Macroeconomics Assignment
ECN150
Spring 2006
WakeForestUniversity
Instructor: McFall
Directions- Answers to the following questions are due on Monday 1 May, 2006 at 5pm. (Please turn in assignments at my office, 129 Carswell Hall.) Your answers should be typed and should reflect your efforts to present answers that are both well written and thorough out. Authors of answers that are either incorrect or do not appear to be well thorough will not be rewarded with a high grade. Please ask if you are wondering about what might constitute a good answer.
Section I- Measuring the Economy
1) What does GDP attempt to measure?
2) Briefly differentiate between nominal and real GDP. Why is real GDP a more accurate measure of economic growth compared to nominal GDP?
3) What are two weaknesses of GDP?
4) Students in France have been protesting the possibility of new labor laws in the country. How might the changes to labor laws impact France’s structural unemployment rate?
Section II- Economic Growth
1)What characteristics do the “industrialized” economies of the G-8 tend to share with one another? Why do economists think that private property laws lead to economic growth?
2)Jeffrey Sachs, an economics professor from ColumbiaUniversity, has lobbied extensively over the last ten years that industrialized economies should take a more active lead in trying to lift poor African countries out of poverty. What does he suggest the world’s largest economies do to help these poor countries? What benefits would the largest economies accrue from his proposed actions? What criticism has confronted his cause?
Section III- Central Banks
1)We have discussed what inflation is. Why are central banks worried about inflation?
2)The US central bank, the Federal Reserve, has two goals in mind when it makes monetary policy, keep inflation and unemployment as low as possible. Why is there tension between these goals? What three tools does the Fed (not the Feds- that is the FBI) use to meet these too goals?
3)If the Fed received data which insinuated that the unemployment rate was lower than the natural rate of unemployment, what might the Fed do in response to this information?
Section IV- Fiscal Policy
1)Compare the goals of the Federal Reserve when it conducts monetary policy to those of the executive branch of the US government when it conducts fiscal policy.
2)What fiscal policy decisions has the Bush administration made since taking office in 2001? What do various pundits have to say about the administration’s decisions?
3)Discuss the trade-offs that are evident in the Denmark’s decision to provide job re-training for workers who have lost their jobs. (Use the article we discussed in class as an information source.)