Aggregate Demand and Supply Models
The United States economy has been in a downward spiral for many years now and there have been many factors contributing to the steady decline. According to Wilson, L. (2011) “Much of the economic prosperity of the last twenty to thirty years was illusory. We lived beyond our means as a result of easy credit. Now we have the hangover from these good times in the form of excessive debt.” Unemployment, lofty expectations, consumer income and interest rates are just some of the key contributors that have affected the current state of the economy. These factors also have a huge effect on aggregate demand and supply causing the government to quickly recommend fiscal policies to try to counteract the consequences following those factors. Below, we not only identify the current state of some economic factors, but we also identify recommended fiscal policies and evaluate the effectiveness of those policies through the Keynesian and Classical model.
Unemployment / Expectations
As of today, the current unemployment rate is 7.7%. Rates are determined by using a survey called the Current Population Survey (CPS). These percentages do not count the multiple categories of people, for instance, discouraged workers, who are not employed. Labor force and employment force measures use different concepts.
The current state of employment looks more promising for those people with advanced degrees. Almost one-half of recent college graduates were working in professional and related occupations. The health care and social assistance sector is projected to gain the most jobs (5.6 million). The growth for employment lies in the professional fields. Advanced degrees will help to get this sector filled with the graduates in the projections for the next decade. The current workforce will be losing many of its workers due to age and some will be unable to fill, however they may be filled with a segment of employable...