Introduction
An economy actually consists of economic system of a particular country or any other area that is, the capital, labor, and land resources. A certain economy is said to be the result of process which involves its history, technological evolution, and social organization, in addition to the area’s natural resource endowment, geography, and ecology as the key factors. Monetary policy is essentially the economic tool that is used in the economy to control the money supply with an objective of promoting the desired economic growth and stability within that economy. Monopolies are a form of market structure where a single producer exists in the market hence enjoys the monopoly power where this it exploits the consumers through charging high prices for its products. Therefore, the study of economics is imperative to determine how the economy functions.
US is essentially the leading economy in the whole world. In the current US economy, slow growth rate and high unemployment rate are still dominant features. Actually, the economic growth during the year 2011 was at an exceedingly slow pace. The issue of unemployment is high and presents itself as the biggest problem to the policy makers. The main cause of this unemployment has been the inflation where prices are increasing day in day out at an alarming rate. For instance, in 2009, the unemployment rate was approximated to be 9.4%.
In addition, during this time a broader measure of this phenomenon was in fact 15.9%. In the years 2009 and 2010, after the 2007-2010 financial crises, the rate of unemployment increased very high. This financial crisis was a global financial crisis that in fact led to widespread inflation. The interest rates were increasing exorbitantly. The nominal GDP was anticipated to be $ 15.7 trillion in last year. This means rate with the rise in GDP the three macroeconomic variables that is, inflation, unemployment and interest rates have declined substantially as compared to five years ago.
One major cause of unemployment has been inflation which in one way or another has led to people refusal to spend more and as a result lack of creation of employment opportunities. Thus, there is a need for the federal government to intervene so that the employment opportunities are created. The strategies that the federal government needs to put in place is the use of both monetary and fiscal policies to correct the inflation rate. This will ensure that the value of the dollar is retained and as a result the macroeconomic problem of unemployment will be forgotten.
This will also encourage entrepreneurship which is a major cure of unemployment. Monetary policies target the interest rate where they are lowered to combat unemployment in the economy. These can either be contractionary which are aimed at slowing inflation or expansionary that are used to combat unemployment. Fiscal policy in the economy is where the government uses its expenditure and taxation to influence the economy. So, these two policies are aimed at growing the economy.
The market structure in the US economy has been characterized by imperfectly competitive markets. These are monopoly, monopolistic competition, and oligopoly. As mentioned the monopolists have been charging exorbitant prices for their products leading to various macroeconomic problems. The lack of competition in the oligopoly market structure really leads to higher costs for the consumers. These few sellers also creates the problems of unemployment and inflation in the economy. The firms in the monopolistic competition have been behaving like monopolies during the short run periods. Consequently, all these imperfect markets structures in their objectives of profit maximization have led to macroeconomic problems that we have been facing and continue to face.
The anti trust laws in the United States were put in place by the state and federal governments to control or regulate the corporations. Their objectives were to keep the companies from exercising monopoly powers and encourage competition that the government saw important in ensuring that the consumers got quality products at fair prices. Therefore, these laws prevented the occurrence of monopoly because it viewed it as a form of consumers’ exploitation. If these laws were not put in place, the consumers would have been exploited as mentioned and as a result, the macroeconomics problems of unemployment and inflation would be worsened.
Discounts in businesses are aimed at encouraging the customers to purchase a product or a service more and to prefer it to other rival products. Thus, it should be used as a strategy to make more selling’s which in turn will create employment opportunities. However, not every consumer or customer qualifies to be given a discount when purchasing. There are various methods that should be used to identify the groups of consumers who qualify to receive a discount. One method is to keep a record of customers which will help in identifying a firm base of the customers. The other method includes observing those customers who comply with the mutually set standards. These standards include loyalty and payment punctuality.
Monopoly market structure is not efficient in any economy. As mentioned, the monopolists maximize their profits through exploiting their consumers which only leads to the major problems in the economy. In addition, the quality of goods and services that the consumers get in monopoly market structure is low due to lack of competition. As a result of this, the consumers are not satisfied. The monopoly also lowers the productive efficiency due to lack of competition hence this creates unemployment. Therefore, monopoly should be discouraged by the relevant authorities as it only creates more problems in the economy.
References
Bernanke, Ben (2006). "Monetary Aggregates and Monetary Policy at the Federal Reserve: A Historical Perspective". Federal Reserve.
Choi, Jay Pil (ed.) (2007). Recent Developments in Antitrust: Theory and Evidence. The MIT Press. ISBN 978-0-262-03356-5.
Martin Crutsinger (April 20, 2007). "Factory jobs: 3 million lost since 2000". USA Today. Associated Press. Retrieved March 4, 2012.
