The economy of U.S.A Essay Example | Topics and Well Written Essays - 1500 words

The economy of U.S.A - Essay Example It outlines the theoretical and methodological approaches that the country seeks to use in economic recovery process, asserting relative data sources and the theoretical perspective on the data’s view. The analytical approach of US economic policies The U.S.A needs to set an analytical approach to the economic issues and establish fiscal policies to stimulate growth, control amount of money in supply, dictate inflationary rates and of the dollar, and subsequently reduce the unemployment levels. The government should be certain of the factors that would help it achieve economic stability to the desired level. The United States should be observant on the whether the factors will positively or negatively affect the country at the long run (Gwartney and James, 250). The U.S.A engages in diverse economic prospectus criteria, ranging from macro to micro variables of forecasting for economic propulsion. The United States observes on the psychological impacts that a given policy would reflect from the economy. Therefore, the economy practices scientific theoretical approaches on the immediate factors of production, for example, the demand and supply variables, interests, and capital basis of the economy and labor. Theoretical and methodological approaches to the US economy The Keynesian theory as an approach to the economy of the United States would propel economic growth if well practiced. The theory stipulates that, during the short run period, productivity of the economy shape up in accordance to change in demand. The theory declares that the supply may not increase during an increase in the level of demand but may instead remain constant thus leading to an increase in prices, which consequently results to high costs of living, demand for salary increments, increased unemployment, and subsequent increase in inflation (Barfield and Claude, 314). The United States could adapt to the theoretical approach, which further inhibits the express authority of capitalists. America practices a free market enterprise whereby the investors make decisions on prices depending on the changes in market variables. The United States of America suffered economic crisis between the year 2007-2009 and eventually resulted to poor exchange value of the dollar against other currencies in the world (Majmundar and Malay, 43). America suffered intensely during the crisis due to the increased rate of unemployment, which implied negatively on the gross domestic product (GDP) because of the reduction of per capita income. America could view this aspect of fall back from another perspective, mainly by imposing controls on pricing whenever the demand of products increases with constant maintenance in supply. America’s approach of forecasting the futu re through leading economic indicators could also help the country realize economic prowess again. The index criterion is a methodological approach that eyes on the bank lending rates and the possible changes in the economy. The Keynesian approach emphasizes that federal bank should restrict on the amount of money in supply (a monetary policy) to ensure that the country does not suffer from inflation. The country should focus on the theoretical approach since, reduction of the amount of money in supply would press the economy to operate on the available balance of payment, and the country’