6. (12 pts.) The last two Presidents from the Republican Party to serve two term

Question

6. (12 pts.) The last two Presidents from the Republican Party to serve two terms in office were Ronald Reagan and George W. Bush. Ronald Reagan was President from January 1981 January 1989. George W. Bush was President from January 2001 -January 2009. Using the data in the table below, compare the outcomes under each President based on the three primary measures of economic performance (i.e. the growth rate of real GDP, the inflation rate, and the unemployment rate). Note: growth rate calculations are needed to properly compare the output (i.e. real GDP) and price (i.e. CPI) measures. Show your work in the space below the table Real GDP $5,883.5 billion 87.0 $7,734.0 bon 121.1 11,334.5 bion 175.1 $13,141.9 billion 211.1 CPI Urban 1982-84 100 Rate National) Unemployment Month/Year January 1981 January 1989 January 2001 January 2009 7.5% 5.4% 4.2% 7.6%

Explanation / Answer

Growth rate table as follows.

Therefore, President Reagan achieved higher economic growth rate as measured by % change in real GDP (31.45% > 15.95%), which led to relatively higher inflation rate (39.2% > 20.56%). As a result, he managed to decrease unemployment rate, while President Bush had a term that experienced lower economic growth rate, lower inflation rate and high increase in unemployment rate.

Real GDP ($B) Real GDP Growth Rate (%) CPI Inflation Rate (%) Unemployment Rate (%) Unemployment Growth Rate (%) Jan 1981 5,883.5 87 7.5 Jan 1989 7,734.0 31.45% 121.1 39.20% 5.4 -28.00% Jan 2001 11,334.5 175.1 4.2 Jan 2009 13,141.9 15.95% 211.1 20.56% 7.6 80.95%

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