Macroeconomic Unemployment

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The State of the US economy on 07 –15 –14

This essay is based on the Federal Reserve Open Market (FOMC) statement released on 07 –15 –14. The release describes the state of the economy in terms of the following macroeconomic indicators: a progression towards maximum employment, increased price stability, and rebounding growth of real gross domestic product. The essay presents a discussion of the Federal Reserve’s mandate and the state of the US economy as of the month of the press release and the proposed policy actions. The following two indicators – employment and inflation– are of particular interest in this essay.
Consistent with the statutory mandate, the Federal Open Market Committee seeks to promote maximum employment, stable
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The personal consumption expenditures function has indicated a relatively stable outlook on long-term inflation stability. Both survey and market based measures of longer-term inflation expectation in the economy have stayed steady throughout the first half of the year.
Inflation is primarily determined by monetary policy. The Committee has specified the long-run goal for inflation to be at two percent. This measure of inflation in the economy is determined by the PCE index of personal expenditures. The Federal Reserve’s statutory mandate of a two percent long-term goal of PCE inflation is consistent with the ability of the committee to foster price stability and maximum unemployment in the long run.

Inflation is significant in an economy as it in a large part relates to the price stability within the U.S. If the inflation rate within the U.S is high, variable, or both, it can greatly interfere with an economies ability to efficiently operate and, in turn, can reduce or prolong economic growth. The Committee has specified the long-run goal for inflation to be at two percent. This measure of inflation in the economy is determined by the PCE index of personal expenditures. The Federal Reserve’s statutory mandate of a two percent long-term goal of PCE inflation is consistent with the ability of the committee to foster price stability and maximum unemployment in the long run.
One area of current concern
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