Macroeconomics

This article discusses the business cycle, economic growth, labor market and more in France's economy. It suggests that France should focus on increasing government spending in productive areas for long-term growth and educating workers for a skilled labor force. The article also provides graphs and data to support the analysis.

Running head: MACROECONOMICS
Macroeconomics
Name of the Student
Name of the University
Author note

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Answer 1
Business cycle is the fluctuation in the economic activities and its effects that economy
faces. The fluctuations in various economic activities of the business put them in different phases
such as prosperity, recession, depression, recovery and expansion. From the economic data of
France it can be stated that the country is in the phase of recovery. This can be seen from various
economic indicators of the economy. The first indicator is GDP that shows that the economy has
experienced a sharp rise in its GDP in 2017 compared to a drastic fall in 2016. GDP rate
increased from 0.1 percent in 2016 to 0.6 percent in 2017. On the other hand, the economy has
also experienced a drastic fall in its unemployment rate in 2017 compared to 2016. The
unemployment rate reached at 10.2 percent in 2016; however it came down to 9.5 percent in
2017 (Tradingeconomics 2018). The fall in the unemployment rate was creation of new jobs and
increasing spending of the government. Thus, due to both the economic factors there was a rise
in the demand of the people in the economy. Changes in these factors were the signals that the
economy has recovering from a depression or recession stage.
2015 2016 2017
9
9.2
9.4
9.6
9.8
10
10.2
10.4
10.6
France Unemployment Rate
France Unemployment
Rate

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Graph- Unemployment Rate
Source- (Tradingeconomics 2018)
2015 2016 2017
0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
France GDP Growth Rate
France GDP Growth Rate
Graph- GDP Growth Rate
Sources- (Tradingeconomics 2018)
Answer 2
From the above data it can be seen that France is in recovery stage I which the economy
is recovering from a stage recession. This is evident from the increase in GDP growth rate and
fall in unemployment rate. This shows that rise in GDP has led to an increase in the income of
the consumer and spending power of the consumers. in addition to this fall in unemployment has
been due to creation of new job opportunity n the economy. This too added to the money in the
hands of the people. Thus, the rise in purchasing power leads to an increase in demand from the
side of the consumer in the economy (Rao 2016). Thus, this leads to a upward shift in the
aggregate demand curve of the consumers in the economy. On the other hand aggregate supply

AD1
AD AS
Y0 Y1
Real GDP
Price level
P1
P
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remains fixed due to no effect on the total supply of the economy with an increase in GDP in the
short run.
Figure: AD and AS curve
Source: Author’s creation
Answer 3
Economic growth of a country depends on various factors that lead to its growth in a
period of time. There are various factors that contribute to the economic growth of the country
such as real GDP, Real domestic output, price level, employment rate, interest rate and others.
These are the factors that affect the economy in both short run and long run. An increase in the
economic growth rate in other words is called as an increase n the annual rate of real GDP. This

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is because an increase in the productive capacity of the economy and increase in consumer
spending. On the other hand an increase in employment or reduction in unemployment also
causes an increase in the purchasing power of the people showing the growth of the economy.
These are the factors that affects the aggregate demand curve leading to an increase or decrease
in economy. However, there are certain factors that affect the long run aggregate supply curve
and long run economic growth. The factors that affect the long run economic growth are level of
infrastructure, technology development and others (Theweek 2017). Thus, it can be suggested
that France should focus on increasing their government spending in productive areas so that
there can be technological development for long term growth and also improve short term
demand of the economy.
Answer 4
Labor play a crucial role in the economy as it helps in the development of various aspects
of the economy. Labor is used in every major and small industry of the economy. Thus, instead
of taking up planned reforms to the labor market the economy can take up educating workers in
the economy. This will help in increasing the skills of the labor and increasing infrastructure.
Educating their employees will have a long-term effect on the economy. This is because
educated employee will be much skilled from before. This will help the economy to take up new
technology for the economy so that they can be productively more efficient. Educated employees
are also more productive than the uneducated and semi skilled ones (Mankiw 2014). This is
because by being more skilled will enable them to use better technology and produce more
number of goods than they used to produce n the absence of such technologies. Moreover,
educated and skilled workers will never fear of losing their jobs as they will have the ability to

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fix themselves in any kind of jobs. This will save them from getting exploited by the employer
and work at a lower wage rate.

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References
Mankiw, N.G., 2014. Principles of macroeconomics. Cengage Learning.
Rao, B.B. ed., 2016. Aggregate demand and supply: A critique of orthodox macroeconomic
modelling. Springer.
Theweek.com. (2017). Emmanuel Macron has misdiagnosed France's ailing economy. [online]
Available at: http://theweek.com/articles/705135/emmanuel-macron-misdiagnosed-frances-
ailing-economy [Accessed 2 Feb. 2018].
Tradingeconomics (2018). France - Economic Indicators. [online] Tradingeconomics.com.
Available at: https://tradingeconomics.com/france/indicators [Accessed 2 Feb. 2018].