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The US economy grew 1.8% in the 1st quarter, less than forecast. What does the 1.8%...

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p3pj812 | Student, Undergraduate | eNoter

Posted May 13, 2011 at 2:02 AM via web

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The US economy grew 1.8% in the 1st quarter, less than forecast. What does the 1.8% increase indicate to policy makers?

http://www.bloomberg.com/news/2011-04-28/economy-in-u-s-grows-less-than-forecast-1-8-as-consumer-purchases-cool.html

 

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pohnpei397 | College Teacher | (Level 3) Distinguished Educator

Posted May 13, 2011 at 2:16 AM (Answer #1)

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There is no single answer to this question.  The meaning of this increase means different things to different policy makers.

For example, to the Fed, it seems to mean that there is still a need for further stimulus.  As the article says, the Fed has decided to continue with stimulus spending because of this relatively slow growth.  To other policy makers, this 1.8% gain means that something has to be done about the federal deficit.  Republicans in particular would argue that it shows that the economy is not growing as rapidly as it should and that the cause is excessive taxation and government spending.  Still other policy makers would argue that the slow growth is almost all because of oil prices.  These policy makers would argue for the need to improve America's energy independence.

As with most economic statistics, the meaning of the 1.8% growth is subject to debate.  Different policy makers will have different opinions as to what has caused the slow growth and what should be done to increase the rate of growth.

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p3pj812 | Student, Undergraduate | eNoter

Posted May 13, 2011 at 10:34 AM (Answer #2)

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thanks so much :)

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