preview

Macroeconomic Situation Essay

Good Essays
Macroeconomic situation in U.S Current economic situation in U.S is demanding, current macroeconomic situation has been termed the worst and unstable. Different researchers and analysts have proved beyond any doubt that due to slow economic activities growth of the economy is always hampered with clear indications from corporate profits, GDP and employment falling, and inflation rising slightly higher. Countries that have recently fallen into economic recession employ monetary and fiscal policies by increasing money supply into the system through loosening of monetary policies. Reducing taxation while increasing government spending is also a concrete solution used in curbing macroeconomic crisis (Mian et al, 2014). One of the goals stipulated by the Federal Reserve in their labor laws is to maximize employment. Many casual workers tend to believe the new system is working due to statistics released currently by the Bureau of Labor Statistics that unemployment stands at 6.3 percent. However,…show more content…
This was a unique tool used in early 2008 which dislocated and strained financial and credit markets, and such amendments in funds rate affected quickly the price of assets and interest rates. Due to illiquidity and dysfunction of spreads, Fed were forced to start lending directly to counterparties which was against the collateral set with an aim of achieving liquidity and upgrade flow of credit in financial markets and economy (Canuto et al, 2012).The Fed also increased the size of its balance sheet in order to avail credit to business and households through lowering costs. Adjusting the balance sheet was achieved through buying securities by the Fed in open markets with a propelling mind that incase interest rates fall to zero there will always be a solution in lowering long term interests. They also lowered mortgage rates to reduce long term borrowing by businesses and households to refinance or purchase
Get Access