Participate in a discussion with your classmates regarding where you see the U.S
ID: 1226011 • Letter: P
Question
Participate in a discussion with your classmates regarding where you see the U.S. economy in its business cycle right now, as based on the economic concepts in the textbook. Review the “EYE on Your Life” caption titled, Using the AS-AD Model, on page 342 in the textbook. Now that we learned that the real business cycle results from fluctuations in the pace of growth of labor productivity and potential GDP, discuss where our economy is positioned within its business cycle. Please apply the effects of aggregate supply and aggregate demand as explained in the textbook when sharing your discussion. Edit question Participate in a discussion with your classmates regarding where you see the U.S. economy in its business cycle right now, as based on the economic concepts in the textbook. Review the “EYE on Your Life” caption titled, Using the AS-AD Model, on page 342 in the textbook. Now that we learned that the real business cycle results from fluctuations in the pace of growth of labor productivity and potential GDP, discuss where our economy is positioned within its business cycle. Please apply the effects of aggregate supply and aggregate demand as explained in the textbook when sharing your discussion.
Textbook information: Foundations of Macroeconomics (seventh edition) Authors: Robin Bade and Michael Parkin
“EYE on YOUR LIFE” snapshot: Using all the knowledge that you have accumulated over the term, and by watching or reading the current news, try to figure out where the U.S. economy is in its business cycle right now.
First, can you determine if real GDP is currently above, below, or at potential GDP? Second, can you determine if real GDP is expanding or contracting in a recession?
Next, try to form a view about where the U.S. economy is heading. What do you see as the main pressures on aggregate supply and aggregate demand, and in which directions are they pushing or pulling the economy?
Do you think that real GDP will expand more quickly or more slowly over the coming months? Do you think the gap between real GDP and potential GDP will widen or narrow?
How you expect the labor market to be affected by the changes in aggregate supply and aggregate demand that you are expecting? You expect the unemployment rate to rise, fall, or remain constant?
Talk about where they see the U.S. economy right now and where it is heading. Is there a consensus or is there a wide range of opinion?
Explanation / Answer
We know that the US economy is one of the largest economy in the world. After the financial crisis of 2007-08 the eonomy is fight back with very strogly. When we determine the position of economy by using the GDP of the country. When we want to measure the size of economy we use the potential GDP. We know that the potential GDP means that the economy is producing at full capacity. After the crisis the US potential GDP is growing with the wealthy rate. But the preictions of the US economy the output gap is increased sharply. But it is not surprising with the economists. They feel that The recession sharply reduces the capital accumulations. This will affect the employment they will makes. But in the recent times economic policies will boost up the economy. commonly the relaxing the housing restirctions in major cities will boost up the service sector of the economy.
In the actua sence the real GDP is also increased. It increased 1.1 percent of the first quarter 2016. It is becuase the positive results from Personal consumption expenditure, residential fixed investment, state and local government spending, exports,etc.
The recent crisis will create a infavour of US production economy. The damage will seriously affect the aggregate demand and aggregate supply of the economy. The production and output will be lowered, The price level will changed, The interest rate also changes. In the recent forcast of US unemplyment level is 5.5 percent.