The deadline for this homework is Sunday, December 3rdh, at 11:55pm. Chapter 11

Question

The deadline for this homework is Sunday, December 3rdh, at 11:55pm. Chapter 11 quiz This is the quiz for chapter 11 Discussion Forum#5 Visit the National Bureau of Economic Research (www.nber.org/cycles.html) and view the duration in months for contractions (recessions) experienced in the United States. 1. What has happened to the duration of time in which contractions have been experienced in the United States in the post World War II (post 1945) era? 2. What do you think could account for this change? 3. What should government do with fiscal policy to combat a recession (a contraction)?

Explanation / Answer

Duration of recession experienced by the USA during post World War 2 is 8 months.

Part (1)=

In this recession, government decline spending at the end of World War II led to an enormous drop in GDP, making this techniqually a recession. This was the result of demobilization and the shift from a wartime to peacetime economy. The post war years were unusual in no. of ways.

Part (2)=

• Real GDP began to growth

• Decrease in capital expenditure

• Domestic demand is declined

Part (3)=

To counter a recession it will use expensionary policy to increase the money supply and reduce the interest rates. Fiscal policy uses the government power to spend and tax. When the country is in a recession, the government will increase the spending, reduce taxes, or do both to expend the economy.

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