Question

Assignment instructions:

based upon macroeconomic evidence and analysis, provide your own analysis regarding where you believe the u.s. economy is operating with respect to the business cycle, i.e., in what phase of the business cycle (trough, expansion, peak, contraction) do you believe the us economy is in? provide evidence for your assertion including, but not limited to, information regarding the leading indicator the coincidence indicator, housing starts, real gdp, consumer confidence, stock market values, unemployment and/or employment. explicitly account for any assumptions you or others are making regarding the relationship of the explanatory variables included in your analysis and the phases of the business cycle. based upon your conclusion, would you recommend a policy action to move the economy toward full employment? why or why not? and who should take what precise action?

papers should be 3-4 double spaced pages in length. papers must include a works cited page and be in mla style. your analysis should include 3 or more references in addition to your textbook. graphs do not count towards the page limit. this paper will count for 100 points of your course grade.

structure of the paper should fit the outline below and include the bolded headings:

i. explain an issue
a. identify and explain the stages of the business cycle.

Answer 1

The business cycle consists of phases such as trough, expansion, peak, and contraction. The current phase of the business cycle in the U.S. economy can be determined by analyzing indicators such as leading indicators, coincidence indicators, housing starts, real GDP, consumer confidence, stock market values, and unemployment or employment rates. Policy recommendations to move the economy toward full employment depend on the specific phase of the business cycle and may vary.

Step-by-step explanation:

The business cycle refers to the period of macroeconomic expansion and contraction in an economy. It consists of phases such as trough, expansion, peak, and contraction. Based on macroeconomic evidence and analysis, it is difficult to accurately determine the current phase of the business cycle in the U.S. economy, as it can vary and is subject to change over time. However, by analyzing indicators such as leading indicators, coincidence indicators, housing starts, real GDP, consumer confidence, stock market values, and unemployment or employment rates, economists can make educated assessments regarding the phase of the business cycle.

In order to make conclusions about the phase of the business cycle, economists often consider a combination of these indicators and their trends. For example, during an expansionary phase, leading indicators tend to show positive growth, housing starts increase, real GDP rises, consumer confidence is high, stock market values are generally positive, and unemployment rates are low. Conversely, during a contractionary phase, leading indicators can show negative growth, housing starts decline, real GDP decreases, consumer confidence may be low, stock market values tend to decline, and unemployment rates increase.

However, it is important to note that these indicators can sometimes show mixed or conflicting signals, making it challenging to determine the exact phase of the business cycle. Additionally, different economists may have different interpretations and assumptions about the relationship between these variables and the business cycle.

In terms of policy recommendations to move the economy toward full employment, it depends on the specific phase of the business cycle and the circumstances at hand. For example, during an expansionary phase, where the economy is close to full employment, policy actions that focus on maintaining stability and controlling inflation may be more appropriate. On the other hand, during a contractionary phase with high unemployment, expansionary policies such as fiscal stimulus or monetary easing can be recommended to stimulate economic activity and promote job growth.