Author Question: What are the four stages of the normal business cycle described in the textbook? How does this cycle ... (Read 136 times)

penguins

  • Hero Member
  • *****
  • Posts: 903
What are the four stages of the normal business cycle described in the textbook? How does this cycle relate to the current state of the U.S. economy?
 
  Answer:

Question 2

Imagine the economy is slipping into a recession. What would a Keynesian advocate and why? Compare this approach to using interest rates to affect the money supply.
 
  Answer:



cswans24

  • Sr. Member
  • ****
  • Posts: 317
Answer to Question 1

An ideal response will:
1. Identify the four stages of the normal business cycle as expansion, contraction, recession, and recovery.
2. Explain that the recent economic turmoil has been called the Great Recession because of its length and very high levels of unemployment, and that it began in 2008 with the collapse of the U.S. housing market.
3. Note that although economic activity began to increase in 2011, the U.S. economy was still struggling in 2012 because the economic cycle was stuck in the recession phase.

Answer to Question 2

An ideal response will:
1. Identify that Keynesian economic policy is a type of fiscal policy that is more concerned with high levels of unemployment than inflation.
2. Specify how increasing government spending and lowering tax rates encourages employment and investment. Note that when taxes are lowered, individuals and businesses will have more money to invest, which in turn increases the potential for new job creation and employment.
3. Note how this is different from using interest rates to affect the money supply because lowering interest rates reduces the cost of money and makes it more likely that banks will offer loans to businesses seeking to expand and thus increases the prospects for increased hiring and employment.



Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
 

Did you know?

Stroke kills people from all ethnic backgrounds, but the people at highest risk for fatal strokes are: black men, black women, Asian men, white men, and white women.

Did you know?

The word drug comes from the Dutch word droog (meaning "dry"). For centuries, most drugs came from dried plants, hence the name.

Did you know?

Despite claims by manufacturers, the supplement known as Ginkgo biloba was shown in a study of more than 3,000 participants to be ineffective in reducing development of dementia and Alzheimer’s disease in older people.

Did you know?

Egg cells are about the size of a grain of sand. They are formed inside of a female's ovaries before she is even born.

Did you know?

Malaria mortality rates are falling. Increased malaria prevention and control measures have greatly improved these rates. Since 2000, malaria mortality rates have fallen globally by 60% among all age groups, and by 65% among children under age 5.

For a complete list of videos, visit our video library