Question

Assume the United States has a potential GDP of approximately $18 trillion. Use economic indicators from the last eight quarters (two years) to make a determination about the state of the economy, whether the U.S is in a recession, expansion or macroeconomic equilibrium. You must explain and support your answer with information you have researched and learned during the semester. Any research that is used must be cited in the paper. This information should include the following:

Real GDP


Unemployment rate


Labor Force Participation rate

Inflation rate

Answer 1

The US economic data for the past few years especially from the time of Great Recession shows that the economy was in recession with high unemployment rate and low economic growth for the past few years. The inflation rate was low due to low level of aggregate demand in the economy.

But the past one year data shows that the economy is on the recovery path. Positive growth in real GDP has been reported in the recent years. Unemployment rate is near the potential level. The inflation rate has been rising due to increase in aggregate demand caused by the increase in the level of investments in the country. due to this fed has also increased the interest rates in the economy to attract foreign investment. Due to fall in the level of unemployment major force participation rate has increased in the economy. This shows that the overall economic conditions in the economy depict recovery mode of the US economy.