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The global financial crisis started to show its effect in the middle of 2007 and into 2008 because of this the world stock market had fallen and large financial institution had collapsed and been bought out and the government in the wealthier nation had to come up with rescue packages to
The financial crisis had been hit due to reckless and not proper lending practices by the United States which resulted in deregulation and securitization in real estate, mortgages in
The global economic crisis hit the world mainly due to the credit crunch in the America and over lending which led to bankruptcy of many top banks in the United States and which caused high unemployment and which lowered the GDP of America
This affected the United States and the world in a very bad way as there were
United States GDP growth rate
Now the economy in
Decline in GDP of America in 2009
America’s GDP declined in 2009 due to
The GDP of United States in the last quarter of the year was expanded at the annual rate of 5.6%. The gross domestic product of United States is 14204 billion dollars of the world economy it has the highest GDP compare to other countries in the world. The economy is market- oriented where most of the decision
Country: United States
Despite they have such a huge growth in the GDP, but they are still weak. They expanded in the fourth quarter
Years over years, the economy of USA has
The US economy has lost 7.3 million jobs after the recession which had
The things got even worst when there was a low rate of interest which was disappointing the investors to deposit money in
The inflation rate in
In February 2010 the inflation rate of USA was 2.1%. It refers to the rise in price
The rise of 0.1% in consumer price index in
In March the cost of living had gone up, but the prices of food and energy were surprisingly unchanged indicating that the domestic inflation was recovering. Excluding the food and
US Inflation After the Recession of 2007-2009
To fight back the slowdown of the economy and credit crisis of 2007- 2009, the federal reserve had taken some action which had not been taken for last 50 years, the interest rates were cut down to nearly 0 and they enlarged their balance sheets by purchasing securities like treasury bonds. In the previous topic of monetary
There are many economists who believe that there is a relation between money supply and changes in the price level that is inflation, but as the relation between money and inflation is not accurate, few economists
Many economists don’t care about the short run they believe that when the economy is below its full capacity the monetary expansion will not result in inflation, but as they recover inflation is likely to increase.
The economy is 6% below is capacity in may 2009, in September 2008 after the collapsed of Lehman brothers the Fed had enlarged their balance sheet, doubling the money supply or we can say
CURRENCY UNITED STATES DOLLAR INDEX (DXY)
According to the intercontinental exchange
The dollar of United States has gone up significantly against the euro if we see in the last few months. We may believe that the greenback i.e. the US dollar will recover in long term but after some time it may lose its position.
The recent fluctuation in US dollar and EUR has lots to do with the growth and interest rate in the area of US and euro. Firstly, the growth rate of euro was just 0.1%, while the United States grew up to 5.7% in the fourth quarter of 2009. The second thing is the Federal Reserve had signaled an exit strategy. Third, the fed surprisingly raised the discount rate from 25bp to 75 bp in the financial market. They are making the foreign investors more positive about the gains in the United States dollar holdings.
On the other
Money supply of United States
M0: The total of all physical currency, plus accounts at the central bank that can be exchanged for physical currency.
M1: The total of all physical currency part of bank reserves + the amount in demand accounts (“checking” or “current” accounts).
M2: M1 + most savings accounts, money market accounts, retail money market mutual funds, and small denomination time deposits (certificates of deposit of under $100,000).
M3: M2 + all other CDs (large time deposits, institutional money market mutual fund balances), deposits of Eurodollars and repurchase agreements.
In 2005 the Federal Reserve had announced that they would cease publishing of M3 and in March 2006 they explained that M3 did not convey any additional information about the economic activity compared to M2 and that M3 has done nothing in the process of monetary policy for few years. Some of the
The Federal Reserve on November 4,
The purchasing power of US dollar
The United States dollar is the most widely used currency all around the world and that’s why it has been held as a reserve currency. In the last decades,
Unemployment occurs when a person is available for work but is currently without work.
Types of unemployment
(a). occupation immobility
(b). geographical immobility
Â©. Technological change
(d). structural change in the economy
3. Classical unemployment: – this is caused when wages in a competitive market is pushed above the equilibrium this is also called disequilibrium unemployment this is caused by minimum wages or trade unions.
4. Demand deficient or “cyclical
THE RISE OF UNEMPLOYMENT RATE IN USA AFTER FINANCIAL CRISIS.
The main problem of unemployment in
There are many negative effects of unemployment like those who are unemployed can no longer support country’s economy because they cannot purchase anything which they could purchase before. It also forces people in poverty.
After the global financial crisis
This is the graph showing the worst years for
Americas unemployment structure after financial crisis
A sobering US
Underemployment at a record high
A growing number of workers finding
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