Answered: The college graduates of 2000 could…

Brief Principles of Macroeconomics (MindTap Course List)

8th Edition

ISBN:9781337091985

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter10: Unemployment

Section: Chapter Questions

Problem 5PA

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Question

The college graduates of 2000 could hardly have asked for better luck. The unemployment rate
dropped to 4.1 % in May 2000- roughly, the lowest level in a generation- and employers were
literally scrambling for new hires. Starting salaries rose, many graduating seniors had numerous
job offers, and some firms even offered $10,000- $20,000 bonuses to students who signed the
dotted line.

Discussion:
(i) Briefly explain and justify what prevailing situation was taking place in the year 2000.
(ii) Identify and explain two fiscal policies and two monetary policies that the US
government may have used to correct this situation.
(iii) Use a diagram to illustrate the correction measures.

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