Macroeconomics examples

Question 1

structural unemployment

Answer 1

many manufacturing jobs were lost in developed countries such as the US, or the UK as production of many manufactured products moved to lower-cost countries such as China or Thailand

Question 2

seasonal unemployment

Answer 2

ski-instructor, lifeguard

Question 3

high inflation

Answer 3

Venezuela is battling high inflation for a few years now with a peak of an estimated inflation rate of over 30000% in 2018 causing the economy to halve in just 5 years

Question 4

deflation

Answer 4

Japan had been struggling with deflation since the 1990s which in turn led to very low GDP growth rates that didn’t surpass 4% for the last 25 years

Question 5

cost-push inflation

Answer 5

Caused by rise of the price of oil almost four times in the 1970s as OPEC restricted its supply. EU is currently experiencing cost-push inflation due to increased prices of commodities due to supply shock from the pandemic.

Question 6

government debt

Answer 6

The European debt crisis in 2008, Greece had problems meeting its debt obligations

Question 7

expansionary monetary policy

Answer 7

US FED decreased its discount rate from approximately 5% to 0% during the 2008 crisis consequently, it had been buying government bonds in the period from 2009 to 2014 for a total of $3.7 trillion. A very similar thing happened in 2019 when it decreased its interest rates from 2.5% to 0% due to the covid crisis.

Question 8

contractionary monetary policy

Answer 8

Czech National Bank recently raised its interest rates from 0.5% to 4.5% in about 6 months to slow down the inflation in the Czech Republic

Question 9

expansionary fiscal policy

Answer 9

The US $5.2 trillion fiscal stimulus caused a rapid recovery of the US economy from the contraction caused by the pandemic at the beginning of 2021.

Question 10

contractionary fiscal policy

Answer 10

During Bill Clinton’s time in the office in the late 1990s taxes on high-income earners increased and government spending decreased on defense and welfare which lead to a budget surplus.

Question 11

market-based supply-side policy

Answer 11

The UK government decided to encourage competition by privatising Royal Mail in 2013. Moreover, corporate taxes decreased in the last decade from approximately 28% to 19% in the UK. The EU had been consistently trying to liberalise the energy market by trying to break up existing monopolies in the last two decades.

Question 12

interventionist supply-side policy

Answer 12

Prague is building a new underground line to improve infrastructure. California high-speed rail network.