BEA reports economy on the rise

Reuters--September 10, 2021

The BEA announced that real gross domestic product (GDP) increased at an annual rate of 4.1 percent in the first two quarters of 2021--January to June. The increase in GDP is welcome news after a sluggish 2020 when the nation's output plummeted to $19.9 trillion, down from $21.4 trillion the year before. New figures from the BEA show the economy at $22.7 trillion in just the first two quarters of 2021. The figures coincide with improving employment numbers and more activity in the nation's factories. Throughout 2020 as the grip of the pandemic tightened on the economy, unemployment ranged from 9 percent to 18 percent and the nation's capital utilization fell into the 60 percent range. Now the BLS reports the nation's official unemployment rate at 5.0% and the Federal Reserve shows industry and retail capital utilization rates hovering around 75%.

3A. Construct a Keynesian Model of the economy as depicted in Figure 1.3 in Module 1 for the US economy in 2021. Use "Y21" for real gross domestic product in 2021.

3B. Show potential GDP, depicted as Y*, on the horizontal axis.

3C. Without moving either the aggregate supply curve or the aggregate demand curve and using "Y19" for real gross domestic product in 2019, position real gross domestic product for 2019 on the horizontal axis.

3D. Without moving either the aggregate supply curve or the aggregate demand curve and using "Y20" for real gross domestic product in 2020, position real gross domestic product for 2020 on the horizontal axis.

3E. Explain whether the US economy is experiencing economic growth in 2021.