Answer to Question #46635 in Macroeconomics for Coleine

Question

1.Assume an economy with deteriorating employment and incomes, collapsing home prices, and business retrenchment. Is this enough information to officially declare a recession? What informal assessment of the economy would you make?

2.How might the official employment statistics of the STATIN be a misleading picture of the overall health of the economy?

3.Identify the following individuals as either "better off", "worse off" or "no different" from unanticipated inflation.
a)Creditors who make variable interest rate mortgages that are tied to the Consumer Price Index
b)Creditors who make fixed interest rate loans
c)Homeowners who pay fixed interest rate mortgages
d)Landlords who receive rent in multi-year contracts

Answer 1

1. The fact that an economy functionate with deteriorating employment and incomes, collapsing home prices, and business retrenchment, this is enough information to officially declare a recession.
2. Some indicators cannot show the real picture of the economy, and some of them show only the part of the total situation or the situation in some industry, so the official employment statistics of the STATIN be a misleading picture of the overall health of the economy.
3.Identify the following individuals as either "better off", "worse off" or "no different" from unanticipated inflation.
a)Creditors who make variable interest rate mortgages that are tied to the Consumer Price Index are better off.
b)Creditors who make fixed interest rate loans are worse off.
c)Homeowners who pay fixed interest rate mortgages are worse off.
d)Landlords who receive rent in multi-year contracts are no different.