What causes slow economic growth?

slow economic growth is caused by a reaction step that consumers, businesses, organizations and even government take in response to what is happening in the economy. Among the causes of slow economic growth are government expenditures more than lending, lack of confidence in the economy of consumer, falling housing prices and consumers who save more than they spend. In the US, when the federal reserve system and the federal open currency committee (FOMC) pull out money out of circulation, it introduces a restrictive monetary policy. If employment rates are high, interest rates are high or consumers fear that the economy is facing inflation, it causes them to stop doing things that normally do. This includes inserting money into banks, buying cars or purchases with large tickets to stimulate the economy. Businesses and other types of organizations have also reduced their expenses that cause slow economic growth.

falling cHousing is another cause of slow economic growth. Buying and selling homes has one of the greatest impacts on the American economy. When someone buys a house, it not only draws money on the seller's bank account, but also gives money to the real estate agent account, appraiser's account, creditor account and other business accounts with home service. When house owners are unable to sell their houses, all these deposit activities will be stopped.

Consumers and businesses also tend to be aveler when there is no trust in what is happening in the economy. This causes their expenses to limit, stop eating, stop spending money on anything that is not a necessity. Without this money flowing companies that consumers and businesses sponsor, it also prohibits money in achieving the general economy. Again, this will cause slow economic growth.

Some consumers even turn to keep their money at home instead of putting their bank accounts for fear that banks fail. OtherThis takes the money from circulation that the bank would normally lend to incite economic growth, so instead slows the economic growth.