ACCT500 Economics Module Week 7 Macroeconomics Applications
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ACCT500 Economics Module Week 7 Macroeconomics Applications
Paper due tomorrow
Part 1
This assignment includes three applications in three major areas in Macroeconomics: 1) Gross Domestic Product; 2) Unemployment and Inflation; and 3) Macroeconomic Policy. You must complete all three applications. Each of the application options are located in the textbook.
You will discuss the Options listed for each of the applications and will complete a draft essay for each of the applications. . About a pg each
APA format
APPLICATION 1 – Gross Domestic Product:
Prior to completing the application, students will need to review Chapter 5 and 6 to best prepare for the applications.
Option 1: The Links Between Self-Reported Happiness and GDP
The Links between Self-Reported Happiness and GDP
APPLYING THE CONCEPTS #3: Do increases in gross domestic product necessarily translate into improvements in the welfare of citizens?
Two economists, David Blanchflower of Dartmouth College and Andrew Oswald of Warwick University in the United Kingdom, have systematically analyzed surveys over a nearly 30-year period that ask individuals to describe themselves as “happy, pretty happy, or not too happy.” The results of their work are provocative. Over the last 30 years, reported levels of happiness have declined slightly in the United States and remained relatively flat in the United Kingdom despite very large increases in per capita income in both countries. Could it be the increased stress of everyday life has taken its toll on our happiness despite the increase in income?
At any point in time, however, money does appear to buy happiness. Holding other factors constant, individuals with higher incomes do report higher levels of personal satisfaction. But these “other factors” are quite important. Unemployment and divorce lead to sharply lower levels of satisfaction. Blanchflower and Oswald calculate that a stable marriage is worth $100,000 per year in terms of equivalent reported satisfaction.
Perhaps most interesting are their findings about trends in the relative happiness of different groups in our society. While whites report higher levels of happiness than African Americans, the gap has decreased over the last 30 years, as the happiness of African Americans has risen faster than that of whites. Men’s happiness has risen relative to that of women over the last 30 years.
Finally, in recent work Blanchflower and Oswald looked at how happiness varies over the life cycle. Controlling for income, education, and other personal factors, they found that in the United States, happiness among men and women reaches a minimum at the ages of 49 and 45, respectively. Since these are also the years in which earnings are usually the highest, it does suggest that work takes its toll on happiness.
APPLICATION 2: Unemployment and Inflation:
Prior to completing the application, it is highly recommended that students review Chapters 5 and 6 to gain a solid foundation.
Option 1: DECLINING LABOR FORCE PARTICIPATION
Declining Labor Force Participation
APPLYING THE CONCEPTS #1: What factors account for the decline in the labor force participation rate in the last decade?
Since reaching a peak of 67.3 percent in 1999, the labor force participation rate has fallen to 62.9 percent by 2015. What can account for this decline?
Two factors have been prominently discussed by economists. The past decade experienced two recessions and low economic growth by historical standards. Perhaps a large number of individuals just decided that job prospects were too poor and left the labor force during this decade. An alternative explanation focuses on the baby boomers—the generation born after 1946. As this large generation ages, a significant number of the baby boomers will naturally retire and leave the labor force.
A recent study by the Federal Bank of Chicago suggested both factors were operative. Based on some statistical models, they estimated that about one-half of the decline in labor force participation was due to a longer run trend of increased retirements from the baby boomers. The rest they attributed to the sluggish economy. The staff of the President’s Council of Economic Advisers reached similar conclusions. They also estimated that one-half of the decline was due to the aging of the population. But they were only able to explain some of the remainder through traditional business-cycle effects. They suggested that increased schooling, higher rates of individuals claiming disability insurance, and the corrosive effects of long spells of unemployment on the skills and work ethic of individuals may also be causing some of the measured decline.
.Many economic time series, including employment and unemployment, are substantially influenced by seasonal factors. These are recurring calendar-related effects caused by, for example, the weather, holidays, the opening and closing of schools, and related factors. Unemployment due to recurring calendar effects is called seasonal unemployment . Examples of seasonal unemployment include higher rates of unemployment for farm workers and construction workers in the winter and higher unemployment rates for teenagers in the early summer as they look for summer jobs.
seasonal unemployment
APPLICATION 3: Macroeconomic Policy
Prior to completing the application, students will need to review Chapter 17 – Macroeconomic Policy Debates.
Option 1: Would a policy rule have prevented the housing boom.
Would a Policy Rule Have Prevented the Housing Boom?
APPLYING THE CONCEPTS #2: Did the Federal Reserve cause the housing boom through excessively loose monetary policy?
John Taylor from Stanford University has argued that the Fed’s “easy money” policy from mid-2001 through 2004 was largely responsible for the housing boom in the decade that ultimately caused so much financial damage. Taylor used his own model of monetary policy—the “Taylor rule”—to analyze the Fed’s behavior. In his prior work, he demonstrated that the Fed’s behavior could be closely described by a model that allowed for some monetary policy tightening and easing in response to output movements. Applying this model to the decade of 2000, however, Taylor found that, compared to past experience, the Fed was much too aggressive in lowering interest rates. Interest rates fell from 2 percent in mid-2001 to 1 percent by 2004. Past experience, however, would have suggested that the Fed would have raised interest rates to 4 percent by 2004—a very significant deviation.
Taylor then showed that housing starts—which are very sensitive to interest rates—would have been much lower if the Fed had not followed its easy money policy. The boom and bust would have been avoided. Finally, as an additional piece of evidence, Taylor looked at the experiences of European countries. There the same phenomenon occurred. Countries that deviated most from the Taylor rule—for example, Spain—experienced the worst boom and bust cycles for housing.
Part 2
Provide short detailed answers to the questions below.
There are two approaches to measuring a country’s macroeconomic activity, which are Gross Domestic Product, and National Income. What do each of these approaches measure. List at least one advantage and disadvantage of each approach.
- Explain why buying a foreign car made abroad for $50,000 increases consumption by $50,000, but does not increase GDP.
- What are the elements that make up GDP?
- Explain why the very top athletes or entertainers would be more likely to change countries to reduce their taxes as compared with ordinary middle-class workers?
- Suppose a country imposed tariffs on computer chips to protect its chip-making industries. What other types of firms in that economy might object to this policy?
RUBRIC
QUALITY OF RESPONSE NO RESPONSE POOR / UNSATISFACTORY SATISFACTORY GOOD EXCELLENT Content (worth a maximum of 50% of the total points) Zero points: Student failed to submit the final paper. 20 points out of 50: The essay illustrates poor understanding of the relevant material by failing to address or incorrectly addressing the relevant content; failing to identify or inaccurately explaining/defining key concepts/ideas; ignoring or incorrectly explaining key points/claims and the reasoning behind them; and/or incorrectly or inappropriately using terminology; and elements of the response are lacking. 30 points out of 50: The essay illustrates a rudimentary understanding of the relevant material by mentioning but not full explaining the relevant content; identifying some of the key concepts/ideas though failing to fully or accurately explain many of them; using terminology, though sometimes inaccurately or inappropriately; and/or incorporating some key claims/points but failing to explain the reasoning behind them or doing so inaccurately. Elements of the required response may also be lacking. 40 points out of 50: The essay illustrates solid understanding of the relevant material by correctly addressing most of the relevant content; identifying and explaining most of the key concepts/ideas; using correct terminology; explaining the reasoning behind most of the key points/claims; and/or where necessary or useful, substantiating some points with accurate examples. The answer is complete. 50 points: The essay illustrates exemplary understanding of the relevant material by thoroughly and correctly addressing the relevant content; identifying and explaining all of the key concepts/ideas; using correct terminology explaining the reasoning behind key points/claims and substantiating, as necessary/useful, points with several accurate and illuminating examples. No aspects of the required answer are missing. Use of Sources (worth a maximum of 20% of the total points). Zero points: Student failed to include citations and/or references. Or the student failed to submit a final paper. 5 out 20 points: Sources are seldom cited to support statements and/or format of citations are not recognizable as APA 6th Edition format. There are major errors in the formation of the references and citations. And/or there is a major reliance on highly questionable. The Student fails to provide an adequate synthesis of research collected for the paper. 10 out 20 points: References to scholarly sources are occasionally given; many statements seem unsubstantiated. Frequent errors in APA 6th Edition format, leaving the reader confused about the source of the information. There are significant errors of the formation in the references and citations. And/or there is a significant use of highly questionable sources. 15 out 20 points: Credible Scholarly sources are used effectively support claims and are, for the most part, clear and fairly represented. APA 6th Edition is used with only a few minor errors. There are minor errors in reference and/or citations. And/or there is some use of questionable sources. 20 points: Credible scholarly sources are used to give compelling evidence to support claims and are clearly and fairly represented. APA 6th Edition format is used accurately and consistently. The student uses above the maximum required references in the development of the assignment. Grammar (worth maximum of 20% of total points) Zero points: Student failed to submit the final paper. 5 points out of 20: The paper does not communicate ideas/points clearly due to inappropriate use of terminology and vague language; thoughts and sentences are disjointed or incomprehensible; organization lacking; and/or numerous grammatical, spelling/punctuation errors 10 points out 20: The paper is often unclear and difficult to follow due to some inappropriate terminology and/or vague language; ideas may be fragmented, wandering and/or repetitive; poor organization; and/or some grammatical, spelling, punctuation errors 15 points out of 20: The paper is mostly clear as a result of appropriate use of terminology and minimal vagueness; no tangents and no repetition; fairly good organization; almost perfect grammar, spelling, punctuation, and word usage. 20 points: The paper is clear, concise, and a pleasure to read as a result of appropriate and precise use of terminology; total coherence of thoughts and presentation and logical organization; and the essay is error free. Structure of the Paper (worth 10% of total points) Zero points: Student failed to submit the final paper. 3 points out of 10: Student needs to develop better formatting skills. The paper omits significant structural elements required for and APA 6th edition paper. Formatting of the paper has major flaws. The paper does not conform to APA 6th edition requirements whatsoever. 5 points out of 10: Appearance of final paper demonstrates the student’s limited ability to format the paper. There are significant errors in formatting and/or the total omission of major components of an APA 6th edition paper. They can include the omission of the cover page, abstract, and page numbers. Additionally the page has major formatting issues with spacing or paragraph formation. Font size might not conform to size requirements. The student also significantly writes too large or too short of and paper 7 points out of 10: Research paper presents an above-average use of formatting skills. The paper has slight errors within the paper. This can include small errors or omissions with the cover page, abstract, page number, and headers. There could be also slight formatting issues with the document spacing or the font Additionally the paper might slightly exceed or undershoot the specific number of required written pages for the assignment. 10 points: Student provides a high-caliber, formatted paper. This includes an APA 6th edition cover page, abstract, page number, headers and is double spaced in 12’ Times Roman Font. Additionally, the paper conforms to the specific number of required written pages and neither goes over or under the specified length of the paper. GET THIS PROJECT NOW BY CLICKING ON THIS LINK TO PLACE THE ORDER
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