What stage of business cycle is this economy most likely in

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Reference no: EM133494568

Problem

Consider the macroeconomic data for a particular economy reported in the following table.

Variable	2022	2021
Consumption spending	$21 billion	$19 billion
Investment spending	$28 billion	$27 billion
Government spending	$30 billion	$29 billion
Net exports(=exports-imports)	$7 billion	$8 billion
Employed persons	28.5 million	28.3 million
Unemployed persons	1.3 million	1.4 million
Working age population	39.8 million	39.7 million
Total population	42 million (or 0.042 billion)	42 million (or 0.042 billion)
CPI	118.6	113.4

Task

Question I. Calculate GDP for this economy for 2021 and 2022, and the rate of economic growth over the two years.

Question II. Calculate the unemployment rate, the labour force participation rate and the inflation rate for this economy for 2022.

Question III. Given your calculations in Parts (I) and (II), what stage of the business cycle is this economy most likely in, and what kind of monetary policy might be considered in response to it? Briefly explain your answer.

Reference no: EM133494568

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