The diagram above shows that real GDP has increased from Y1 to Y2 which means that economic growth has increased. As a result, unemployment falls as we are getting closer to the inelastic part of the AS curve, which is much needed as “unemployment has shot up” in this economic crisis. However, inflation has risen from P1 to P2 which means that our exports become less competitive so our trade deficit gets worse. However, the rise in inflation is needed as inflation is falling below the 2% target. The changes in the government’s macroeconomic objectives depends on where we are on the AS curve as shown below.
Trident University Macro-Economic Indicators: GDP, CPI, Unemployment, Interest Rates TAWANNA J. RICHARD ECO202 MODULE 2 Cases Dr. Canarella GDP 1. Y= C+ I+ E+ G 1750= 1,000+ 200+ 300+ 250 2. If we increase our domestic energy production, and imported less oil from foreign countries the GDP would raise extremely high due to no out sources. Inflation 1. ((111-106)/106)*111 111-106=5 5/106= 0.0471 0.0471*111= 5% 2.
The author of this article, Jeannine Aversa, is stating that key economic indicators point to the likelihood of a recession. Aversa supports her thoughts by noting the real GDP; “crawled at a 1.3 percent pace in the opening quarter of 2007…even weaker than the sluggish 2.5 percent rate in the closing quarter of last year.” The author suggests the main cause of the economic slowdown is due to “the housing slump.” Consumer expenditures are driving the economy, but Aversa worries about a “fallout from risky mortgages and rising energy prices.” Uncertainty of the Feds actions concerning the interest rates is leading to lower investment spending. The author also states that the Feds decision on raising or lowering the interest is due to the
The increase in receivables could be due to an increase in accounts with higher credit limits. The issue arises with an increasing amount of consumers unable to pay off these high
Nominal GDP is the measurement that leaves inflation in the estimate therefore | |it’s usually higher than real GDP . | |(Colander, D. C. (2010). Macroeconomics (8th ed.). Boston, MA: McGraw Hill/Irwin) | |Unemployment Rate: Unemployment rate is the percentage of people in the economy who are willing and able to work but who are not working. | |(Colander, D. C. (2010).
Swenson’s investment philosophy is based on five principles. First, on the basis that equities outperform fixed income assets. Not only do fixed income assets give lower returns they are affected by rising or highly fluctuating inflation. Exhibit 7 shows that for 2006, the returns for domestic as well as foreign equity were much higher that fixed income, which showed negative returns. Swenson has referred to actual cumulative long-run returns of stocks vs.
It is important to keep in mind that the government definition of poverty rises based on the rate of inflation. If inflation was still calculated the way that it was 30 or 40 years ago, the poverty line would be much, much higher and millions more Americans would be considered to be living in poverty.
In the short-run, a larger government deficit would cause an increase to “total planned expenditures and higher aggregate demand “(Miller, 2012, pg. 308). The real GDP equilibrium would rise above the full-employment level because of deficit spending. The price level would also increase. In the long-run, the economy “adjusted to changes in all factors” and the “equilibrium real GDP remains at its full-employment level” even though the increase in the budget deficit causes a rise in the aggregate demand.
The increase in real GDP would put downward pressure on the price level and reduce inflation. Supply-siders also believed that the budget deficit would not increase substantially as a result of the tax cut. Even if it did increase, it would be offset by increased saving due to the lower taxes. Many economic critics today and in the 1980’s questioned the effectiveness of Reagan s policies, also known as Reaganomics. Economists still argue whether Reagan’s actions were helpful or harmful to the United States economy.
The problem of deficit spending out of a recession is inflation. Inflation means there is more demand or money than there are goods this causes an increase in prices and drives down the worth of the dollar. A five dollar bill is still a five dollar bill even if the five dollars are only worth a five cent piece of bubble gum, just the prices of things will be outrageously high because everyone would be fighting for the scarce