Answer 3 of 4: 1. Explain how economic condition and economic policies in the U.

Question

Answer 3 of 4:

1. Explain how economic condition and economic policies in the U.S. in the last 1960s led to the long period of so-called "Cstagflation" ending only in the 1980s. Discuss the diagnosis of this problem given by Keynesian economists at the time, and compare this to the "New Classical" diagnosis and the policy prescriptions that resulted from their critique.


2. Discuss the determinants of a country`s rate of growth in income as found in the original "CHarrod-Domar" (HD) model. How was the instability problem in the HD model resolved by Solow in what is now the "Cstandard" (neoclassical) model of growth? Use this latter model to explain how "Cemerging" countries typically experience rapid growth in the early stages of their development, why this rate slows down, and the sources of growth that may be exploited by older "Cdeveloped" countries.

3. Discuss the recent experience of the US economy, from "Cboom" to "Cbust", focusing particularly on the role of monetary policy in generating these cycles over the last three decades or so. What has been the state of fiscal policy over this period? Discuss the possibility that neither type of policy has much "Croom" left as we go further into the second decade of the 21st century.

4. The US has, despite periodic slowdowns, been an "Cengine"of growth for the global economy. In the late 1980s Japan looked like it could overtake US in that role but they fell back into a two-decade-long economic funk. In the last 1990s it looked like Europe (the EU) could become a global economic powerhouse, but they too have fallen back, Now it is China`s and perhaps India`s turn in the spotlight. Discuss the problems that affected Japan and the EU, and what they are trying to do about it. What problems may lie ahead for the latter countries?

please help! if possible, please included the graphs for each question as well. Thanks! :)

Explanation / Answer

Stagflation, a portmanteau of stagnation and inflation, is a term used in economics to describe a situation where an inflation rate is high, the economic growth rate slows down, and unemployment remains steadily high. It raises a dilemma for economic policy since actions designed to lower inflation may exacerbate unemployment, and vice versa. The term is generally attributed to British politician who became chancellor of the exchequer in 1970, Iain Macleod, who coined the phrase in his speech to Parliament in 1965.[1][2][3][4] [notes 1] In the version of Keynesian macroeconomic theory which was dominant between the end of WWII and the late-1970s, inflation and recession were regarded as mutually exclusive, the relationship between the two being described by the Phillips curve. Stagflation is very costly and difficult to eradicate once it starts, in human terms as well as in budget deficits. In the political arena, one measure of stagflation, termed the Misery Index (derived by the simple addition of the inflation rate to the unemployment rate), was used to swing presidential elections in the United States in 1976 and 1980.

Related Questions

Navigate

• Browse (All)
• Browse A
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.