Using Economic Indicators to Analyze the Economy The economy has seen the unemployment rate increase from 6 percent to 95 percent, the inflation rate decrease from 28 percent to 12 percent, and there...

Using Economic Indicators to Analyze the Economy

The economy has seen the unemployment rate increase from 6

percent to 95 percent, the inflation rate decrease from 28 percent to 12

percent, and there has been a 24 percent decline in consumer spending and a 45

percent decline in investment spending in the same time period

a) Given the above, what would you predict about the overall

direction of the economy?

b) Describe the appropriate discretionary fiscal policy that

the government should adopt, given the above situation

c) Describe the appropriate monetary policy that the central

bank should be operating, given the above situation