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Name: Spencer Gale

Section: ____________

E-Portfolio Signature Assignment


Salt Lake Community College
Economics as a Social Science - Econ 1010
Professor: Heather A Schumacker
Please type your answers to the following questions. If you need to hand draw the graphs on page 3 you may and then scan them as a
separate document. When you have completed this assignment post it to your e-portfolio along with your chosen article and 20 terms
article write up. (20pts) Make sure to put an explanation of the assignments and a reflection statement on your ePortfolio web site.
For examples of reflection prompts please see SLCCs website: https://www.slcc.edu/gened/eportfolio/docs/ReflectionHandout2.pdf.
(10 pts) Link your ePortfolio URL to your MyPage under the student tab so that instructors can view your work. (5pts)
1.

2.

What are the 3 main macroeconomic goals economists would like to see for an economy: (3pts)
1. Economic Growth____________________
2. Low Unemployment_____________________
3. Low Inflation____________________
What is the formula for GDP (write out the full name)? Circle the largest component and fill in the chart. Under each put the
components and something unique. (19pts)

GDP = _________C__________

+ __________I_________ + ________G___________ + __________(X-M)_________

Components: Consumption
Circle the largest sub-category

Components: Investments

1. Durable
2. Non Durable
3. Service

1. Capital Investment
2.Construction
3. Inventory
Excludes:
1.

Financial Assets

Components: Government

Components: Net Exports

Spending
1. Goods
2. Services

1. Exports
2. Imports

Excludes:
1. Transfer Pmts
2. I on debt

3.

What is the problem associated with being at AD2 that makes policy makers concerned? (1pt)
____________________Inflation_________________

Q1

Q Full

Q2

REAL OUTPUT (quantity per year)

Employment

4.

Who does fiscal and monetary policy? What are 2 fiscal policies and 3 monetary policies to correct a situation where the economy
is naturally at AD* but finds itself at AD2, as seen in the graph on the previous page. Briefly explain how each of these policies
would work to correct the situation. (22pts)

Who does fiscal policy: Government and the President


1.

Taxes
_Raise Taxes for both Consumption and Investment. A large tax on consumption items and capital investments
will generate more money and create an influx of money through the economy. This will generate more job
opportunities, public use (parks, roads, and buildings), and economic security.

2.

Government Spending
The government is spending less money on construction, education, communication networks, massive powergeneration, and other projects because the debt limit has been reached. The whole foundation of the U.S was
built around the idea of credit. Because of the recent levels of debt the U.S has accumulated over the years they
arent able to provide economic security. If they were to budget better they would be able to expand the
economy, maintain a steady currency, and lower unemployment rate.

Who does monetary policy: Federal Reserve


1.

Reserve requirement
____Raise the reserve requirement. Reserve requirements are defined as the cash reserve ratio that all central
world banks use to fund smaller commercial banks that customers go to. The higher the reserve requirement the
less banks are able to loan out.

2.

___Discount Rate__________________________________
__Increasing the discount rate will lower the money supply in the economy. When lowering the supply of
money in the economy, it will cause a decrease in inflation causing the common currency to regain its value.
Commercial banks need to be charged higher interest rates on loans they receive from their regional Federal
Reserve Bank's lending facility.

3.

__Federal open market___________________________________


Raising the federal fund rates makes it more expensive to borrow from banks, which in turn have a significance
on major aspects of the broad economy including employment, growth and inflation. Creating short term
interest rates and setting normal levels which will reduce the federal securities in the market.

5.

Begin in equilibrium in each of the following graphs; draw the effects from question 2 above as they would apply in each graph
below. Next draw the effects of an anti-inflationary policy taken by the fed to correct the result from question 2 - use both graphs.
Explain what is happening in each graph and overall in the economy as the due to the anti-inflationary policy. (20 pts)
Money Supply and Money Demand Graph

Nominal
Interest Rate
Aggregate
Demand and
Aggregate Supply

Money Supply Curve (MS)

PL

Real GDP

AS

Money Demand (MD)

AD

1. Fed sells bonds in the open market


This will pull $ out of the economy as the people buy the bonds
2. MS Shifts left/in
As money becomes more scarce people want $ so bid up (I)
3. As (I) rises, Consumption and Investment prices
4.

6.

Shifts AD in US prices down {Exports (up)} {Imports (down)}

Given the situation our economy has been in the past several years why fiscal and monetary policy had a difficult time getting us
back to the optimal level of GDP. (5pts)

Because during the recession the government is supposed to spend more to keep us afloat. Creating more government debt. The
problem is that they have already reached their debt limit. If they spend anymore the economy will collapse. If they changed our tax
rates to fit the payment requirements the fiscal and monetary policy would work.

7.

FRED: Follow the instructions for this assignment on PDF handout.


Before you start, make sure to log in to your free account so that you can save your graphs!
FRED unemployment graph:
Watch the video Introduction to FRED and complete your own unemployment graph. Instead of using St. Louis use Salt
Lake City. Have the graph span the last 10 years. Write about what inferences you can make from this graph. Save and paste
the graph here: (5pts for the graph and 5 pts for write-up)

Utah has been able to keep unemployment rates under the national civilian unemployment for the past ten years. At
the end of 2006, and beginning of 2007 the unemployment rate for Utah was at its all time low of 2.5%. During the recession people
drastically lost their jobs. Salt Lake City also was able to keep their unemployment rate lower than the nation percentage.

List the 3 types of Unemployment, define each, and put a star next to those that are included in the natural rate of
unemployment. (8pts)
1.

Cyclical______________________________
When the economy enters a recession, many of the jobs lost are considered cyclical unemployment.

2.

Frictional_______________________________
The time period between jobs when a worker is searching for, or transitioning from one job to
another.___________________________________________________________________________________

3.

__________________________________________________________________________________________
Structural__________________________
A form of unemployment caused by a mismatch between the skills that workers in the economy can offer, and
the skills demanded of workers by employers.
__________________________________________________________________________________________

What is the difference between nominal and real, why is each important? (4pts)
__Nominal: Based off of raw data on production for estimates. Both of these systems are very important
because whether the GDP goes up or down it has a very big effect on the stock market, which in turn makes
stock prices rise or fall, then effecting the unemployment rate and wages.
__Real: Uses the raw estimate to put into inflation form. This shows us how much inflation is running through
8.

an economic system.
FRED Create a GDP graph following the instructions on the handout:
Based on the graph, what is the Real Personal Consumption Expenditures for the second quarter of 2008?
10,000
Based on the graph, what is the Real Government Consumption Expenditures and Gross Investment amount for the second
quarter of 2008?
3,000
Based on the graph, what is the Real Gross Private Domestic Investment amount for the second quarter of 2008?
2,500
Based on the graph, what is the real net exports of goods and services amount for the second quarter of 2008? (4pts)
-550

Write about what inferences you can make from this graph. Save and paste the area graph here: (5pts for the graph and 5 pts for
write-up)

You can see how real personal consumption expenditures has grown the most over the last 60 years. This is because our nation is so
absorbed about consuming. They feel like their personal benefit is a need not a want. In this graph you can also see in 2008 exports
and imports increased, bringing more money into the economy by the selling of goods and services.

Change the graph type to a pie graph:


Put the curser over the pie graph: What is the value of the current Real Personal Consumption Expenditures
in billions of chained 2009 dollars and what % of GDP is it

66%

What is the value of the current Real Government Consumption Expenditures and Gross Investment
billions of chained 2009 dollars and what % of GDP is it

17%

2,868,681

17%

What is the value of the current Real Gross Private Domestic Investment Expenditures
chained 2009 dollars and what % of GDP is it

11,262,800

(6pts)

2,862,400

in billions of

in

Paste the pie graph here: (3 pts)