Assignment:
Part 1
Introduction
1. Analyze the economic environment and the role of the federal government in establishing fiscal and monetary policies.
2. Do you think that, at this time, the United States should try to decrease or increase federal spending?
3. What reasons do you have for your position?
4. How will the increase or decrease impact GDP and national income?
Automatic Stabilizers
1. Analyze the effect of built-in (or automatic) stabilizers on a country's economy. Explain how built-in stabilizers work.
2. Explain the differences between proportional, progressive, and regressive tax systems as they relate to an economy's built-in stability.
Multiplier Effect
*Include related equations/computations*
1. Analyze the concept of the multiplier effect.
2. How does this concept relate to both economic recessions and vigorous economic expansion?
Part 2
Introduction: Monetary Policy Overview
1. Does the company have characteristics of a perfect competition, monopoly, or oligopoly?
2. How does competition in this industry help or hurt consumers?
3. What does the annual report say about the corporation's view of future business challenges and the market in which it operates?
4. Does this corporation see long-run adjustments?
5. Consider both the microeconomic and macroeconomic views. Do you agree with the corporation's view? Why or why not?
2007-2008 Financial Crisis
Explain how each of the following relate to the financial crisis of 2007-2008:
• Declines in real estate values.
• Subprime mortgage loans.
• Mortgage-backed securities.
Cyclical Asymmetry
1. Analyze what economists mean when they say that monetary policy can exhibit cyclical asymmetry.
2. How does the idea of a liquidity trap relate to cyclical asymmetry?
3. Why is the possibility of a liquidity trap significant to policymakers?