The United States Economy

The United States Economy

The economy over the last eighteen months had started with moderate production, but began to slope into a recession causing the unemployment rate to rise. Beginning in the fourth quarter of the year 2001, the Federal Reserve decided to lower its federal funds rate to 1-3/4 %( this was the lowest rate in the last 40 years). With this move the economy expanded quickly not soon after the change. Consumer Spending increased considerably and housing production was on the rise with the help of good weather. The Gross Domestic Product (GDP) had increased at an annual rate at an excess of 6 %. With the inflation adjusted at such a low rate, interest investments began to decline and business investments for an increase of capital had increased. The Fiscal Policies action to lower taxes, give investment incentives, and increase higher spending are stimulating the aggregate demand curve in a positive way. With a combination of a decline in our forei...