The economy of a hypothetical country has been stable for two or three years with very low unemployment. Wages have been gradually increasing during this time. Now an aggressive policy of increasing tariffs on foreign goods imported into the country results in retaliatory actions from the other countries against the hypothetical country’s products and services. This causes a great loss of business in the hypothetical country and results in significant unemployment. What kind of economic gap will start to occur (inflationary or recessionary)?

Need a paper written? Our academic experts can create an original essay on any subject for ~~$13.00~~ $11/page Learn More

The economic gap that exists in the hypothetical country is recessionary. It occurs when the country has a lower real GDP than its potential GDP. The described country is experiencing lower output than its potential as individual income has substantially reduced due to increased unemployment rates. The government is also experiencing business losses due to reduced prices to match the low demand among customers. The real GDP will, therefore, drop below the potential GDP.

Rate the answer:

Further research on topic

Answer by Academic.tip's expert

An answer to this question is provided by one of our experts who specializes in business & economics. Let us know how much you liked it and give it a rating.

Cite this page

Select a citation style:

References

Academic.Tips. (2022) 'The economy of a hypothetical country has been stable for two or three years with very low unemployment. Wages have been gradually increasing during this time. Now an aggressive policy of increasing tariffs on foreign goods imported into the country results in retaliatory actions from the other countries against the hypothetical country's products and services. This causes a great loss of business in the hypothetical country and results in significant unemployment. What kind of economic gap will start to occur (inflationary or recessionary)'. 3 November.

Reference

Academic.Tips. (2022, November 3). The economy of a hypothetical country has been stable for two or three years with very low unemployment. Wages have been gradually increasing during this time. Now an aggressive policy of increasing tariffs on foreign goods imported into the country results in retaliatory actions from the other countries against the hypothetical country's products and services. This causes a great loss of business in the hypothetical country and results in significant unemployment. What kind of economic gap will start to occur (inflationary or recessionary)? https://academic.tips/question/the-economy-of-a-hypothetical-country-has-been-stable-for-two-or-three-years-with-very-low-unemployment-wages-have-been-gradually-increasing-during-this-time-now-an-aggressive-policy-of-increasing-t-5/

References

Academic.Tips. 2022. "The economy of a hypothetical country has been stable for two or three years with very low unemployment. Wages have been gradually increasing during this time. Now an aggressive policy of increasing tariffs on foreign goods imported into the country results in retaliatory actions from the other countries against the hypothetical country's products and services. This causes a great loss of business in the hypothetical country and results in significant unemployment. What kind of economic gap will start to occur (inflationary or recessionary)?" November 3, 2022. https://academic.tips/question/the-economy-of-a-hypothetical-country-has-been-stable-for-two-or-three-years-with-very-low-unemployment-wages-have-been-gradually-increasing-during-this-time-now-an-aggressive-policy-of-increasing-t-5/.

1. Academic.Tips. "The economy of a hypothetical country has been stable for two or three years with very low unemployment. Wages have been gradually increasing during this time. Now an aggressive policy of increasing tariffs on foreign goods imported into the country results in retaliatory actions from the other countries against the hypothetical country's products and services. This causes a great loss of business in the hypothetical country and results in significant unemployment. What kind of economic gap will start to occur (inflationary or recessionary)?" November 3, 2022. https://academic.tips/question/the-economy-of-a-hypothetical-country-has-been-stable-for-two-or-three-years-with-very-low-unemployment-wages-have-been-gradually-increasing-during-this-time-now-an-aggressive-policy-of-increasing-t-5/.

Bibliography

Academic.Tips. "The economy of a hypothetical country has been stable for two or three years with very low unemployment. Wages have been gradually increasing during this time. Now an aggressive policy of increasing tariffs on foreign goods imported into the country results in retaliatory actions from the other countries against the hypothetical country's products and services. This causes a great loss of business in the hypothetical country and results in significant unemployment. What kind of economic gap will start to occur (inflationary or recessionary)?" November 3, 2022. https://academic.tips/question/the-economy-of-a-hypothetical-country-has-been-stable-for-two-or-three-years-with-very-low-unemployment-wages-have-been-gradually-increasing-during-this-time-now-an-aggressive-policy-of-increasing-t-5/.

Work Cited

"The economy of a hypothetical country has been stable for two or three years with very low unemployment. Wages have been gradually increasing during this time. Now an aggressive policy of increasing tariffs on foreign goods imported into the country results in retaliatory actions from the other countries against the hypothetical country's products and services. This causes a great loss of business in the hypothetical country and results in significant unemployment. What kind of economic gap will start to occur (inflationary or recessionary)?" Academic.Tips, 3 Nov. 2022, academic.tips/question/the-economy-of-a-hypothetical-country-has-been-stable-for-two-or-three-years-with-very-low-unemployment-wages-have-been-gradually-increasing-during-this-time-now-an-aggressive-policy-of-increasing-t-5/.

Copy