The economy of the United States of America is one of the World’s largest economies. The economy of the USA is considered a mixed economy also. They call it a mixed economy because it operates as a free market for consumer goods and business services.
US economy also operates as a command economy. The US economy is the most powerful economy when it comes to technology. All the firms situated in the US have the best technology, which is why they are the most developed holder of all the industries.
The US dollar is the most used currency when it comes to international transactions. The computers, medical, defense, and aerospace technologies are mostly exported from the US.
The US has the most considerable aspect of importing and is the second-largest when it is about exporting. It has a lot of free trade agreements with several nations, and some nations are under the deal of negotiation.
Major Influences on the economy of the US
The central bank of the US is the Federal Reserve System. Federal Reserve System controls the supply of money by changing the interest rates. And a lot of money banks are introduced in the open market operations so that it can help the supply when there is inflation in the market. This also enables a lot with the unemployment rate’s downfall.
When the money banks are opened in the open market, and the money supply increases, it is known as the expansionary monetary policy. This happens when the interest rates are lower, and there are many additions in the bank credits. This helps in the growth of the money, and the unemployment factor is reduced to a significantly lower amount.
In Contractionary monetary policy, the interest rates are raised, and the credits are removed from the banks. This makes the money supply go a little lower, and it also refrains the economy from growing.
Prices of the commodities change frequently; it can be a daily or weekly basis. By the change in prices of things, the contract prices also show growth in them. This commodity market has an unregulated influence on the economy of the US. Due to regular and unmeasured changes in prices, the traders face a lot of effects on the prices of imports and exports.
What is the role of supply and demand in the US economy?
Supply and demand are the main forces that give a push to the agendas of the US economy. Supply includes labor, natural resources, and employment. Whereas demand drives 70% of the economy, it occurs according to its consumption season.
When there is a recession, unemployment is increased simultaneously. People get a feeling of discouragement, and they lose hope of finding a job, which gives them a lot of anxiety.
There are four basic laws of supply and demand.
- If there is an increase in demand, the supply is unchanged.
- If the demand is decreased, the supply remains unchanged.
- If the supply increases, the demand remains unchanged.
- If there is an increase in supply, the demand remains unchanged.