The Fiscal and Monetary Policy

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The Fiscal and Monetary Policy and Economic Fluctuations

Lyndsey Beach

ECO 100

May 28, 2014

Discuss the current economic situation in the U.S. as compared to five (5) years ago. Include interest rates, inflation and unemployment rate in your explanation.

Five (5) years ago in 2008 interest rates were cut multiple times in an attempt to stimulate the economy. The interest rates started out in January 2008 at 3.5% and by the end of the year in December 2008 the interest rates had been cut down to 1%. Currently interest rates are three quarters of a percent lower sitting at 0.25% according to the Fed.

According to the Consumer Price Index (CPI) the buying power of the dollar has increased over the last five (5) years. In 2008 the buying power of a single dollar had the buying power of a single dollar. However that same dollar has a different buying power in 2013.

The buying power of the dollar bill in 2013 is now worth $1.08. The current economic situation in the United States is unemployment is still above its natural rate. The economy has continued to grow since the recession but, at a slower rate than what society would like to see. According to Time Business & Money the economic growth rate has not been above 2.25% and in the recent quarter it has fail beneath 1%. Even though the economy has been growing at a slower rate, but steady the unemployment levels have managed to decrease during this process. The rate of new jobs that are being added to the economy is short of what is needed to bring down the unemployment at an acceptable rate. According to the Bureau of Labor and Statistics U.S. Department of Labor the current unemployment rate is 7.3% and the unemployed...