The Key Concepts Of Economics

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The Key Concepts in Economics

Kristen E. Singleton

Dr. Bernadette West

Principles of Economics


The Key Concepts in Economics 1
The U.S economy has shown many signs of positive growth and development since last five years. As we know that U.S was suffering from recession in 2007-08, thereafter the economy went almost into a slump. The broadest measure of economic growth – GDP growth rate also fell at a very lowest point by 1% and came down to around 2.9% last year. It was the largest drop ever measured in the economic growth since World War II. If we compare the current economic statistics like interest rate, inflation and unemployment rates with the figures from five years ago, we will be able to measure the main changes that happened within these five years. It has been found that the Fed interest rate was around 0% to 0.25% in 2010 which remains almost same in 2015 as well. It is the rate which banks charge with one another for one day. It has been decided by the market, that is, supply and demand of money in the market. The basic reason for not changing the interest rate is that the economy needs a maximum level of spending to boost the aggregate demand. If there is a hike in the interest rates, then the spending would be reduced leading to a drop in the overall GDP of the economy (BLS, CPI, 2015). Other key statistics is the inflation rate which represents the rise in the general price level in the
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