NUMBER ONE.
Consider the USA macroeconomic data provided below. Describe the state of the macroeconomy in terms of the business cycle for the period from 1996 to 1999.
|
real GDP |
real GDP |
inflation |
unemployment |
|
(1996 dollars) |
growth rate (%) |
rate (%) |
rate (%) |
|
|
|
(CPI-U) |
(civilian labor force) |
| 1995 |
$7.544 trillion |
2.67% |
2.80% |
5.60% |
| 1996 |
$7.813 trillion |
? |
3.00% |
5.40% |
| 1997 |
$8.160 trillion |
? |
2.30% |
4.90% |
| 1998 |
$8.509 trillion |
? |
1.60% |
4.50% |
| 1999 |
$8.859 trillion |
? |
2.20% |
4.20% |
NUMBER TWO
Imagine a hypothesized macroeconomy that begins in its long-run equilibrium position.
Use the Aggregate Demand - Aggregate Supply model to describe in the abstract, the business cycle movements this economy would experience if:
(A) there were a large exogenous decrease in Aggregate Demand.
(B) there were a large exogenous decrease in Long-Run Aggregate Supply.
(C) both (A) and (B) were to occur simultaneously.
Does this model describe the US recession of 2008-2009? Which of the threes variants (A),
(B), or (C) is the most likely correct scenario? Explain.
NUMBER THREE
Is Nigeria a rich nation or a poor nation? Based upon it's macroeconomic statistics, would you say Nigeria is performing better, worse, or same as a comparable nation? What would be an appropriate nation for comparison? Explain. What are the key elements in the natural resource endowment and in the social-political-economic institutions which explain the macroeconomic position of Nigeria and of the performance of Nigera's macroeconomy?
ECONOMIC STATISTICS FOR NIGERIA
total GDP (in Purchasing Power Parity) = $1,058 b. - - - ranked 21st largest in the world (out of 230 nations ranked)
(up from $989 b. in 2013)
GDP per capita = $6,100 - - - ranked 160th highest in world (159 out of total of 230 nations) (up from $5,800 in 2013)
real GDP growth rate = +7.0% - - - ranked 19th highest in world (out of 222 nations) (up from +5.4% in 2013)
Unemployment Rate = 23.9% (2011 estimate) - - - ranked 171st lowest in world (out of 204 nations)
Inflation Rate = 8.3% - - - no ranking available (down from 8.5% in 2013)
Distribution of family income - Gini index = 43.7 (in 2003) - - - ranked 47th most unequal in the world (out of 141 nations)
(down from 50.6 in 1997)
Government Budget surplus (+) or deficit (-) =
-2.0% of GDP - - - ranked 149th lowest surplus out of 215 nations)
{note: revenues of $22.77 b. minus expenditures of $34.62 b. = deficit of $11.85 b.}
Public Debt = 11.7% of GDP - - - ranked 149th highest in world (out of 164 nations)
(up from 10.5% in 2013)
Exports = $93.01 b. - - - ranked 43rd largest in world (out of 223 nations)
(down from $96.74 b. in 2013)
Imports = $52.59 b. - - - ranked 54th largest in world (out of 223 nations)
(up from $51.38 b. in 2013)
Population below poverty line = 70.0% (in 2010) poverty line standard is set by Indian government
worldwide median values in 2014:
total GDP (in Purchasing Power Parity) = $34.48 b. (Laos - - - ranked 116th largest out of 230 nations)
GDP per capita = $12,700 (South Africa - - - ranked 115th highest out of 230 nations)
real GDP growth rate = +3.0% (Jordan - - - ranked 112th highest out of 222 nations)
Unemployment Rate = 8.8% (Ukraine - - - ranked 103rd lowest out of 204 nations)
Inflation Rate = no ranking available
Distribution of family income - Gini index = 38.0 (Serbia in 2013 - - - ranked 71st most unequal out of 141 nations)
Government Budget surplus (+) or deficit (-) = -2.8% of GDP (United States of America - - - ranked 108th lowest surplus out of 215 nations)
{note: revenues of $3,029 b. minus expenditures of $3,520 b. = deficit of $491 b.}
Public Debt = 44.3% of GDP (Honduras - - - ranked 83rd highest out of 164 nations)
Exports = $5.67 b. (Cuba - - - ranked 112th largest out of 223 nations)
Imports = $8.081 b. (Zambia - - - ranked 111th largest out of 223 nations)
NUMBER FOUR
Consider the recent report "The Employment Situation - April 2015" - released Friday 5-8-15) by the U.S. Department of Labor:
According to the Bureau of Labor Statistics, the national unemployment rate "was essentially unchanged at 5.4percent" from March to April 2015. Where does this information place the performance of the U.S. macroeconomy? From these basic unemployment rate figures can we be confident that the economy has fully recovered from the recession of 2008-2009 and is moving towards a prosperous expansion? What figures in the report (or that you can find elsewhere) might provide the basis for an argument to the contrary? Explain.
NUMBER Five.
Consider the recent macroeconomic history of the USA. It would appear that, in spite of the aggressive expansionary pace of monetary policy, the economy has evidenced only a sluggish recovery. Does the Quantity Theory of Money and the Equation of Exchange provide any insight into the current ongoing US macroeconomic doldrums (if that is what they are)? Or, is this theory largely broken and ineffective at explaining inflation and real economic growth? Explain.
NUMBER Six
Discuss the use of aggressive expansionary fiscal policy to stimulate the macroeconomy. When does this type of policy move work the most effectively? Under what conditions - both in terms of macroeconomic fundamentals and in terms of political institutions - is an expansionary fiscal policy likely to yield counterproductive and even destructive results? Describe these negative outcomes and why they create long-run problems for society. Should Congress admit that it is addicted to irresponsible over-spending and turn its legal political authority for making big new discretionary fiscal policy moves over to an independent Federal Budget Authority?