Question

1. What has contributed to the slowdown in growth during the 20th and 21st centuries? In your own words, describe both the supply-side arguments (from Gordon) and the demand-side arguments (presented by Friedman).
2. Why do you think wages have grown at a much slower rate than productivity since the 1970s? How has this trend impacted income inequality in the United States?

Answer 1

Economics

Explanation:

The slowdown in growth is largely witnessed due to economic cycles since 1990 which has adversely umpacted economic growth trcak for USA. The Asian Financial crisis, Dot Com Bubble, Great Recession 2008, US china Trade War, Brexit and seeies of geopolitical risks coupped with widening conflicts between The Government and US Fed has led to misallocation of policies and hence has resulted in subdued growth. The consumer demand too has plunged owing to high income tax rates, hyperinflation and recessionary cycles.

Wages have grown at much lower rate due to substitutions with technical machines which has replaced labor and with advent of mass unemployment and economic cycles and instability in Government policies which all creates aggregate pressure on rising wages and hence wages remain at all time low.

Moreover, the rising opportunity and avenues for top 20 quintile has made richer more richer and hence income inequality has widened. Secondly the US Fed policy of contractionary monetary policy and Governments contractionary fiscal policy for long periods have resulted in credit freeze which has caused lower net profitability to organisation and hence have resulted in lower than average wages.