In the mid-1990s and through the early 2000s, Japan's annual money supply growth rate fell to 1-2...

Question

In the mid-1990s and through the early 2000s, Japan's annual money supply growth rate fell to 1-2 percent from an average annual rate of 10-11 percent in the late 1980s. What effect did this decline have on:
a. Japanese real output?
b. Japanese unemployment?
c. Japanese inflation?
For this assignment, I recommend that you are doing the following:
a. understanding and reading the background of the problem
b. relate how each of the inflationary parts relate to the Japanese economy
c. make sure it is 2 pages long and proper format

Robert · Accepted Answer

Japanese Economy – mid 1990s to early 2000s 
The performance of Japanese economy in the 1990s was less than average and the 
economy remained stagnant throughout the decade. The average growth rate in the mid-1990s to 
early 2000s was just above 1 percent. The inflation rate, either measured by CPI or GDP 
deflator, was negative throughout this period i.e. the Japanese economy was suffering from 
deflation during this period. The deflation had brought the CPI level by the end of 2003 to 3% 
below the 1997 level. A comparison with United States economy shows that during this period, 
the US CPI level had increased by 12%. With almost no growth and deflation, the Japanese 
nominal GDP shrunk by 4% from 1996 to 2002, while during the same period, United States 
GDP expanded by 25%.   
Given the performance of Japanese economy during this period (or decade), the decade is 
often called a “lost decade” in the history of Japanese economy. There were many problems 
which seemed to have worked as contributing factors to this “lost decade” in Japan. The burst 
bubble and non-performing loans have been often blamed for the poor performance in the early 
stages of stagnation. By early 2000s, the stock and land prices had declined to one-fourth of their 
respective peak in 1989-90.

In the mid-1990s and through the early 2000s, Japan's annual money supply growth rate fell to 1-2 percent from an average annual rate of 10-11 percent in the late 1980s. What effect did this decline...

Solution

Answer To This Question Is Available To Download

Related Questions & Answers

Submit New Assignment