Events of the Past 18 months: Real GDP in the economy increased by...

 

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Events of the Past 18 months: ● ● ● Real GDP in the economy increased by $800 billion for the first 9 months but has been stable for the last 9 months at $23.2 Trillion, an all-time record. Price levels have risen during the past 18 months and the current rate of inflation is at 7.9% Currently Interest rates are moderate and somewhat responsive to changes in M1. Leading Indicator Information During the past 6 weeks, the values of stocks in the Dow Jones Industrial average, the NASDAQ and the Fortune 500 have been gradually decreasing. ● ● Consider the scenario and information given below. This essay will consist of three graphs and three paragraphs regardless of if policy is used or not. ● ● Total spending has been increasing. Unemployment rates have been decreasing but have recently stopped changing, and are at 4.25%, participation rate is at 70%. The number of new construction starts, orders for new finished capital resources and number of orders for new durable goods have dropped over past 3 months. There has been a slow rise in the number of new unemployment insurance claims filed during the past 16 weeks; and the average work week dropped from 29 to 25 hours steadily. Consumer Confidence & Business Outlook have dropped below 40 (37, 35, and 28) over the past 3 months. a. Demonstrate what has happened during the past 18 months on an AD/AS graph. Construct an M1/MD graph based on current interest rate information. Write a paragraph explaining what is happening and determine if there is a problem in the economy. If there is a problem, clearly state what it is. b. Consider the Leading Indicator Information and determine what it predicts about changes in total spending. In a paragraph, analyze each of them, what the majority predicts and determine if Macroeconomic Policy should be used, stating why or why not. c. If Macroeconomic Policy is appropriate, write a paragraph recommending Macroeconomic Policy to help remedy this situation. Be sure to indicate which kind and mode of Macroeconomic Policy is used, which tools are used and give specifics on how they will be used, including impact on relevant macroeconomic variables. Additionally, show and summarize the effects of it on another AD/AS graph. Also show the effect on the earlier constructed M1/MD graph where applicable. If Macroeconomic Policy is not appropriate, instead write a paragraph to explain why it's not appropriate. Additionally, show and summarize how that is the case on another AD/AS graph. Events of the Past 18 months: ● ● ● Real GDP in the economy increased by $800 billion for the first 9 months but has been stable for the last 9 months at $23.2 Trillion, an all-time record. Price levels have risen during the past 18 months and the current rate of inflation is at 7.9% Currently Interest rates are moderate and somewhat responsive to changes in M1. Leading Indicator Information During the past 6 weeks, the values of stocks in the Dow Jones Industrial average, the NASDAQ and the Fortune 500 have been gradually decreasing. ● ● Consider the scenario and information given below. This essay will consist of three graphs and three paragraphs regardless of if policy is used or not. ● ● Total spending has been increasing. Unemployment rates have been decreasing but have recently stopped changing, and are at 4.25%, participation rate is at 70%. The number of new construction starts, orders for new finished capital resources and number of orders for new durable goods have dropped over past 3 months. There has been a slow rise in the number of new unemployment insurance claims filed during the past 16 weeks; and the average work week dropped from 29 to 25 hours steadily. Consumer Confidence & Business Outlook have dropped below 40 (37, 35, and 28) over the past 3 months. a. Demonstrate what has happened during the past 18 months on an AD/AS graph. Construct an M1/MD graph based on current interest rate information. Write a paragraph explaining what is happening and determine if there is a problem in the economy. If there is a problem, clearly state what it is. b. Consider the Leading Indicator Information and determine what it predicts about changes in total spending. In a paragraph, analyze each of them, what the majority predicts and determine if Macroeconomic Policy should be used, stating why or why not. c. If Macroeconomic Policy is appropriate, write a paragraph recommending Macroeconomic Policy to help remedy this situation. Be sure to indicate which kind and mode of Macroeconomic Policy is used, which tools are used and give specifics on how they will be used, including impact on relevant macroeconomic variables. Additionally, show and summarize the effects of it on another AD/AS graph. Also show the effect on the earlier constructed M1/MD graph where applicable. If Macroeconomic Policy is not appropriate, instead write a paragraph to explain why it's not appropriate. Additionally, show and summarize how that is the case on another AD/AS graph.

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aThe ADAS graph below demonstrates the events of the past 18 months During this time the aggregate d... View the full answer