The United States Economy
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The economy of any stated country is the pillar of its economic success. It is the rates in the economy that determine whether the country is financially stable or not. The growth rates of different economies are the difference between the most developed countries and the less developed ones. Whereas the growth rate of the first world nation stands at over 50% that of the less developed countries is well below 10%. This paper seeks to find a comparison between the economies of the United States then and no. It seeks to unravel the changes that have taken place in the economy in the past fifty years. It is a dissertation about the United States Economy, then and now.
In the 1960s, the United States was experiencing its longest and uninterrupted period of economic expansion in its history. In early 1963, there was stable inflation and corporate profits were record high. The stock market was on a rebound, but the unemployment rate was too high at 5.7%. Although this was high, it decreased to tolerable levels over the years. By the end of the economic growth period, the real income of the households in the country had increased by 50 percent. Over the recent years, the unemployment levels have increased since then to 7.9%. The inflation rate as of October 2012 was 2.16 percent (Petro, 2012)
There are different strategies that the federal government can employ to encourage the American people to increase their spending. Increasing consumer spending is a means by which that the GDP of the country will grow and increase the aggregate savings is through consumer spending. The federal government can commit to providing excitement and new products and services at a much lower rate than the prevailing market rates. If the consumers find that they can buy more commodities with the same amount of money, then theaggregate spending increases (Retail Touch Points).
Another method is to ensure that the federal government can use to increase spending is to capitalize on scarcity. Scarce commodities are rare to find, hence the reason they will find buyers as soon as they hit the market. This is a strategy that the government can capitalize on to ensure that they get all their goods sold. The demand levels for scarce commodities are extremely high. This will increase employment in the sectors that are responsible for the rare commodity (Retail Touch Points).
Antitrust policies are measures put in place to ensure that are secured in place to ensure that monopolies do not mar the economic market of the United States. One of the ways in which the government paid attention to antitrust laws is to review all proposed mergers to ensure that all companies will not create a monopoly when they merge. The Sherman Antitrust act is one of the measures by the government to stop monopolies from dominating the market (Jstor.). In 1974, the violation of antitrust laws, which included price fixing, was changed to felonies to misdemeanors. Price fixing is an agreement by competitive firms to charge an identical price for their commodities (Tripod). This is one of the major steps by the government to ensure that consumers do not get hurt by the retailing firms in terms of pricing. The government has been keen in ensuring that they reinforce these laws for the common good of the consumer. There is a tendency of monopolies to overcharge the consumer for lower quality products.
Monopolies are those companies in the market that sell a commodity and have no competition. This means that they are the only companies in that the economy that produces a given commodity. They control and manipulate the market in ways that are harmful to thhe consumer, hence the need for the US to employ antitrust policies to stop the spread of the negative effects with which the monopoly brings.
Different customers have different spending habits. This is the reason why the government has to find a manner with which to give discounts to some of their customers without making the others feel alienated. One of the measures is to use the preferences of the consumer relative to the commodity that they are purchasing. If a class of goods and services are common to a majority of the customers, then the retailer can offer them discounts without alienating any of the shoppers. Another strategy would be for retailers to come up with a retail reward system for customers who frequent their stalls. In that sense, the consumer can spend their money shopping at an outlet and get discounts based on the regularity and capacity of their sales (Wessels, 2006).
A monopoly is not efficient in any given economy. This is because there is no competition and the products will never be diversified. The retailer will only have one undiversified product that will never find means of improvement to make it better. Monopolists are price makers (Arnold, 2008). The higher the price they set on their product, the more they reduce demand and the less their product is bought. There is always an optimal level of production that maximizes profit per unit. With monopolies, when the production rises, the cost of production also rises; numerous units of output cost a lot more to produce. The quantity of goods produced by monopoly markets is a lot less than that which is socially acceptable. This means that there has been misallocation of resources and that not enough resources are being utilized in the production. This is a form of inefficiency indicating underutilization of resources (Samuelson and Nordhaus, 2010).
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