Question

 

1. How would you define and explain the actual unemployment rate of the American economy in light of the different types of unemployment you studied?

2. Define GDP and discuss its main limitations in the case of both a developed and a developing country?

3. Putting into perspective: How would you define and explain inflation, in particular during the 1973-1979 period?

Answer 1

Q.1. answer actual unemployment rate= natural rate+cyclical rate

during the time of recession in US (1960, 1980,2000,2020) frictional unemployment occured as workers feared being unable to find better work. In the time of technical revolutions in US, the economy is operation atbits full potential, cyclical unemployment rate is zero and the unemployment rate is roughly equal to the sum of structural and frictional unemployment. This is referred to as the natural unemployment rate. It is not directly observable(in short term cyclical unemployment difficult to predict) , but the Congressional Budget office estimates the U.S natural unemployment rate is about 4.4%.

Q.2 answer GDP is the final value of the goods and services produced within a geographic boundaries of a country during a specified period of time (1year).GDP growth rate is an important indicator of aeconomic performance of acountry.

in developed country, producers increase their output by giving less consideration to the enviroment. Such enviromental damage should be counted against Country's GDP since it is not conducive to achieving a sustainable production situation.

in developing country, per capita GDP counted that reflect average levels of people income.it cannot reflect the differeces of the people's individual welfare caused by the individual differences of income distribution.

Q.3. answer The 1970s was an era of rising prices and rising unemployment because of 1973's first oil crisis during Yom-Kippur War and 1979's second oil crisis or energy crisis durin Iranian revolution disrupted of oil supplies in US from middle east country. The economic malaise in united states easily crossed the border an increase in unemployment. GDP growth rate dropped from 7.2% to -2.1% . In january 1973 the inflation rate was 3.61% but incresed dramatically throughout the year, to 6.8% in the third quarter and to a high of 8.71% in november.