Over the last two years, the unemployment rate in Westerlight has risen from 4% to 8%, while

Fantastic news! We've Found the answer you've been seeking!

Question:

Over the last two years, the unemployment rate in Westerlight has risen from 4% to 8%, while GDP growth has been 1.5%. Milo, a citizen of Westerlight, currently doesn’t have a job and although he is actively searching, has been unable to find one.

The Business Cycle and the Problem

a. What stage of the business cycle is the economy currently in?

Blank 1

b. What is the current problem in the economy?

Blank 2

c. Does it need money in or out of the economy?

Blank 3

a) In the last two years, the unemployment rate has increased, and as people are not getting jobs so their demand for goods and services will fall further in the market and thus causing the GDP to fall.

Currently, the economy is in a downward falling phase (known as the recession phase) of the business cycle.