Essay on Alf Money and the Prices in the Long Run and Open Economies

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ALF Money and the Prices in the Long Run and Open Economies


1.0 Introduction 3

2.0 History of Economic Changes and comparing it to Forecast for the next Five Years 3

2.1 Changes in GDP 3

2.1.1 Economic Forecast 4

2.2 Changes in Savings 4

2.2.1 Economic Forecast 4

2.3 Changes in Investment 5

2.3.1 Economic Forecast 5

2.4 Changes in Unemployment Rates 6

2.4.1 Economic Forecast 6

2.5 Changes in Real Interest Rates 7

2.5.1 Economic Forecast 7

3.0 How Government Policies Can Influence Economic Growth 8

4.0 Influence of Monetary Policy 8

5.0 Influence of Trade Deficits or Surpluses 9

6.0 The market for loanable funds and the market
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These effects were the stock market thrash of 1929 and the great economic depression of 1930 respectively (Macdonald, 2010). The GDP for the United States in 1929 was $ 1.057 trillion and $ 0.967 trillion in 1930. The change in GDP was – 8.5 percent. The prices of goods and services in the US market fell by 6.4 percent (Key economic indicators: The United States, 2015). Nevertheless, the GDP for the United States rose steadily from 1950 up to today. During 1950 the nominal GDP for the United States was $ 300.2 billion. By 2015, the GDP for the United States increased to $17,947 billion (Choi & Wang, 2014). In 2015, the effect of a high dollar hurt exports. For example, the prices for oil collapsed or decreased drastically.

2.1.1 Economic Forecast The forecast for US GDP for the next five years is positive with an average rate of 1.94 percent. From 2016 to 2020, the growth of US GDP as per the forecast will be 2 in 2016, 1.8 in 2017, 1.9 in 2018, 2 in 2019 and 2 percent in 2020 respectively (United States | Economic Forecasts | 2016-2020 Outlook). According to the actual or aggregate forecast for the next five years, US GDP will be $ 18,295 billion in the year 2020. Therefore, the trend is positive, and US GDP will continue to rise gradually.

2.2 Changes in Savings As reported by the U.S Bureau of Economic Analysis, the savings rate for US households remained unchanged at a

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