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Article: How Does the US Economy Work?

https://www.thebalance.com/how-does-the-u-s-economy-work-4056835

Article Description:

This article discusses the most common economic concepts that influence the economy of the US. The factors that contribute to the recession and the influence of Gross domestic products and demand and supply are thoroughly discussed in the article.

Discussion:

The most important concept used in the article is inflation. The causes and impact of inflation are discussed thoroughly in the article. Concept of inflation is tricky but simple. Inflation refers to the increase in the prices of goods and services over a particular period of time. In economic terminology, it can be explained as that people have to pay more to get certain products and services, from getting a new haircut, to buying a new milk crate. Inflation affects all aspects of human life and increases the cost of living ADDIN ZOTERO_ITEM CSL_CITATION {"citationID":"U5BkU2dP","properties":{"formattedCitation":"(\\uc0\\u8220{}Inflation,\\uc0\\u8221{} n.d.)","plainCitation":"(“Inflation,” n.d.)","noteIndex":0},"citationItems":[{"id":1895,"uris":["http://zotero.org/users/local/KZl8ZL3A/items/4SILX6HB"],"uri":["http://zotero.org/users/local/KZl8ZL3A/items/4SILX6HB"],"itemData":{"id":1895,"type":"webpage","title":"Inflation","container-title":"Econlib","abstract":"Economists use the term “inflation” to denote an ongoing rise in the general level of prices quoted in units of money. The magnitude of inflation—the inflation rate—is usually reported as the annualized percentage growth of some broad index of money prices. With U.S. dollar prices rising, a one-dollar bill buys less each year. Inflation thus …","URL":"https://www.econlib.org/library/Enc/Inflation.html","language":"en-US","accessed":{"date-parts":[["2019",4,18]]}}}],"schema":"https://github.com/citation-style-language/schema/raw/master/csl-citation.json"} (“Inflation,” n.d.).

It reduces the purchasing power of the common man and the businessmen in terms of each unit of currency. It reduces the value of a currency in the global market. The more prices rise the fewer people can buy in a particular amount in comparison to the time when inflation rates are lower. It increases the feelings of uncertainty in the consumer market. It is attributed by the percent increase or percent decrease in prices during a specified period, which is usually over a period of month or year. For example, if the inflation rate for milk is 2 percent in a year, its price will be 4 percent in the next year or month. If the inflation rate is above 50 percent in one month it is considered as hyperinflation. But if this inflation occurs at the time of recession it is called stagflation, which will result in the rising prices of gold and stock, this situation will be called asset inflation. One cycle of inflation leads to another. Two main types of inflation are demand-pull inflation and the other one is called cost-push inflation. In demand-pull inflation occurs when demand beats supply of goods and services. In this situation of scarcity, the buyer becomes desperate for the product and become willing to pay more. This is also a common type of inflation in the US. The second type of Cost-Push inflation occurs when supply is restricted but demand is not restricted ADDIN ZOTERO_ITEM CSL_CITATION {"citationID":"KwE93NIZ","properties":{"formattedCitation":"(Amadeo, n.d.-b)","plainCitation":"(Amadeo, n.d.-b)","noteIndex":0},"citationItems":[{"id":1893,"uris":["http://zotero.org/users/local/KZl8ZL3A/items/GHFQH4IV"],"uri":["http://zotero.org/users/local/KZl8ZL3A/items/GHFQH4IV"],"itemData":{"id":1893,"type":"webpage","title":"Why Inflation Is as \"Violent as a Mugger\"","container-title":"The Balance","abstract":"Inflation is when prices rise over a designated time period. The inflation rate is the percent increase. It will lowers your standard of living.","URL":"https://www.thebalance.com/what-is-inflation-how-it-s-measured-and-managed-3306170","language":"en","author":[{"family":"Amadeo","given":"Kimberly"}],"accessed":{"date-parts":[["2019",4,18]]}}}],"schema":"https://github.com/citation-style-language/schema/raw/master/csl-citation.json"} (Amadeo, n.d.-b).

In the book inflation concept is defined as “quantitative measure of the rate at which the average price level of selected goods and services in the economy increases over a period of time” ADDIN ZOTERO_ITEM CSL_CITATION {"citationID":"819XOGXC","properties":{"formattedCitation":"(Tucker, 2010)","plainCitation":"(Tucker, 2010)","noteIndex":0},"citationItems":[{"id":1889,"uris":["http://zotero.org/users/local/KZl8ZL3A/items/NVWN3XZK"],"uri":["http://zotero.org/users/local/KZl8ZL3A/items/NVWN3XZK"],"itemData":{"id":1889,"type":"book","title":"Economics for Today","publisher":"Cengage Learning","number-of-pages":"932","source":"Google Books","abstract":"Help your students visualize economics in action with the most pedagogically rich, complete text on the market--Tucker's ECONOMICS FOR TODAY, Seventh Edition. A quick look at this engaging, dynamic text will show you why this is the book that is famous for helping students at all levels of skill and preparation. Written by an award-winning educator recognized for his work in relating basic economic principles to global issues, Irvin Tucker's ECONOMICS FOR TODAY continues its strong tradition of presentation using a unique textual and visual learning system. This edition concisely presents and reinforces core concepts, then immediately assesses student comprehension to ensure understanding. The latest information on federal deficits, the stimulus package, environmental issues, and other developments in economics today is presented in an engaging, easy-to-follow format that students can quickly grasp and apply to everyday life. ECONOMICS FOR TODAY, Seventh Edition, provides a full complement of instructor resources, including a handy Instructor's Resource CD, new PowerPoint slides, optional CourseMate website and complete array of videos. Help your students learn and apply economics with the unmatched student-friendly approach in Tucker's ECONOMICS FOR TODAY, Seventh Edition. Discover a rich array of online teaching and learning resources to support your course on the Text Companion Website for Tuckers' MICROECONOMICS FOR TODAY. This dynamic website builds on this edition's content with password-protected teaching resources available to download as you need them, including the Instructor's Manual, Test Bank, and PowerPoint slides. Interactive tutorial tools help students master concepts from the text.Important Notice: Media content referenced within the product description or the product text may not be available in the ebook version.","ISBN":"978-0-538-46938-8","note":"Google-Books-ID: _GeHxvDMI6AC","language":"en","author":[{"family":"Tucker","given":"Irvin B."}],"issued":{"date-parts":[["2010",9,13]]}}}],"schema":"https://github.com/citation-style-language/schema/raw/master/csl-citation.json"} (Tucker, 2010).

In the article, this concept used as "Inflation is difficult to stamp out. Once it occurs, people begin to expect ever higher prices. They will buy now before prices go up more in the future. That increases demand even more.” ADDIN ZOTERO_ITEM CSL_CITATION {"citationID":"a5w2lYqr","properties":{"formattedCitation":"(Amadeo, n.d.-a)","plainCitation":"(Amadeo, n.d.-a)","noteIndex":0},"citationItems":[{"id":1891,"uris":["http://zotero.org/users/local/KZl8ZL3A/items/PSET2CLP"],"uri":["http://zotero.org/users/local/KZl8ZL3A/items/PSET2CLP"],"itemData":{"id":1891,"type":"webpage","title":"How Does the US Economy Work?","container-title":"The Balance","abstract":"The U.S. economy works through the laws of supply and demand. It's managed by the Federal Reserve and your elected officials.","URL":"https://www.thebalance.com/how-does-the-u-s-economy-work-4056835","language":"en","author":[{"family":"Amadeo","given":"Kimberly"}],"accessed":{"date-parts":[["2019",4,18]]}}}],"schema":"https://github.com/citation-style-language/schema/raw/master/csl-citation.json"} (Amadeo, n.d.-a)

In these lines, the influence of inflation over the population is explained. The concept defined here is demand-pull inflation. It is correctly used in these lines of the article. It is a common human behavior that when there is a scarcity of some essential product, they want to buy it in large quantities and stock it so that they stay uninfluenced by the reduced supply of product in the future. But overall when the demand is more and supply is less, tis further stocking and buying off the product, further reduces the supply thus results in increased demand. This behavior further intensifies the inflation in the community. Currently, in the US, the inflation rate is on the high rise according to the Bureau of Labor Statistics. The cost of living is increasing at a rapid rate which is resulting in people feeling unable to afford the living cost.

References

ADDIN ZOTERO_BIBL {"uncited":[],"omitted":[],"custom":[]} CSL_BIBLIOGRAPHY Amadeo, K. (n.d.-a). How Does the US Economy Work? Retrieved April 18, 2019, from The Balance website: https://www.thebalance.com/how-does-the-u-s-economy-work-4056835

Amadeo, K. (n.d.-b). Why Inflation Is as “Violent as a Mugger.” Retrieved April 18, 2019, from The Balance website: https://www.thebalance.com/what-is-inflation-how-it-s-measured-and-managed-3306170

Inflation. (n.d.). Retrieved April 18, 2019, from Econlib website: https://www.econlib.org/library/Enc/Inflation.html

Tucker, I. B. (2010). Economics for Today. Cengage Learning.