Aggregate Economic Behavior Of The U.s. Economy

Running Head : AGGREGATE ECONOMIC BEHAVIOR OF THE US ECONOMYAggregate sparing Behavior of the US Economy : The Significance of drawing And Long Term raise Rates[Author][Affiliation][Date]Aggregate Economic Behavior of the US Economy : The Significance of Short And Long Term enliven RatesThe recent trends in the US miserliness indicated that it is slowing down (in economic terms , stagnating . The widening trade deficit with mainland mainland China is forcing many companies to transfer a significant portion of their smashing to China (which offers a huge market for American goods . Added to that , the come to the fore of the blue(predicate) decrease in retail sales just a couple of weeks ago forced the organization to issue casual bonds to reinvigo roll the industry . The unexpected point drop in the said industry was su pplemented by the devaluation of the US dollar against the Euro some(prenominal) economists conceive that the US economy is experiencing what Japan experienced 10 old age ago : a receding economyThis situation of the US economy can be partially explained by analyzing the causal cistron of chase judges in the landed estate . There be generally two types of pursual tells : pithy and long way out to strides . Short-term reside rate is the concern rate charged for petty loans . Long-term interest rate is the interest rate charged for long-tern loans as headstrong by the federal official Reserve Board . The Board determines the intensity level of specie spread in the economyIn a simple relationship , blasphemous interest rates motivate lenders to put more florid in bank . Investors though borrowing from financial institutions ar forced to delay their borrowing instrument .

In short at that place is an inverse relationship between interest rate and investment Investment is represented by (I , the keep down change into smashing Interest rate is represented by (r , determined by the volume of property circulating in the economyShort-term interest rates ar more fluid than long interest rates A slight change in the volume of gold in the economy results in a greater change in the interest rate schedule of banks (for short-term loans . Long-term interest rates are commonly unmoving in the short-run Effects can be sensed after a series of interest rate restructuring is implement . Usually , the government announces a decrease or add in the interest rate in to pay financial institutions time to adjust their interest rates . whenc e , the government is responsible for fixing the monetary policy of the country (in this typeface , the USHow is interest rate related to the volume of notes ? If there is an increase in the volume of money circulating in the economy , interest rates decrease . Banks are less(prenominal) willing to increase the savings deposits of potential depositors . If the volume of money decreased , banks are more willing to lend investors great(p) . Note that the relationship is also inverse (this is an extension of the I and r relationshipReferenceFederal Reserve Bank of New York (2007 . Retrieve on October 21 , 2007 from http / http /www .ny .frb .org Aggregate Economic Behavior summon \ MERGEFORMAT 1...If you want to get a expert essay, order it on our website: BestEssayCheap.com

If you want to get a full essay, visit our page: cheap essay