In recent years the US economy has suffered tremendously. As a result many families have lost their incomes, and other families have lost their homes. Many businesses were forced to close due to this recession. This caused the unemployment rate in America to sky rocket. The US economy has created over 100,000 Jobs in each of the past seven months, but that is still well below the 200,000 needed to rapidly bring down the unemployment rate, which remained at 8. 2% at the end of March 2012.
Meanwhile, GAP growth, income and consumption are all positive, but are growing at below-trend rates, and the housing market still shows no sign of life (North). These improvements to the US economy are happening because of the monetary policy of the Federal Reserve System which allows the government to borrow money. New businesses are also being started due to the low rate of interest imposed by the monetary policy of America. Even though we are seeing some positive changes in the
American economy, we are also seeing signs of inflation. The consumer is now paying more money for groceries and household goods, as well as for gas at the gas stations. The government has made loans from the Federal Reserve in order to help start new businesses as well as to help floundering businesses stay in business. The government has also used loans to extend unemployment benefits. This government’s borrowing and spending to improve the economy is known as the expansionary fiscal policy.