Suppose due to an impeachment you are the newly elected President of the United States (US). You, with your prudent set of economic advisors, are reviewing the following hypothetical economic data in 2019 to 2020:

Real GDP per capita growth rate= -0.2%

Unemployment rate= 6.8%

Inflation rate= -1.0%

a. Determine what phase of the business cycle the US economy is likely to be experiencing in 2019 to 2020. Provide specific reasons for your answer.

b. Use a well-labelled AD/AS diagram to show the position of this economy in 2020. Explain how the US government, using appropriate fiscal policy, might boost the economy back to the long run, full-employment GDP equilibrium. Draw the AD curve shift(s) associated with this policy on your diagram.

Answer rating: 100% (QA)

a The United States is going through some political upheaval and the real GDP growth rate mentioned ... View the full answer