Microeconomic Principles and Current Events

Paper Summary:

The paper discusses current events in the light of microeconomic principles. United States is facing a slow down in the economy which is leading to reduction in consumer spending and is also negatively affecting borrowing and investment in the country. Applying microeconomics concepts, we notice that demand for money is quite inelastic these days, as reduction in fund rates is not producing desirable results.

From the Paper:

"To understand what is happening to our economy from a microeconomics perspective, we must first take into account some of the current events in order to get a clearer picture of the economic situation. The economy was already facing a recession-like situation when it was given the rudest shock of the century on September 11th. The country's economy since then has been sliding downwards because the government has been unable to generate enough consumer spending despite several announcements of tax cuts which are aimed at giving people more purchasing power and several reductions in the federal fund rates. We need to analyze the current events from microeconomics perspective as this would give us clear understanding of the compelling issues our economy is encountering today. "

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