Title: THE ECONOMY, MONETARY POLICY, AND MONOPOLIES
Name: Jackie Harris
Course: ECO 100 (Principles of Economics)
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 United States economy is the largest national economy in the world; it is a market orient economy with a GDP (purchasing power parity) of 15.08 trillion dollars in 2011.” (www.cia.gov/worldfactbook). The economy of the United States is continually growing, at present it has a “GDP growth rate ...view middle of the document...
Though the U.S economy is still in a state of recovery, the recession is over, and the economic situation in the country is progressing gradually.
Propose two (2) strategies that the federal government could implement that would encourage people to spend more money in order to create employment opportunities.
There are many strategies that the federal government could implement that could induce increased consumer spending. It is important for the government to regain consumer confidence in the economy and help increase aggregate demand. Strategies that the government could implement that may lead to an increase in consumerism are cutting tax rates and lowering interest rates. If the government cut taxation rates, people would have more money to use for other things which may lead to an increase in spending. Additionally if government cuts interest rates it is likely that more people would borrow money and spend it thus increasing demand for products/services and ultimately creating jobs to meet the increased demand. Another strategy that government could implement would be price levels, although this is not a long term solution, it could potentially raise sales and encourage people to buy more in the short run. Another plausible strategy that could be implemented would be to increase tariffs and lower quotas on imported goods or implement protectionist policies. Businesses like to outsource or move their companies into other countries that are cheaper to produce in, and by doing this they save money but leave people unemployed in America when they move or outsource; however, most businesses still like to sell their goods and products in America despite producing goods overseas. In my opinion, if the government were to stop or lower the amount of imported goods or come up with stricter policies for businesses selling to the American populace, they could make sure that if businesses want to sell in America they must produce their goods in America. By implementing such a radical strategy, it would lead to job creation and increased consumer spending.
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 purpose of antitrust policy is to promote competition among firms, which leads lower prices for consumers.”(O’Sullivan, Sheffrin & Perez,2012,p.201). Antitrust laws are implemented in order to stop companies and businesses from gaining monopolistic power, fixing prices. One famous case of government intervention in America is that of Microsoft. “The Justice Department and the states believe that Microsoft has used its monopoly in operating system software to protect its dominance and eliminate competitors. The government says that in the long run, consumers will be harmed, because there will be less competition...