Some time ago (the year is unknown) three friends got together and decided to ta

Question

Some time ago (the year is unknown) three friends got together and decided to talk about the economy. First friend said "I think our economy is doing pretty good, unemployment rate is 2% and inflation rate is 0%". Second friend said that "I also heard that economy is doing pretty good, but I think our GDP growth rate is 5% and unemployment rate is 8%" Third friend says, "You are both wrong, our unemployment rate is 8% and our inflation rate is almost 0%!". According to the economic theory, which of three friends' assessment of the economy is most likely correct? Please explain. Make sure to explain why you think other two friends' statements are not consistent with economic theory. Based on your answer in part a) do you think this economy is expanding or contracting? Explain. Ideally, economists would like to see unemployment rate equal to inflation rate equal to and GDP growth equal to d) List two fiscal policies which could help to improve economy described by a third friend. Describe the current state of U.S. economy? Discuss unemployment rate, inflation rate, and GDP growth rate. Do you think our economy is expanding or contracting? Explain.

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Some time ago (the year is unknown) three friends got together and decided to ta

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