4This question requires you to reflect on the concepts you learnt in this course

Question

4This question requires you to reflect on the concepts you learnt in this course, personal knowledge, and experience. Each reasoned argument will receive one point. i) The economy is growing, unemployment is low, and inflation is also modest. However, many Americans are not feeling/enjoying the benefits of a steadily growing economy, and have economic worries? What are the possible reasons for this anomaly i) Suggest policies, backed by sound economic reasoning that may help the US achieve sustainable economic growth, and raise standard of life of majority of Americans.

Explanation / Answer

When the economy is growing and the unemployment level is low and the inflation rate is also modest then there are two possible reasons for the Americans to not enjoy the benefits of a growing economy.

a) Wage rate: there is a possibility that the increase in wages of those employed is not satisfactory, In fact, theoretically speaking a labor market characterized by low wages explain low unemployment levels.  

b) Inequitable Distribution of Income: High levels of inequality means that despite higher levels of economic growth people in the lower strata of the society do not get the benefits of this growth.
  
Note: These are just the two possible reasons, there can be various other reasons for the Americans to not feel/enjoy the benefits of a steadily growing economy.

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