At the end of the fourth quarter of 2022 (December 2022) was the United States economy operating in the Keynesian, intermediate, or neoclassical portion of the economy’s Short Run Aggregate Supply Curve? Explain. Compare the overall state of the economy at the end of 2022 (fourth quarter) to the fourth quarter of 2019 which you described in your Chapter 11 Discussion. * For the Chapter 11 discussion for the fourth quarter of 2019, I said that the economy was acting in neoclassical. This was my discussion post from last time: Potential GDP is defined as the amount of real GDP an economy can produce by fully employing its existing levels of labor, physical capital, and technology in the context of its existing market and legal institutions. The non-cyclical natural rate of unemployment is defined as the lowest level that a healthy economy can sustain without creating inflation. Before the spread of the pandemic, the state of the U.S. economy at the end of the 2019 before the spread of the Coronavirus was operating at its potential GDP level and even a slightly bit above. It had a GDP growth rate of 2.3% from 2018. The unemployment rate was below the natural rate of unemployment. The inflation rate was close to 2% and statistics from December 2019 of the Bureau of Economic Analysis shows that it reached a low of 3.5% for unemployment rates. The CBO stats shows the non-cyclical natural rate of unemployment in the US economy was to be around 4.2% in 2019. The overall economy was very steady and there shows to be much growth since the economy was at potential GDP. The pandemic period is characterized by the Keynesian range where the economy is operating below the full potential level in which government spending could not do much to overcome the effects of a supply shock. Right before the pandemic period however, the U.S. economy was generally considered operating in the neoclassical portion of the economy’s Short Run Aggregate Supply Curve. This is where the equilibrium is near potential GDP and cyclical unemployment is low. The neoclassical zone of the SRAS curve is the near-vertical portion on the right-hand side. The shifts of aggregate demand to the right or left have little effect on output or employment. The only way to increase the size of the real GDP in the neoclassical zone is for AS to shift to the right. Consumer confidence in December 2019 was at a high of 99.3 which means that consumers were optimistic about current and future economic conditions and growth. Industrial production was steady, at 101.7 in December 2019. This means that the US economy in 2019 was operating at an overall strong and steady level of industrial output.
At the end of the fourth quarter of 2022 (December 2022) was the United States economy operating in the Keynesian, intermediate, or neoclassical portion of the economy’s Short Run
* For the Chapter 11 discussion for the fourth quarter of 2019, I said that the economy was acting in neoclassical.
This was my discussion post from last time:
Potential
The non-cyclical natural rate of
Before the spread of the pandemic, the state of the U.S. economy at the end of the 2019 before the spread of the Coronavirus was operating at its potential GDP level and even a slightly bit above. It had a GDP growth rate of 2.3% from 2018. The unemployment rate was below the natural rate of unemployment. The inflation rate was close to 2% and statistics from December 2019 of the Bureau of Economic Analysis shows that it reached a low of 3.5% for unemployment rates. The CBO stats shows the non-cyclical natural rate of unemployment in the US economy was to be around 4.2% in 2019. The overall economy was very steady and there shows to be much growth since the economy was at potential GDP.
The pandemic period is characterized by the Keynesian range where the economy is operating below the full potential level in which government spending could not do much to overcome the effects of a supply shock.
Right before the pandemic period however, the U.S. economy was generally considered operating in the neoclassical portion of the economy’s Short Run Aggregate Supply Curve. This is where the equilibrium is near potential GDP and cyclical unemployment is low. The neoclassical zone of the SRAS curve is the near-vertical portion on the right-hand side. The shifts of aggregate demand to the right or left have little effect on output or employment. The only way to increase the size of the real GDP in the neoclassical zone is for AS to shift to the right.
Consumer confidence in December 2019 was at a high of 99.3 which means that consumers were optimistic about current and future economic conditions and growth.
Industrial production was steady, at 101.7 in December 2019. This means that the US economy in 2019 was operating at an overall strong and steady level of industrial output.
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