For the past couple of months the U.S. stock market has been plummeting significantly with very little signs of improvements. Many public officials have been warning the people of the United States of a possible recession. So what is the government doing to rectify this economic problem? And also, how does this affect Americans at a microeconomic level?
Last year was a lucrative time for many dot-com companies. Advertisements of these companies were seen everywhere from billboards to commercials on TV. However, popular companies, such as Yahoo, are now experiencing a huge cut in what has made the company so profitable. That huge cut is the money that other companies spent on advertisement costs. Even huge companies s
uch as Cisco Systems have begun to lay off employees due to the decline in networking product sales. These ricochet events are all adding up to what many government officials believe as the beginning of a nation wide recession.
But how does slashing the interest rate affect Americans at a microeconomic level? William A. McEachern defines microeconomics as the study of the economic behavior in particular markets, such as that for computers or for unskilled labor according to the textbook Microeconomics. Basically, microeconomics looks at the things that influence people’s behavior towards economic choices controlled by the market. So with the slashing of the interest rate, we Americans in theory would spend more, thus reversing the economi
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