Day: January 25, 2021

In this Assignment, you will examine factors that affect aggregate demand (AD) and aggregate supply (AS). You will compute the rates of inflation using the U.S. consumer price index (CPI) and then examine how the results impact nominal interest rates, inflation, disinflation, and deflation.
Instructions: This Assignment presents scenarios in which you will analyze macroeconomic indicators of economic health. It requires a combination of short paragraph answers, computations, and completion of a 450-500 word essay. Answer all of the following questions in this document. You are required to follow proper APA format. Read the Criteria section below for more information before you begin this Assignment.
In this Assignment, you will be assessed on the following outcome:
MT445-4: Examine how U.S. macroeconomic indicators are used to gauge economic health.

1.    Determine whether each of the following would cause a shift of the aggregate demand (AD) curve, a shift of the aggregate supply (AS) curve, neither, or both. Which curve will shift, and in which direction? What will happen to aggregate output and the price level in each case?

a.    The price level changes.

i.    Which curve will shift?

ii.    Which direction does it shift?

iii.    What will happen to aggregate output?

iv.    What will happen to the price level?

b.    Consumer confidence declines.

i.    Which curve will shift?

ii.    Which direction does it shift?

iii.    What will happen to aggregate output?

iv.    What will happen to the price level?

c.    The supply of resources increases.

i.    Which curve will shift?

ii.    Which direction does it shift?

iii.    What happens to aggregate output?

iv.    What happens to the price level?

d.    The wage rate increases.

i.    Which will curve shift?

ii.    Which direction does it shift?

iii.    What will happen to aggregate output?

iv.    What will happen to the price level?

2.    Explain whether the following statements are true or false.

i.    Some people who are officially unemployed are not in the labor force.

ii.    Some people in the labor force are not working.

iii.    Everyone who is not unemployed is in the labor force.

iv.    Some people who are not working are not unemployed.

3.    Refer to the following data on the U.S. consumer price index and answer the questions below.

    Year    CPI        Year    CPI        Year    CPI        Year    CPI
1988    118.3        1993    144.5        1998    163.0        2003    184.0
1989    124.0        1994    148.2        1999    166.6        2004    188.9
1990    130.7        1995    152.4        2000    172.2        2005    195.3
1991    136.2        1996    156.9        2001    177.1        2006    201.8
1992    140.3        1997    160.5        2002    179.9

a.    Compute the inflation rate for each year 1988-1989, 1989-1990, 1990-1991, 1991-1992 etc. using the CPI data for 1988-2006 in the table above. Show your work.

b.    Which years were years of inflation? What do you expect to happen to real interest rates during this time period if nominal rates remain unchanged?

c.    In which years did deflation occur? What do you expect to happen to real interest rates during this time period if nominal rates remain unchanged?

d.    In which years did disinflation occur?

4. Answer the following questions in a 450500 word essay.

Explain the difference between anticipated and unanticipated inflation? What are the costs associated with unanticipated inflation? Why do these inflation costs differ from those associated with anticipated inflation?

Criteria
    This Assignment should be completed in this Word document.
    It should be written in Standard English and demonstrate exceptional content, organization, style, and grammar and mechanics.
    Respond to the questions in a thorough manner, providing specific examples where asked.
    Your sources and content should follow proper APA format (A title page is not required). Review the APA formats found in the Writing Resources accessed through the Academic Success Center within the Academic Tools area of the course.
    Review the grading rubric to ensure all points have been captured in the paper.

References (add references in APA format in the space below)

Topic: Unemployment and Cost Inflation

The two main forms of economic problems are unemployment and inflation. There are different types of unemployment in the economy. Moreover, some employed people are underemployed, particularly during economic downturns like recessions.

Stabilizing prices is one of the macroeconomic goals of policy making. Price stability calls for taming inflation or deflationary pressure in the economy.

1. What are the various forms of unemployment? What type of unemployment is the most difficult to solve? Why?
2. Discuss the differences between unemployment and underemployment and give examples for each of them. What are the costs of unemployment and underemployment on the economy?
3. What are the costs of inflation? What are the costs of deflation? Why do policymakers need to tame inflation (deflation) to stabilize prices? When does rate of inflation become a problem in the economy?

Topic: Shape of Demand Curves, Barriers to Entry and Competition

The shape of demand curves firms face may change from one form of market structure to another. In addition, there are several factors that influence the nature of firms, including the level of competition they may be involved in or may not be involved in at a given period. Barriers also shape the nature of the various forms of market structures.

1. Why does a Starbucks coffeehouse face a downwardsloping demand curve while a dairy farmer has a horizontal demand curve? What other suppliers might face a downwardsloping demand curve?
2. How do barriers to entry impact the level of competitions in a market? What might happen to the market price as greater barriers to entry come into existence?
3. All barriers to entry are not created through market conditions. Barriers to entry, such as patents, licenses, or international trade restrictions, may be government imposed. How do governmentimposed barriers such as patents impact consumers and suppliers in these markets?

In this Assignment, you will calculate total cost, total revenue, and total profit/loss. Based on the computed results, you will determine the optimal quantity of output that maximizes profit under a perfectly competitive market. Moreover, you will evaluate the antitrust laws and merger guidelines based on market shares of firms to prevent a monopoly and promote competition in the economy.
Instructions: This Assignment requires a combination of short paragraph answers and computations. Answer all of the following questions in this document. You are required to follow proper APA format. Read the Criteria section below for more information before you begin this Assignment.
In this Assignment, you will be assessed on the following outcome:

GEL-7.02: Apply ethical reasoning to ethical issues within your field of study.

1.    How does the demand curve faced by a perfectly competitive firm differ from the market demand curve in a perfectly competitive market? Explain.

2.    How does the profit maximization condition for a monopoly differ from that for a perfectly competitive firm? How does this difference impact efficiency under each market structure? Explain.

3.    The following table provides market share information about the soft-drink industry. Review antitrust laws and the merger guidelines under Chapter 15: Monopoly and Antitrust Policy and conduct your own research on U.S. antitrust laws in the Online Library or the internet to answer the following questions.

Company    Market Share
Coca-Cola    37%
Pepsi-Co    35%
Cadbury Schweppers    17%
Other    11%

a.    Compute the Herfindahl-Hirschman Index (HHI) market concentration rules that guide mergers between companies to prevent monopoly creation and to promote competition among firms. Based on the market shares of the companies in the table, the merger of which companies will be highly concentrated? What ethical rules will be affected based on U.S. antitrust laws and merger guidelines in regard to a highly concentrated market?

b.    Do you think the Department of Justice and the Federal Trade Commission would approve a merger between any two of the first three companies listed in the table based U.S. merger guidelines and antitrust laws? Explain.

c.    Do you think this market has barriers to entry? If yes, what might be the market barriers?

References (add references in APA format in the space below)

Criteria
    This Assignment should be completed in this Word document.
    It should be written in Standard English and demonstrate exceptional content, organization, style, and grammar and mechanics.
    Respond to the questions in a thorough manner, providing specific examples where asked.
    Your sources and content should follow proper APA format (A title page is not required). Review the APA formats found in the Writing Resources accessed through the Academic Success Center within the Academic Tools area of the course.
    Review the grading rubric to ensure all points have been captured in the paper.