There are monetary policies in place that is used by

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Reserve has the authority to make the changes to the interest rates. There are monetary policies in place that is used by the Federal Reserve. It is used as a means to influence the level of aggregate demand of the U.S. economy. If there is an increased level of demand and consumption is as high, this may lead to inflation in the economy. When interest rates are lowered, more people tend to make larger purchases such as property and vehicles. When financed, it is perceived as being more affordable because the total amount paid in the end totals less. There are also consumers that are more apt to making purchases using credit. The end result is getting consumers to purchase more and will in turn stimulate the economy by getting them back in to stores. Consumer Income The current state of consumer income looks to be on the rise. According to foxbusiness.com, “U.S. consumer spending rose in February and income rebounded, further signs economic activity accelerated in the first quarter.” That’s good news for the economy. It would seem that consumers would have more to spend and put back into the economy resulting in a healthier economy. “Income increased a healthy 1.1 percent after tumbling 3.7 percent in January.” (foxbusiness.com) Personal income was higher in December with companies trying to avoid the tax increase at the beginning of the year by paying out dividends and bonuses. “A 2
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Economic Factors Effecting Us Today 5 percent payroll tax cut expired on Jan 1 and tax rates for wealthy Americans also went up.” So you see why income rose in December. These companies were not trying to pay higher taxes because of the income of their employees. What a way to get around those tax increases. With their being more income for consumers to spend, it would lead one to believe that the economy would get better over time as people start to use the extra income on goods and services. But people may also want to keep that money to themselves and save. I would suggest that people save a little bit of it but in order for the economy to thrive, we need to be spending the money and putting it back into the economy. Just don’t forget to budget. Having a budget can
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