Fiscal | Management homework help

Sep 13, 2023

  Provide the last 2 digits of your phone number.  The first number is your fictional economy’s unemployment rate.  The second number is your fictional economy’s inflation rate.  For example, the last two digits of my phone number are 6, 2.  So, I would start my post with “My unemployment rate is 6% and my inflation rate is 2%.”  NOTE: if one or both of your numbers is “0,” use “10” in its place.

Assume, like in the US, the optimal unemployment rate is the natural rate of unemployment (4-5%) and the optimal inflation rate is 2% (the Fed’s target).  How does you economy compare to these optimal results?  Is your economy in a recession, overheating, experiencing stagflation, or “just right”?  Explain in a few sentences.

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Provide a specific fiscal policy you would advise the President and Congress to initiate to move your economy closer to potential GDP.  How would that policy affect aggregate demand?

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