What are the phases of business cycle and Why is the phase of business cycle critical in evaluating the health of the economy

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1. What are the phases of business cycle and Why is the phase of business cycle critical in evaluating the health of the economy?

2 .What factors determine the stage of the economy in business cycle? Given the trend over the past 5 years, what will you conclude is the current stage of the US economy in business cycle? https://econsnapshot.com/

3. GDP can be expressed as GDP = C + INV + G + NX. where GDP is the sum of Consumption + Investment + Government spending + Net exports (exports – imports). This equation can be written in further detail as: GDP = C(Y – T) + INV(r) + G + NX where Y = Income and T represents taxes. (Y – T) is the Disposable income.

  • Given this relationship, what is the impact of income on Consumption?
  • What other factors aside from income can affect Consumption?

Please address both questions in response

4. GDP can be expressed as GDP = C + INV + G + NX. where GDP is the sum of Consumption + Investment + Government spending + Net exports (exports – imports). This equation can be written in further detail as: GDP = C(Y – T) + INV(r) + G + NX where Y = Income and T represents Taxes. (Y – T) is the Disposable income.

Now let us focus on Consumption C(Y-T) and Investment (INV) segments of the relationship. This is called the Aggregate Expenditures Model. This model is used as a framework for determining equilibrium output, or GDP, in the economy.

Given this relationship what is the impact of change in Investment level on GDP? What is an investment multiplier?

5. What is aggregate demand (AD) and how is it different from microeconomic market demand?

6. What is fiscal policy? Give one example of a fiscal policy used during the recent recession? How does fiscal policy affect GDP level? – Think in terms of the components of GDP

Please address both questions in your response

7.Consider the diagram below showing relationship between macroeconomic equilibrium.

What is the relationship between short-run aggregate supply and long-run aggregate supply? How does this relationship affect price level in the economy due to changes in aggregate demand in the short run and in the long run?

Image result for macroeconomic equilibrium

8. What factors are critical drivers of self-correction in an economy?

Do you think these factors would have been sufficient to eliminate the recent US recession without government fiscal and Fed’s monetary policy intervention?

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