Question

2. Consumption spending is a large percentage of GDP in the United States. The ageing population is a demographic certainty. Explain how ageing demographics in the U.S. will affect the economy for each of the two views discussed below.

a. Using key macroeconomic measurements and models explain how ageing demographics traditionally has already affected several economies (such as Japan and Europe.

b. Now explain how ageing demographics will affect U.S. consumers and U.S. consumers and U.S. businesses if older people are behind in saving for their retirement and must continue to work to save more for retirement.

Answer 1

A.) Like Japan and Europe the US is an ageing society between 2000 and 2050 the number of older people is projected to increase by 135%. Moreover the population aged around 85 and over which is the group mostl likely to need health and long term care services, is projected to increase . Over this time period the proportion of population that is over the age of 65 will increase from 12 to 20 percent in 2050.

Two points are noteworthly about this demographic change first while a significant proportion of the US is elderly much of Europe already has a higher proportion of population japan and other country are already having to cope wiht the impact of an agening society to greater extent than US.

It will effect the higher fertility rates and immigration America's population while agening is nonetheless likely to remain distincty younger than other develop countries. Second the future strains of population agening in the US derive not so much from the growth in the elderly population.

The slow growth in the working age population will mean that these will be relatively fewer people to pay the taxes necessary to support public programmes for the older population and fewer people to provide the services that older people need.

B.) The ageing population demograhics will affect US consumers and US businessess by saving for their retirement and must continue to work to save more for retirement due to this movement of money in the econmy will affect and the people who is older their expenditure is more in medical healthcare facility and the workfore is also decreasing day by day the workforce is the main factory for economic development and increase in GDP will done by large number of workfore. Due to this US business will affect by not getting workforce to do work and the older people has not that much capebilty to do hard work.