How US Economy Works. What are the main pillars of US Economy

It is a very common question in your mind how does the US economy work?US Economy is a mixed economy. Major business assets are held by persons individually and some are owned by governments.

Supply and Demand

Supply and Demand are the main function that hold the US economy. Demand of personal goods drives 70% of the economy.Black Friday is main event where shopping happens rapidly.Supply involve labor natural resources and employment.Natural resources include land, oil and water.

Monetary Policy

Monetary policy is managed by federal reserve.The Federal Reserve tools include the money supply and the use of credit, feds fund rate.Interest rate affect the money.The main goal of monetary policy is to control inflation and stimulate the economy.It also monitor the working of banking system.

Fiscal Policy

Fiscal Policy is controlled by federal government through federal budget.All the revenue generate from taxes on your income and how it is expend.Fiscal policy can guide or depress the economy.Congress has the government spending authority and president starts budgetary method.

If spending increases a budget deficit is created and added to national debt.If revenue is increases than budget surplus is created.


Everything in any economy produces is measured by GDP.The key part of economy is government spending, net exports, consumer spending and business expenditures.The U.S is second largest world economy.When the GDP growth rate remains positive the economy enters a boom phase when turns negative economy enters a recession.

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