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Macroeconomic Condition of the USA in 1996-1999 - Essay Example

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There was a period of low unemployment, low inflation, and the GDP kept growing substantially faster than in 1995 (Iceland, pp. 12-57).
In 1997, the economy…
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Macroeconomic Condition of the USA in 1996-1999
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Download file to see previous pages It was a 2.1 increase from that of 1995, at the same time interest rates were low. The unemployment levels were as shown below in the period.
In the year 1998 the economy experienced some of the best macroeconomic results that policymakers there were a tremendous outburst of volatility in the asset market. Although the GDP was above average in the year 1998, there was a consistent decline in growth. The economic condition worsened in 1990 making the economy more adverse (Iceland, pp. 12-57).
The curve indicates the correlation between the quantity of real GDP and price level required by household. In the long run, the average demand curve and short run average curves intersect at a point on the long term average supply curve.
In the presence of contraction policies the aggregate demand curve shifts to the left leading to a reduction in aggregate demand. In this case, price levels will fall but the output is not affected. On the other hand, if it were in the short run both output and price would drop.
The aggregate supply shows how much is provided by a firm and at what price. In the long run, the curve is affected by events that lead to a change in the potential output of the economy. The term aggregate supply refers to the total value of services and goods that a country’s firms produce over a period. In case of a decrease in the long run supply curve, there will be a drop in the price level and an increase in the GDP.
The health of the economy is by three economic indicators that include the gross domestic product, consumer price index and unemployment levels. For the economy to be termed as healthy there is a certain baseline that should be met. For a well-performing economy, the GDP should be growing at a rate of 2-3 % per annum reflecting a real growth pattern. An increase in any rate above 3% is possible but might be due to stepping on employee and environmental rights. ...Download file to see next pagesRead More
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