Question

In: Economics

While over the long run, the economy grows about 2 to 3% per year on average,...

  • While over the long run, the economy grows about 2 to 3% per year on average, over the shorter term, the economy goes through business cycles. Think about the growth rate of GDP, the inflation rate, and the unemployment rate over the last 4 quarters including the Covid-19 period until July. Once you’ve looked at the data, can you draw conclusions about the state of the economy? Would you describe the economy as booming, recovering, or in a recession? Why? Which curve do you think caused the change? Explain your reasoning.

Solutions

Expert Solution

As per the data about the gorwth rates, inflation rates and unemployment rates, it is observed that the level of economic activity was highest in the Unites States in the month of February, 2020. This is the time when the country was not hit by the Covid -19. After the outbreak of the pandemic, the country has faced a situation of health crisis. In this situation, the deadly virus spreads from communication and hence has led to a stopage in the economic activity. The economy has gone under a recession due to such a fall in the economic activity. Production levels have fallen because the production units have been shut down because of the fear of virus spraeding, This has caused in an increased rate of unemployment for the people who were employed earlier along with the people who entered the labor force during the pandemic. Excess demand has been onserved in the economy because of falling supply levels and that has lead to rising inflation rate. So, mainly the prime reason behind the economy going in recession is the shift in productiuon curve downwards.


Related Solutions

While over the long run, the economy grows about 2 to 3% per year on average,...
While over the long run, the economy grows about 2 to 3% per year on average, over the shorter term, the economy goes through business cycles. Think about the growth rate of GDP, the inflation rate, and the unemployment rate over the last 12 months. What conclusions about the state of the economy? Would you describe the economy as booming, recovering, or in recession during the last few years? Why? Use the AD-AS model to describe the economy. Which curve...
While over the long run, the economy grows about 2 to 3% per year on average,...
While over the long run, the economy grows about 2 to 3% per year on average, over the shorter term, the economy goes through business cycles. Think about the growth rate of GDP, the inflation rate, and the unemployment rate over the last 4 quarters including the Covid-19 period until July. Once you’ve looked at the data, can you draw conclusions about the state of the economy? Would you describe the economy as booming, recovering, or in a recession? Why?...
Write about 300 words: While over the long run, the economy grows about 2 to 3%...
Write about 300 words: While over the long run, the economy grows about 2 to 3% per year on average, over the shorter term, the economy goes through business cycles. Think about the growth rate of GDP, the inflation rate, and the unemployment rate over the last 12 months. What conclusions about the state of the economy? Would you describe the economy as booming, recovering, or in recession during the last few years? Why? Use the AD-AS model to describe...
If inflation grows continuously at a rate of 9 % per​ year, how long will it...
If inflation grows continuously at a rate of 9 % per​ year, how long will it take for $ 2 to lose half its​ value? It will take approximately nothing years for $ 2 to lose half its value. ​(Do not round until the final answer. Then round to the nearest tenth as​ needed.)
Consider a closed economy in which the population grows at the rate of 1% per year....
Consider a closed economy in which the population grows at the rate of 1% per year. The per-worker production function is y = 6 * ((K)^0.5), where y is output per worker and k is capital per worker. The depreciation rate of capital d is 14% per year. a. Households consume 90% of income and save the remaining 10% of income. There is no government. What are the steady-state values of capital per worker, output per worker, consumption per worker,...
Suppose the Fed is concerned that deflation would harm the economy over the long run. Use...
Suppose the Fed is concerned that deflation would harm the economy over the long run. Use the ​IS-MP model​ (including the output gap Phillips​ curve) to analyze how the Federal Reserve would fight deflation. Use an ​IS-MP model using the output gap version of the Phillips curve to show​ long-run macroeconomic equilibrium with a deflation rate of​ 2%. ​1.) Using the line drawing​ tool, draw a Phillips curve that illustrates a​ long-run equilibrium at a deflation rate of ​2%. Properly...
2. How does the envelope relationship relate short run average cost and long run average cost?
2. How does the envelope relationship relate short run average cost and long run average cost?
Suppose the economy is in long-run equilibrium.
Scenario 1 - Pessimism Suppose the economy is in long-run equilibrium. Then because of corporate scandal, international tensions, and loss of confidence in policymakers, people become pessimistic regarding the future and retain that level of pessimism for some time. Scenario 1 - Pessimism. Which curve shifts and in which direction? aggregate demand shifts right aggregate demand shifts left aggregate supply shifts right. aggregate supply shifts left.
A. In the long-run, a firm’s costs of production are shown by the long-run average cost...
A. In the long-run, a firm’s costs of production are shown by the long-run average cost curve. (12) (1) What forces explain the typical shape of the long-run average cost curve? (6) (2) How is the shape of the long-run average cost curve related to what the firms in an industry will look like? Will there be lots of firms or just a few, or perhaps even just one? Will all the firms be about the same size or will...
2. In an economy with two sectors, what are the long-run effects of increased immigration on...
2. In an economy with two sectors, what are the long-run effects of increased immigration on employment under free trade? A) Employment will rise in one sector and fall in the other sector. B) Wages will fall in both sectors. C) Employment will rise in both sectors. D) There will be no change in employment in either sector. 3. In 1994, the United States, Mexico and Canada created the largest free trade region in the world with the North American...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT