Macroeconomic Assignment

Running head: MACROECONOMIC ASSIGNMENT
Macroeconomic Assignment
Name of the Student
Name of the University
Author Note
Date of Report: 20.07.2018

1MACROECONOMIC ASSIGNMENT
Table of Contents
Chapter 1: Macroeconomics, GDP and Economic Growth.......................................................2
Chapter 2: Inflation and rise in price levels...............................................................................3
Chapter 3: Unemployment and Wages......................................................................................5
Chapter 4: Financial Markets, Capital Formation and Savings.................................................6
Chapter 5: Business Cycle, Short-term Economic Fluctuations and Aggregate Expenditure...8
Conclusion................................................................................................................................10
References................................................................................................................................12

2MACROECONOMIC ASSIGNMENT
Chapter 1: Macroeconomics, GDP and Economic Growth
a. Article Title: “Amid massive Trump-induced chaos, GDP growth continues. Why?”
(Dallasnews.com 2018)
Article Source: https://www.dallasnews.com/opinion/commentary/2018/07/19/amid-
massive-trump-induced-chaos-gdp-growth-continues
b. Article Summary
According to the article, on one hand, the country can be seen to be struggling with a
possible trade war, fallacies on part of the government and political tensions and on the other
hand the GDP of the country can be seen to be showing positive and impressive growth rates
(nearly 4.5%) (Dallasnews.com 2018). The article attributes this growth in GDP to the
aspects like the increase in the development and economic activities of the economies with
which the USA enjoys economic linkages, fiscal stimuli on part of the government in the
forms of tax cuts and increased government expenditures (Jorgenson, Gollop and Fraumeni
2016).
c. Analysis:
The above phenomenon can be explained with the help of the AD-AS model. The
components of AD include consumption, investment, government expenditures and net
exports:
AD = C+I+G+NX
Due to the fiscal stimuli, G can be seen to be increasing and due to a highly profitable
financial market and robust development of partner economies, investment is also rising. The
growth of the partner nations is also contributing in higher exports, thereby increasing NX.
Along with the same, with the tax cuts, especially in the domain of businesses and corporate

3MACROECONOMIC ASSIGNMENT
expansions, the investment can also be seen to be increasing in the country, which, in turn,
can also be seen to be contributing to the increase in the AD of the country.
Figure 1: Increase in the Aggregate Demand and increase in GDP
(Source: As created by the author)
This increase in the AD, can be seen to be increasing the GDP of the country (Heijdra
2017), as with the increase in the AD, the producers are encouraged to produce more, thereby
increasing the economic productivity of the country, which is reflected in the GDP dynamics
of the country.
Chapter 2: Inflation and rise in price levels
a. Article Title: “Japan's core inflation rate rises to 0.8% in June on energy boost”
(Asia.nikkei.com 2018)
Article Source: https://asia.nikkei.com/Economy/Japan-s-core-inflation-rate-rises-to-0.8-in-
June-on-energy-boost