- The Current State of the Economy and Unemployment
Imagine a scenario where there is a decline in aggregate
demand. Identify which part of the business cycle is part of a decline in
aggregate demand. Gross Domestic Product (GDP) measures the amount of new
production. A change in the amount of new production affects employment.
Describe what would happen to GDP, the unemployment rate and the inflation rate
if there is a decline in aggregate demand.
Reference: Chapter 6, section 6.3: Aggregate Equilibrium and
Changes in Equilibrium.
- Who Benefits and Who Loses from Inflation?
Inflation is an important policy issue because it causes a
redistribution of income and wealth, and discourages saving and
investment. Discuss how inflation affects borrowers and lenders, asset
prices, and households on fixed incomes.
Reference: Chapter 4, section 4.3: Gainers and Losers from
Inflation.
Amacher, R., Pate, J., (2012). Principles of Macroeconomics. San Diego,
California: Bridgepoint Education, Inc.
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