Question

This week's EC202 material focuses on Savings, Investment (10), Income and Expenditures (11). We learn that Investment in an economy can only occur when someone saves. “Someone” can be Households, Government (in the form of a government surplus), other Businesses, or someone outside economy in the international sector.

When comparing Income to Expenditures, we learn that during a recession, incomes fall, creating a Paradox of Thrift: When individuals save, that is “good,” but when “everyone saves,” spending (expenditures) in the economy falls, which can cause a recession (not “good” and thus the “Paradox”).

With the new administration in office since January 2017, what do you think about the current state of our US economy? Think back over the past two week's discussion forums and the current discourse about trade and tariffs, changes in government taxation and spending (G). Choose one of the following and present an argument (a paragraph). Be sure to include evidence (economic indicators, cite source(s)) to support your argument:

The economy is improving, consumers (C) and businesses (I) are spending more, and changes in (G) will have a positive impact.

The economy is struggling a little, and consumer (C), business spending (I) and government spending (G) is still uncertain.

The economy is struggling a lot, consumers (C) and businesses (I) are spending less, and saving more and/or changes in government spending (G) will likely have a negative impact.

Be sure to present a strong argument with evidence to support it. Look back to remind yourself what the (C) (I) and (G) components of GDP are, if you need to. We will be revisiting this topic throughout the term.

Answer 1

US Economy slowed down at the end of the year 2017.It picked up initially in the beginning but later on started losing momentum.

In the 4th quarter,growth slowed and fell short of Trump's targets.The economy grew at 2.6% from October to December as against the expected 3% by many economists and officials.

There have been tax cuts.In fact,there has been a $1.5 trillion income tax cut and the government spendings have also increased.Unemployment stands low and wages soar high.Domestic demand including consumers and business spending also stands good.This can be seen from the fact that consumers are spending happily,businessmen are investing and stock market is raging.Exports rose to 7.3% but droppped to 2.3% in september.There was a trade deficit of 2.6% in the second quarter of 2017.

So overall,it can be said that the economy is struggling a little!!