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Unformatted text preview: Macroeconomics Textbook Recession U.S experienced recession in 2001 Solution: Macroeconomic policy response - The Fed (U.S. central bank, Federal Reserve Board) decreased interest rates- The Bush administration sharply cut taxes - Resulted in higher spending - Since 2001, Budget deficit steadily increased and reached 4.6% of U.S. output in 2003 Increase in productivity = increase in output per capita = standard of living Information technologies major cause of economic growth Tax cuts lead to stronger recovery from recession of 2001. Long-lasting deficits result in smaller amount left for private investment. (capital accumulation) -> Lower output in the future. The European Union Six European countries formed a common European market in 1957 Official name was European Community Total 25 countries, 10 joined in 2004. Output in 2003: $11.0 trillionOutput in 2003: $11....
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