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Indicate your understanding of the current state of the economy by reporting whether you believe we are in a recession, a trough, in recovery, or at a peak of the business cycle given a comparison of current and historical levels of real GDP, inflation, and unemployment.

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Vaishali Yadav
Vaishali YadavLv10
28 Sep 2019

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Related questions

A business cycle is the period of time in which:

1. the price level varies with real GDP.
2. a business is established and ceases operations.
3. there are four phases: peak, recession, trough, and recovery.
4. expansion and contraction of economic activity are equal.
5. none of these are true.

1) As the economy falls from the peak to the trough of the business cycle:

a. Inflationary pressures should increase as unemployment rises

b. Cyclical unemployment should increase and real GDP should decline

c. Frictional unemployment should fall because people find jobs more quickly

d. Structural unemployment will be eliminated

2) Nominal income must have fallen if real income:

a. Falls and there is inflation

b. Falls and there is deflation

c. Rises and there is inflation

d. Rises and there is deflation

In this discussion question, you will determine the stage of the business cycle that best describes where the US economy stands, using GDP growth, unemployment and inflation as metrics. Go back to the websites for the Bureau of Economic Analysis (www.bea.gov) and the Bureau of Labor Statistics (www.bls.gov) to find current data on GDP growth (last full year), unemployment, and inflation as measured by CPI and GDP deflator. Are they higher or lower than in the year 1998? What circumstances or trends do you think contribute to the difference? What stage of the business cycle are we in now? What stage of the business cycle were we in in the 1998?

In 1998 the annual unemployment rate was 4.5%, the real GDP was 4.4%, and the inflation rate for the year was 1.6%.

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