Imagine that the U.S. economy is characterized by falling GDP and a rising unemployment rate, driven...

Imagine that the U.S. economy is characterized by falling GDP and a rising unemployment rate, driven by a large decline in business investment. TRUE or FALSE. An effective strategy to reduce the unemployment rate would be higher government spending. Explain.

Expert Solution

False, the problem here is not lack of demand. Government spending will act as a demand shock and increase demand but the problem is that the businesses are not investing enough. Thus, there need to be measures to improve business investing such as a decline in the interest rates. An increase in government spending can lead to an increase in interest rates and more crowding out of private business investment.

Rahul Sunny answered 2 years ago

Imagine that the U.S. economic situation is characterized by rising inflation and strong GDP growth. TRUE...

Imagine that the U.S. economic situation is characterized by rising inflation and strong GDP growth. TRUE or FALSE: This combination of rising inflation and strong GDP growth could be the result of higher oil prices. Explain. • If true, explain how the situation is consistent with higher oil prices. • If false, explain why not. (use the IS-LM and AS-AD logic to answer)

what is the conection and impact U.S GDP with U.S unemployment rate

Assume the economy has a GDP of $11,500 billion. The unemployment rate is at 7.3% and...

Assume the economy has a GDP of $11,500 billion. The unemployment rate is at 7.3% and has been slowly rising for the last 6 months. Inflation was at 2.3% one year ago but has since dropped to near 0%. The MPC in the economy is .80 and the Natural Rate of Unemployment is 4.5%. The target rate for inflation is 2%. Why would it be better for government to solve the problem using government purchases (part c above) rather than...

Suppose the real GDP of an economy is $560 billion dollars andits unemployment rate is...

Suppose the real GDP of an economy is $560 billion dollars and its unemployment rate is 8%.If the natural rate of unemployment is estimated at 5%, what is the value of the country’s potential GDP (LAS) in billions of dollars? Enter your response below rounded to 1 decimal place.

Effects of GDP, unemployment and inflation rate on the ghanaian economy in this period of Covid-19....

Effects of GDP, unemployment and inflation rate on the ghanaian economy in this period of Covid-19. Please it should be of about 500 word count. Thank you

GDP and unemployment Analyse the effects of quarantine on GDP, employment and the unemployment rate. Which...

GDP and unemployment Analyse the effects of quarantine on GDP, employment and the unemployment rate. Which industries are likely to be most affected and which industries are likely to be least affected by quarantine measures? Choose any country that introduced quarantine as an example. What was its GDP growth rate in 2018, 2019? (Indicate the source of information.) Is this country likely to be in recession this year? Refer to two definitions of recession. Are your answers consistent with (general)...

If actual GDP is below potential GDP, then the unemployment rate is _____________ the natural rate. A)...

If actual GDP is below potential GDP, then the unemployment rate is _____________ the natural rate. A) below B) above C) right at D) cannot be determined without inflation rate Fiscal policy affects the economy through: A) Taxes B) Government Spending C) Interest Rates D) Taxes and Government Spending The Federal Reserve Bank’s decisions on monetary policy are made by the: Board of Governors B) FOMC C) Reserve Banks D) Federal Reserve Bank of New York One of the FED’s responses to the COVID crisis has been to: Lower the...

What is the current rate (approximately) for a 30-year fixed-rate mortgage? How will rising or falling...

What is the current rate (approximately) for a 30-year fixed-rate mortgage? How will rising or falling interest rates affect a future home purchase? In what situation might you prefer a variable rate mortgage?

Suppose the economy produces real GDP of $40 billion when unemployment is at its natural rate.

5. The slope and position of the long-run aggregate supply curve Suppose the Fed doubles the growth rate of the quantity of money in the economy. In the long run, the increase in money growth will change which of the following? Check all that apply. The size of the labor force The quantity of physical capital The price level The inflation rate Suppose the economy produces real GDP of $40 billion when unemployment is at its natural rate. Use the purple points (diamond symbol) to plot the...

Suppose the economy produces real GDP of $60 billion when unemployment is at its natural rate.

5. The slope and position of the long-run aggregate supply curve Suppose the Fed doubles the growth rate of the quantity of money in the economy. In the long run, the increase in money growth will change which of the following? Check all that apply. The inflation rate The quantity of physical capital The size of the labor force The price level Suppose the economy produces real GDP of $60 billion when unemployment is at its natural rate. Use the purple points (diamond...

Question