Analysis of business cycle and monetary policy.
Use the data below to answer the subsequent problems.
|
|
Real
|
CPI
|
|
|
Budget
|
Prime
|
|
Year
|
GDP
|
Inflation
|
Unempl
|
Deficit
|
Interest
|
M1
|
|
1
|
$5,460
|
7)60%
|
5)60%
|
-$140B
|
9)60%
|
$2100M
|
|
2
|
5480
|
7)4
|
5)5
|
-132
|
10)5
|
2122
|
|
3
|
5401
|
6)8
|
5)8
|
-151
|
10)3
|
2131
|
|
4
|
5372
|
5)1
|
6)4
|
-183
|
10)1
|
2170
|
|
5
|
5432
|
3)8
|
6)9
|
-173
|
8)3
|
2269
|
|
6
|
5493
|
3)2
|
6)7
|
-169
|
7)8
|
2341
|
a) How would you characterize the economy during the period? At illustrate what points did the economy experience different parts of the business cycle (i.e. Peak, trough, expansion, and contraction)? describe and support using the specific information. If the economy experienced a recession, indicate when.
b) Given the information above, which policy tool, monetary or fiscal seemed to have a greater impact on the economy? Support your answer. How would you characterize the monetary policy during the period? The fiscal policy? Support your answer.