Question

1. This quarter we have had several snow days. My salary remained unchanged, while student well-being fell due to economics-withdrawals. Name and explain three specific examples of how the snow storms may have impacted GDP.

2. How does the availability of credit impact the economy? What policies affect this & how?

3. Discuss the tradeoffs between stability & growth presented by the use of fiscal & monetary policies. Discuss arguments in favor of & opposed to the use of discretionary policy to manage the business cycle. Provide at least one example of each.

Answer 1

Normally the storm in the first quarter should not have a significant impact in the first quarter of US Gross domestic product as good amount of lost output can be made up in the next few weeks.However the storms fallout in the national level are major disruptions in seaports, airlines as well as airports.The impact of weather generally has a temporary impact in the eonomy.This will affect monthly nominal retail sales,housing ,factory production as well as employment But a severe storm  prevents spending by consumers which will be a drag on the economy .Impact on employment will be severe as people will be out of work for a full week .This will affect the GDP of the country. as well .