Economic 2


The American economy has many components which contribute to its growth and which affect its rate of inflation, but the overriding stimuli stem from the monetary and fiscal controls imposed by the Federal Reserve and government, respectively. The economy has enjoyed modest growth for several years, and that can be expected to continue. The Federal Reserve is likely to raise interest rates in late 1999 or early 2000 in order to keep the rate of inflation down; this research considers the reasons that this is likely.
The Federal Reserve sets interest rates by mandating the rates at which Federal Reserve banks loan funds to other institutions. These rates then affect the rates of those ...

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held interest rates steady for most of 1997 and 1998 during which time the economy moved forward at a slow pace. Inflation was kept in check, the federal deficit declined, and unemployment was at near-record lows throughout the country. Despite this, there was little upward pressure on wages and, in general, consumers have seen some slight interest in their purchasing power. By late 1998, there was an increase in wages in some service industries and among computer and technical professionals; this has led to some increase in service prices.
Consumer spending as measured through retail sales generally increased throughout the country during 1997 and 1998 with sales of durable goods (such as home furnishings and appliances) posting steady increases. These increases indicated that the economy continued to experience growth, but at a slow pace. This growth was also reflected in manufacturing where gains were seen in the Midwest and east. Construction materials and related goods ...

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PAPER DETAILS
Added: 4/17/2007 09:10:27 AM
Category: Miscellaneous
Type: Premium Paper
Words: 858
Pages: 4

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