Question

Look up the current GNP, Prices, and employment numbers from the government agencies and determinant what stage of the business cycle we are in today and list the types of investments you should be looking for. List the government fiscal and monetary policy that the government should be using in that stage.

Answer 1

Answer;

• Main indicators suggest that the economy is health and is looking prosperous.
• Growth rate of real GDP is expected to hover around 2 to 3 percent which is considered ideal by world standards for developed and advanced countries.
• Unemployment is quite near and is expected to remain at its natural rate of unemployment.
• Federal open market committee forecasts that GDP growth rate will fall in in 2018 and 2019.
• There has been an increase in the structural unemployment in past few months where people working on high paying job have been out of work for so long.
• Inflation is expected to increase in coming years with 1.9% in 2018 and 2.0% in 2019 Per rising prices of oil, this is an alarming situation.
• Observing at the new tax reforms and promises made by the President and Congress of an expansionary fiscal policy, we expect la tight monetary policy.
• This will balance things out and the inflationary gap that is likely to be registered in future can be combatted upon.