
Brennan Dwyer
I recently graduated as a student at the University of New Hampshire, and majored in analytical economics. I am getting a PhD in economics at the University of Mississippi (Ole Miss). I am passionate about economics, politics, business, finance, physics and philosophy. In my free time I enjoy learning more about these subjects and coming up with new hypotheses and ideas.
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1. Once the economy reaches close to a full employment rate and when real GDP is at or close to potential GDP, then businesses don’t end up producing and growing nearly as quickly as what they and the lenders predicted, as a result of there being no more workers in the population to hire. This leads to businesses not being able to pay back the interest payments on their loans, and results in them having to default on their loans and lay off workers. This not only leads to a higher unemployment rate and a decreased amount of output, but also problems within the financial sector due to the higher delinquency rate of loans, which could lead to a financial crisis.
2. Sometimes when the unemployment rate decreases, (which often may not be as close to full employment in this scenario), workers end up demanding higher wages, which leads to cost push inflation from the businesses having to pay higher wages, and demand-pull inflation from the higher incomes being used to consume more goods and services. This likely causes a similar problem to occur as the first theoretical cause of the business cycle, with businesses not being able to have as much of a marginal increase in growth because of a lack of workers to find at reasonable wages that the businesses are willing to pay. It also may be the ‘other way around’ where those that are unemployed aren’t satisfied with the wages that businesses are offering, and don’t accept the jobs being offered. This leads to a higher delinquency rate of loans, massive layoffs, etc.
It is logical to think that a higher power would likely do what maximizes everyone’s wellbeing, and what is the best possible and most rightful thing to do. Considering how analytical, mathematical, and factual the universe is that everyone observes, it would be logical that this higher power is much similar in character and in thought process to those descriptions of the universe.