblog/wp/2012/12/26/why-2013- should-be-a-good-year-for-the-u.-s.-economy/ 3. Investopedia. (2010). A History of U.S. Monopolies. Retrieved from: http://www.investopedia.com/articles/economics/08/hammer-antitrust.asp