Economics Systems. Discuss how your college education could be considered an investment in human capital. What is the opportunity cost of your degree?
Reference: Chapter 1, section 1.1: Economics and Chapter 2, section 2.1: Limited Resources.
Guided Response: Review and respond to at least two of your classmates’ posts by replying to their posts on how a college education contributes to human capital and the opportunity cost of a degree. Be sure to refer to concepts found in the reading when responding to your classmates.
Role of Government. Economics is the study of how society chooses to allocate its scarce productive resources (labor, capital, land, entrepreneurial talent).
In a mixed economy, elements of both central planning and market allocation of resources are used in allocating productive resources. The United States economy is a mixed economy, with a bias towards market allocation of resources. This means most resources are allocated in the private sector by way of markets.
Discuss whether you favor a larger or smaller role of government in the economy. Refer to concepts found in the reading to support your opinion.
Reference: Chapter 2: Markets, Governments, and Nations: The Organization of Economic Activity
Guided Response: Review and respond to at least two of your classmates’ by stating why you agree or disagree which economic activities the government is more efficient at providing, and which economic activities the private sector is more efficient at providing.
The Current State of the Economy and Unemployment. Imagine a scenario where there is a decline in aggregate demand. Identify which part of the business cycle is part of a decline in aggregate demand. Gross Domestic Product (GDP) measures the amount of new production. A change in the amount of new production affects employment. Describe what would happen to GDP, the unemployment rate and the inflation rate if there is a decline in aggregate demand.
Reference: Chapter 6, section 6.3: Aggregate Equilibrium and Changes in Equilibrium.
Guided Response: Review and respond to at least two of your classmates’ posts by discussing this question in terms of how a decrease in aggregate demand impacts GDP, and why the change in GDP affects unemployment.
Who Benefits and Who Loses from Inflation? Inflation is an important policy issue because it causes a redistribution of income and wealth, and discourages saving and investment. Discuss how inflation affects borrowers and lenders, asset prices, and households on fixed incomes.
Reference: Chapter 4, section 4.3: Gainers and Losers from Inflation.
Guided Response: Review and respond to at least two of your classmates’ posts by sharing any ideas you may have about how households and businesses can protect themselves against inflation. Be sure to refer to concepts found in the reading when responding to your classmates.
Government Fiscal Policy. Between 2007 and 2009 the U.S. economy experienced a severe recession. In an effort to stimulate the economy, the federal government passed a stimulus package. Explain the federal government’s use of fiscal policy (the stimulus) to promote growth and employment. Support your ideas with concepts found in the assigned reading. Include the following in your response:
Discuss some actions taken by the federal government and whether the recession would have been longer and the unemployment rate higher if the government had not acted by passing the stimulus package?
If left alone, do you believe the economy would have corrected itself as suggested by Classical economic theory? Explain.
Discuss the effect these policies had on increasing the size of the budget deficits and the national debt.
Reference: Chapter 9, section 9.4: More Recent Tax Changes, and Chapter 10, section 10.2: Early 1990s and 2000s Recessions.
Guided Response: Review the discussion board posts of your classmates. Respond to at least two of your classmates by agreeing or disagreeing with their posts. Support your ideas with concepts found in the assigned reading.
Budget Deficits and the National Debt. Between 2007 and 2011 the federal budget deficit grew from $160.7 billion to $1,299.6 billion, and the national debt grew from $8.9 trillion to $14.8 trillion. (Figure 10.1: The ratio of debt to GDP, 1977-2011.)
In your post, differentiate the budget deficit from the national debt. How do you think the increases in the budget deficits and the national debt will affect the economy in the future?
Reference: Chapter 10, section 10.1: Debt and Deficits, and section 10.4: Do Deficits Matter?
Guided Response: Review the discussion board posts of your classmates. Respond to at least two of your classmates with questions that allow them to extend their thinking. Support your ideas with concepts found in the assigned reading.
Efforts to Reduce the Budget Deficit. The rapid growth of the national debt alarmed some politicians and created pressure for restricting Congress’s unlimited ability to spend. After reviewing Chapter 10, Section 10.2:Efforts to Reduce the Deficit, write a 2-3 page paper, formatted according to APA style as outlined in your approved style guide, discussing the actions taken by the Congress since 1985 to reduce the budget deficits.
Include some authoritative sources on the current debate between the White House and Congress on what measures are necessary to address spending and revenues, i.e. news reports, official statements, press conferences, as well as numerous government websites.
Ashford University Online Library: AULIBRARY Ashford Online Library Congressional Budget Office: www.cbo.gov.
Internal Revenue Service: www.irs.gov.
The Executive Office of the President: www.whitehouse.gov.
Fed Policy during the 2007-2008 Recession. [Insert prompt].From 2007-2010, the Federal Reserve Bank (the Fed) used many practices that had never before been seen from the central bank of the United States.
Discuss the some of the actions that the Fed took during this period. Such as:
How the Federal Reserve’s lending practices changed during this period.
What did the Federal Reserve do to support firms deemed “too big to fail.”
Do you believe these actions were necessary to avoid a collapse in the financial system? Support your opinion with information from the textbook or external source(s).
Reference: Chapter 12, section 12.4: Bank Failures During the Great Recession, Chapter 14, section 14.4:Monetary Policy in the 2000s, and Conclusions section at the end of the Chapter 14
The Effect of Bank Lending on the Economy. In conducting expansionary monetary policy, even if the Federal Reserve Bank is providing reserves to the banking system, during a recession or during periods of slow economic growth, banks may choose not to lend out their reserves when interest rates are low and potential borrowers look risky. This is known as a “credit crunch”. Explain how a credit crunch affects economic growth. Specifically, answer these questions in your post:
How does a credit crunch affect consumer spending and business investment?
How does a credit crunch affect aggregate demand, GDP, and unemployment?
Reference: Chapter 14.1 Is Monetary Policy Effective? and section 14.3: Domestic Sectoral Effects.
Foreign Direct Investment. Imagine you are in charge of development for a developing country and were approached by a multinational corporation interested in locating in your country.
Identify some of the benefits and some of the costs to the host country from allowing a multinational corporation to locate in a country with a developing economy. Discuss with your classmates if developmental assistance from world developmental agencies, such as the World Bank or the United Nations, would be preferable to private investment.
Reference: Chapter 17, section 17.5: Help From The Private Sector: Multinationals.
Economies in Transition. The movement in the direction of a market-based system with freely determined prices, competition, profits, private ownership, and other features of capitalism is not simple. Discuss some of the challenges associated with an economy transitioning from socialism to capitalism.
Reference: Chapter 20, section 20.1: World Economic Systems, and section 20.2: Transition to a Market System
Focus of the Final Paper
In an effort to move the economy out of a recession, the federal government would engage in expansionary economic policies. Describe the actions the government would take in conducting expansionary fiscal policy and expansionary monetary policy.
Expansionary Fiscal Policy:
Review Chapter 7: Classical Macroeconomics and the Keynesian Challenge and Chapter 9: Taxes, Government Spending, and Fiscal Policy.
Explain the actions the federal government would take while engaging in expansionary fiscal policy in terms of the following:
The necessary change in taxes and government spending, The effect on aggregate demand, GDP, and employment.
Expansionary Monetary Policy:
Review Chapter 12: Banking and The Federal Reserve System and Chapter 14: Monetary Policy In Theory And Practice.
Identify the three tools available to the Federal Reserve Bank (The Fed) when conducting monetary policy. Explain whether the Fed would:
Increase or decrease the required reserve ratio Increase or decrease the discount rate Buy or sell government securities when conducting expansionary monetary policy
Explain how these actions would affect the money supply, interest rates, spending, aggregate demand, GDP, and employment.
Writing the Final Paper
The Final Paper:
1. Must be 5 to 6 double-spaced pages in length and formatted according to APA style as outlined in your approved style guide.
2. Must have a cover page that includes:
a. Title of paper
b. Student’s name
c. Course name and number
d. Instructor’s name
e. Date submitted
3. Must include an introductory paragraph with a succinct thesis statement.
4. Must address the topic of the paper with critical thought.
5. Must conclude with a restatement of the thesis and a conclusion paragraph.
6. Must use at least four scholarly resources, including the textbook. Two references must come from the Ashford Library.
7. Must use APA style as outlined in your approved style guide to document all sources.
8. Must include, on the final page, a Reference List that is completed according to APA style as outlined in your approved style guide.
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