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Chapter 23: Q.15 (page 618)

What factors led to decreases in both the unemployment and inflation rates in the 1990s?

Short Answer

Expert verified

There are two accounts because of which rate of affectedness and joblessness was dwindling. Globalization and technology change and reduce within the government spending and increase within the rate of the government.

Step by step solution

01

Concept Introduction  

Rate may be enough measurement of the expansion within the price of the products and services which is occasionally represented within the odds form. The rate of affectedness is computed on the perennial and annually elemental by the pocket foundation.

02

Explanation of Solution   

There are two cases because of which the rate of affectedness and joblessness was dwindling. Globalization and technology fluxes and reduce within the government spending and gain within the rate of the govt. because of changes within the technology, the effectiveness of the assembly accelerated because of which rate of affectedness and joblessness abated.

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Most popular questions from this chapter

The Problems update with real-time data in My Lab Economics and are available for practice or instructor assignment.

1. Go to the St. Louis Federal Reserve FRED database, and find data on real government spending (GCEC1), real GDP (GDPC1), taxes (WO06RC1 Q 027 SBEA), and the personal consumption expenditure price index (PCECTPI), a measure of the price level. Download all of the data into a spreadsheet, and convert the tax data series into real taxes. To do this, for each quarter, divide taxes by the price index and then multiply by 100 .

a. Calculate the level change in real GDP over the four most recent quarters of data available and the four quarters prior to that.

b. Calculate the level change in real government spending and real taxes over the four most recent quarters of data available and the four quarters prior to that.

c. Are your results consistent with what you would expect? How do your answers to part (b) help explain, if at all, your answer to part (a)? Explain using the IS and A D curves.

Suppose the inflation rate remains relatively constant while output decreases and the unemployment rate increases. Using an aggregate demand and supply graph, show how this scenario is possible.

If large budget deficits cause the public to think there will be higher inflation in the future, what is likely to happen to the short-run aggregate supply curve when budget deficits rise?

What factors shift the short-run aggregate supply curve? Do any of these factors shift the long-run aggregate supply curve? Why?

Suppose the public believes that a newly announced anti-inflation program will work and so lowers its expectations of future inflation. What will happen to aggregate output and the inflation rate in the short run?
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