Aggregate Demand and Supply Paper

The lack of response to low mortgage rates shows that no one industry or market will be able to stimulate economic growth, other industries and markets must join in. The labor market has taken initiative and has made changes, such as adding jobs to the economy in order to lower the unemployment rate. When the United States economy first went into its recession in the years 2008 and 2009, 7.4 million jobs were lost. Since then, there have been over 7.2 million jobs created, which is a 97 percent recovery of “employed persons” in the economy; furthermore, unemployment is at a five year low, sitting at 6.7 percent (Green). These changes in the labor market are crucial for success. Increasing employment throughout the United States, will increase household incomes dramatically. With this increase in household income, comes confidence which will guide consumers to spend the money they make in the economy, instead of saving it. During recessions, there is a sudden increase in savings which stop the flow of money in the economy. However, now the saving rate, the amount of income not spent but set aside, has continued to drop. In December 2013, the saving rate was 3.9 percent, a large decrease from 4.3 percent in November of that same year. The average rate for the entire year was 4.5 percent, the lowest saving

A nation’s economy plays a vital role in how a nation operates. The United States economy faces a large variety of problems in this paper; we will focus on 4 major economic problems, unemployment, inequality, federal debt, and the financial/credit market. All four issues are interconnected in some way with deep social and economic implications. These issues were emphasized during the Great Recession that hit the U.S. economy in 2007.In the following paper, we will look at each of the four topics individually as well as look at how each plays a significant role in one another’s overall impact on the U.S. economy as well as individuals in the United States. The United States plays a crucial role in the world economy, meaning that every issue and difficulty faced the United States economy has implications far outside the U.S., understanding how these issues relate to one another sheds insight into just how connected every area of the economy actually is.

As of March, 2013 the U.S. National Unemployment rate was 7.6%. A total of 11.7 million people were reported as unemployed by the Bureau of Labor Statistics. This rate is improved from the height of the recent recession, where the statistic floated around 9%, but it is still not the usual 3-4% figure we are used to seeing in regular market conditions. (bls.gov, US, 2013)

Subprime mortgage lending is the origination of residential mortgage loans to customers with impaired credit histories. Typically, these borrowers have lower credit scores and/or other credit deficiencies that prevent them from qualifying for prime mortgages. Subprime borrowers pay premium above the prime market rate in order to compensate the lender for bearing greater default risk. In addition, subprime borrowers pay higher origination and continuous costs, such as applications fees, appraisal fees, mortgage insurance payments, late fees and fines for delinquent payments.

Subprime lending became prevalent in the early 2000’s when property values were sky-rocketing and many Americans thought they would fulfill their home ownership dreams, by obtaining loans they may not otherwise qualify for. A subprime loan is a loan offered to an individual who does not qualify for a loan at the prime rate due to their credit history. Subprime loans have higher interest rates because of the risk that the lender is taking. During the early 2000’s the housing market was great for homebuyers, since interest rates where low and property values

The Supply and Demand Simulation consist of microeconomics and macroeconomics concepts. The concepts are explained and how they apply to the principle of microeconomics and macroeconomics. The simulations presents shifts in the supply and demand curve, the rationale for the shift is given. Each shift is analyzed showing the effects of the equilibrium price, quantity, and decision making for the company presented. An explanation of the price elasticity affects the pricing strategy for consumers and company.

Today the United States Americans more than ever; there is a constant fear of an awaiting recession due to the economy. The recession in the later 2000’s has been known as the greatest economic decline since the Great Depression. The United States of America, the banks and businesses are not able to succeed and are failing due to the market. Many people across America cannot afford their homes or bills due to the unemployment rate that seems to keep increasing. Many people blame this on the higher oil or gas prices, and the wars that the United States acts on. The recession has overall declined our economic activity in business profits, employment, and investment. This is all due to our falling market, and the rise of prices that so many Americans cannot afford.

The United States is the leading economy across the globe and experienced several tribulations in the recent past following the 2008 global recession. Despite these recent challenges, there are expectations among policymakers and financial experts that the country will experience solid economic growth. Actually, financial analysts have stated that the U.S. economy will be characterized by increased consumer spending, increased investments by businesses, reduced rate of unemployment, and reduction in government cut. Some analysts have also stated that the country’s economy will strengthen in 2014 with an average of 2.7 percent or more. However, these predictions can only be understood through an analysis of the current macroeconomic

The aggregate demand curve shows the relationship between the aggregate price level and (the) aggregate:

Imagine that you wake up and turn on the television as you are getting ready for work at 0600. You decide to watch the news, specifically the business channel. As you watch the news you learn that the Dow futures is down 300 points and that the Asian and European markets have done poorly. As you continue to listen to the news you learn that there is another healthcare facility that is laying off 3,000 people nationwide. Are you shocked by this information? Most likely you are not. This is how many people in the United States start each morning. There continues to be fluctuations in the economy, even though the numbers show that there is slight improvements. The purpose of this paper is examine unemployment, the interest rate and inflation,

The purpose of the subprime banks was to sell mortgage loans to people who couldn’t afford them. The banks dupe the people using Screaming ads showing highly misleading mortgage products. The Mortgage brokers were paid big fees to lure people. Countrywide Financial is considered as the epicenter

The increase was lower than previous years. A few of the areas that helped increase the growth was real estate, fishing, and forestry. (Pettinger, 20130 The unemployment keeps going down, but the numbers are nowhere where they should be. The unemployment rate was seven point four percent. Things are starting to look better for the economy in the United States.

Banks were also overvaluing some of the subprime mortgages making a false assumption that housing prices would continue to rise. Subprime loans are loans that are made to individuals who have complications in trying to maintain a more scheduled payment. Individuals who are going through certain hardships in their life such as divorces, unemployment, etc. Most of these investment banks preferred subprime loans because they carried higher interest rates which led to a massive increase in predatory lending. The reason why banks were creating such complex policies were so that anyone who planned to take out a loan would have difficulty translating the documents therefore allowing the banks the take advantage of homeowners without or if any repercussions.

The United States is currently experiencing a slow recovery from the recession of 2008-09. The current unemployment rate is 7.7%, which is the lowest level since December of 2008 (BLS, 2012). However, this rate is believed to higher than the rate that would occur if the economy was operating at peak efficiency, and it is also believed that there are structural issues still underpinning this performance. For example, the number of Americans who have exited the work force as the result of prolonged unemployment is believed to be higher than usual. In addition, the Congressional Budget Office (CBO, 2012) notes that long-term unemployment of greater than 26 weeks is at a much higher rate than normal, which will have adverse long-run effects on the economy, since workers with long-term unemployment often find their career paths derailed.

The unemployment rate in the United States has improved dramatically over the last two years, from a high of 8.3% in July 2012, to a low of 6.6% in January 2014. In October of 2012, the civilian labor force increased from 578,000 to 155.6 million, labor force participation increased up to 63.8%, and total employment overall rose by 410,000! Since then, the unemployment rate has been falling at a stable rate due to a political push from Washington DC and new employment initiatives. The inflation rate over the last 2 years has been relatively stably, with a few major increases and decreases in 2012 and 2013. It reached a high of 2.3% in June of 2012, and reached a low of 1.0% at the end of 2013. The federal interest rate has remained at a constant .25% over the past few years.