In its recent report, The Conference Board’s Global Economic Outlook 2015, updated November 2014 (http://www.conference-board.org/data/globaloutlook.cfm), projects China’s growth between 2015 and 2019 to be about 5.5%. International Business Times (http://www.ibtimes.com/us-exports-china-have-grown-294-over-past-decade-1338693) reports that China is the United States’ third largest export market, with exports to China growing 294% over the last ten years. Explain what impact China has on the U.S. economy.
What may happen if growth in China continues or contracts?
Does it make sense that wages would be sticky downwards but not upwards? Why or why not?
Suppose the economy is operating at potential GDP when it experiences an increase in export demand. How might the economy increase production of exports to meet this demand, given that the economy is already at full employment?
Do you think the Phillips curve is a useful tool for analyzing the economy today? Why or why not?
Return to the table from the Economic Report of the President in the earlier Work It Out feature titled “The Phillips Curve for the United States.” How would you expect government spending to have changed over the last six years?
Explain what types of policies the federal government may have implemented to restore aggregate demand and the potential obstacles policymakers may have encountered.