Reference no: EM132842853
What are your thoughts on the below scenarios? Provide explanation as well. True
1.The U.S. economy grew fast in the 19th century as it industrialized and adopted technology from Europe. Over time, the growth rate of U.S. real GDP has declined to roughly 3 percent per year.
2.Financial recessions are longer and deeper than non-financial recessions.
3.During the Great Depression, countries that maintained the Gold Standard performed the best because they kept inflation under control and preserved the credibility of their financial system.
4.Consumption of non-durables and services does not generally fall during recessions.
5.Purchases of consumer durables fall considerably during recessions.
6.Residential investment is a leading indicator: it starts to fall before a recessions begins. So, it gives some advanced warning that the economy is entering a period of economic decline.
7.Non-residential investment is a leading indicator. It starts falling before the recession starts and recovers quickly as companies invest in capacity to meet the rising demand.
8. Recession periods are characterized by large falls in investment.
9.Consumers spend less time shopping and looking for sales during recessions because they are focused on keeping their jobs (if they are employed) or searching for jobs (if they are unemployed).
10.The skill premium (the ratio of the wage of high-skill workers to the wage of low-skill workers) has been rising since 1979.
11.Artificial intelligence thrives when there is a virtuous cycle: more data allows for the creation of better products that attract more users who generate more data.
12. During the last three U.S. recessions, we have seen routine workers permanently lose their jobs to outsourcing or automation.
13.The fraction of total income received by the bottom 50 percent U.S. income earners has remained stable.
14.Most real estate booms turn into busts.
15.Booms and busts in house prices tend to occur predominantly in economies with sophisticated financial systems that produce complex mortgage securities.
16.When commodity prices are high, commodity producers reduce their investments because they fear that commodity prices will fall.
17.The price to rent ratio is a good indicator of whether a boom in house prices will turn into a bust.
18.The boom in house prices in Japan that ended in 1990 was smaller than the U.S. boom that ended in 2006. And yet, the Japanese economy was more affected by the housing bust than the U.S. economy.
19. The aggressive reaction of the Japanese central bank to the housing bust that occurred in the 1990s eventually resulted in high inflation rates.
20.Currently the correlation between commodity prices and the stock market is very low, so adding commodities to an investment portfolio provides large diversification benefits.
21.Over the long run, commodity prices tend to rise as commodities become more and more scarce.
22.Women labor force participation in the U.S in recent years greatly exceeds women labor force participation in Japan.
23.The planning system allowed the Soviet Union to grow faster than the U.S. in the first half of the 20th century.
24.After 1991, the Russian economy has been growing fast reflecting its transition to a market-based economy.
25.Japan and the Asian Tigers grew fast because banks offered high interest rates to depositors, creating incentives for households to save a large fraction of their income.
26.China's success is in part due to the high profit margins earned by its manufacturing firms.
27.After independence, India followed a policy of import substitution to help domestic firms grow and to preserve political and economic independence.
28. The recovery of the U.S. labor market in the aftermath of the 2008 financial crisis was slow because firms have outsourced or automated routine jobs during the recession.
29.Commodity prices are less volatile than stock prices, which is why commodities are gaining popularity with retail investors.
30.The Soviet Union grew faster than the U.S. during the Soviet era because the planning system avoided recessions and created large factories that brought down production costs as a result of their scale.
31.There are so many people in China waiting to move from the country to the city that urban wages are likely to remain constant for a long period of time.
32.India grew fast under Nehru as a result of import substitution policies that reserved domestic markets for domestic firms, allowing India to move quickly up the value chain and produce sophisticated durable goods.
33. Two historical variables that predict income in ex-colonies in 1995 are: distance to the equator and settler mortality in the 17th, 18th and, 19th centuries.