Background: You have been randomly selected to participate in a student focus group conducted by the Council of Economic Advisers (Links to an external site.) .
Your selection does not imply that you supported the President in the last election or that you agree with his views. “The Council bases its recommendations and analysis on economic research and empirical evidence, using the best data available to support the President in setting our nation’s economic policy” The administration will use suggestions from the focus group to craft legislation that it can propose to Congress and be approved on a bipartisan basis.
In preparation for the focus group meeting you are asked to prepare a written Discussion Board Post which describes the state of the aggregate economy and outlines possible policy options that can be pursued by the administration to counteract the effects of the pandemic. Your post should consist of your complete responses to the four questions posed below. At least one complete paragraph should be devoted to each question.
Please number your responses to the questions below and carefully read the “Requirements” section below. Your posting should employ economic reasoning and apply the concepts that you have learned in Econ 2 Online. What did economic data tell us about the health of the economy as of January 1, 2020 before the advent of the COVID-19 pandemic. Assess the health of the U.S. economy at the beginning of 2020 by evaluating the key economic indicators that we have looked at in this course. How close was the overall economy to potential GDP and the natural rate of unemployment? Was the economy experiencing an inflationary or recessionary gap?
As of January 1, 2020 (before the rapid spread of the Coronavirus) was the United States economy operating in the Keynesian, intermediate, or neoclassical portion of the economy’s Short Run Aggregate Supply Curve? Explain your answer carefully using the data and information that you have gathered regarding real GDP, unemployment, the GDP deflator, and consumer price inflation in the previous discussions.
You should discuss the concepts of potential GDP and the natural rate of unemployment to receive full credit. For the data on real GDP and the GDP deflator use the information from the fourth quarter of 2019. (Links to an external site.) For monthly variables such as the unemployment rate and the Consumer Price Index use the figures for January 2020.
The relevant economics statistics that you should discuss include the growth rate of real GDP, the unemployment rate, and the consumer price inflation rate at a minimum. You are encouraged to discuss and evaluate other economic indicators such as measures of consumer confidence (Links to an external site.) , industrial production (Links to an external site.) , and stock market indices that could add to a more complete picture of the state of the economy as of the beginning of our course. Hints: The data indicated that the U.S. economy was operating close to or at Potential GDP before the advent of the Covid-19 crisis.
Much of the basic information that you need to complete this question should be available to you from previous discussions although you are encouraged to refer to other online sources. The FRED website is a valuable resource for current economic statistics: https://fred.stlouisfed.org/ (Links to an external site.)
A list of possible data sources is available at the end of this document: Draw and carefully describe a graph that utilizes the Aggregate Demand/Aggregate Supply model that would illustrate the state of the aggregate economy in the United States as of January 1, 2020. Make sure that you explain your graph in your own words. You should draw your own AD/AS graph which you can then embed into your post. Your graph needs to be clearly labeled and explained in some detail.
Make sure that your graph includes an aggregate demand (AD) curve, a short run aggregate supply (SRAS) curve, and a long run aggregate supply curve (LRAS, Potential GDP) curve. You should clearly label both axes of the graph The Coronavirus pandemic has resulted in shocks to both Short Run Aggregate Supply (SRAS) and Aggregate Demand. Workers who can’t go to work can’t supply goods and services. On your graph clearly illustrate the effects of the shocks to the economy through shifts in both the aggregate demand (AD) and the short run aggregate supply curve (SRAS) that have occurred as a result of the COVID pandemic. How have the aggregate supply and demand shocks affected real GDP and the price level? Use the GDP data (Links to an external site.) from the second quarter of 2020 which will be available on July 30 to plot both the level of real GDP and GDP deflator (Links to an external site.) on your graph.
Explain how and why the spread of the Coronavirus is likely to affect consumer and business investment spending and how it will affect aggregate demand? Which sectors of the economy and occupations will be most affected? Be specific. Please draw your graph rather than cut and paste from an outside source.
Graphs that are simply copy and pasted from other sources including your text will be penalized at least 5 points. For information about how to embed an image in a discussion and reply see: https://community.canvaslms.com/docs/DOC-10700-4212190965 (Links to an external site.) Should you have difficulty embedding your graph into your post you can attach a copy of your image as a Word or PDF file but you should be able to embed if you follow the instructions here (Links to an external site.) .
You will receive extra consideration on your post if you embed the image in your post. The Council of Economic Advisers requests that you carefully describe and explain at least two long run macro policy options that the President can consider to boost productivity growth and potential GDP after the effects of COVID subside. These policies should be aimed at raising potential GDP and shifting the Long Run Aggregate Supply curve (LRAS) out over time. The administration is considering several policies that could boost productivity over the long run.
These policies include massive infrastructure spending, various tax breaks, as well as policies that could bring manufacturing activity back to the United States. Describe how the policies that you propose will affect real GDP. Recall that GDP = Consumption Spending + Investment Spending + Government Spending + Trade Balance (Exports – Imports) 4. Expectations and confidence play an important role in macroeconomic analysis. Consumer and business confidence are major drivers of the economy in the short run. After reviewing Section 12.1 (Links to an external site.) of your text: -Describe how your expectations about the future of the economy have changed as a result of Covid-19. Do you anticipate that there will be permanent changes in your spending patterns? What are your expectations about the future course of inflation in light of the pandemic?
-How has the Coronavirus pandemic affected your plans for the future? Have you reevaluated your educational and/or transfer plans? Have your career choices changed in light of the pandemic? Are you changing your Investment strategies? Are you concerned by the large deficits that are being run to counter the Covid-19 pandemic? Explain your reasoning.
Requirements: -In total your post should be at least 4 paragraphs with at least one numbered paragraph devoted to each question above.
– Apply at least four economic concepts (Key Terms) from Chapters 11, 12, 13, 14, 15, 16, 17, 18, 20, and 21 in your post.
-Make sure that you highlight and/or bold each Key Term that you apply and include the chapter reference to the text in parenthesis.
-You are required to cite at least two recent online sources to support the statements in your post. Your task is to find “authoritative” online sources written by economists or serious economic journalists with macro content and then explain the information in your own words. For example: Calculated Risk (Links to an external site.) : The Calculated Risk (Links to an external site.) website which is published right here in Orange County is an excellent source for data driven macro stories.
-Cite any and all outside sources, including blogs and websites with enough detail so that I can easily find it. The APA (Links to an external site.) style of citation is recommended although the MLA & Chicago styles are acceptable also. Include a reference (works cited) list for all of your sources.
The Saddleback College Library (Links to an external site.) has resources that will help you cite your sources. See: https://www.saddleback.edu/library/citation (Links to an external site.) Provide a hyperlink for all information from the internet so that the reader can find the article/post quickly on the web.
-You are responsible for checking to make sure that your post and graph is visible on Canvas within a thread. You are responsible for double checking to make sure that your post and graph are visible to all. If I need to click on an attachment to grade your post you will lose three points. Grading Rubric: 1) Clarity and conciseness of writing- at least 4 separate paragraphs 2) Correct application of course concepts and 4 Key Terms from Chapters 11-18 and 20-21. 3) Critical thinking
– Did you back up any normative statement or opinion with economic reasoning? Make sure that your post is analytical. Economists appreciate data and dislike data free conversations. Relate your post to what you have learned in the class. It is always a good idea to bring in examples or concepts from class readings.
4) Sources-did you properly cite at least two outside sources? Did you include a Works Cited list for all of your sources? Points will be subtracted if the language in your posting is so muddled as to be unclear; or if there are major errors in punctuation, spelling, grammar, and usage that are obvious and distracting. Please leave a blank line between each numbered paragraph. Use a spell-check program and proofread your post prior to submitting. It is also a good idea to have someone else proofread your post for both grammar and the logic of your argument.
My overall impression of your post will certainly be diminished if there are numerous errors. Twenty points per day will be deducted if your post is submitted after the deadline: Wednesday, August 5 at 11:59 p.m. Data Sources
-You can find current information on GDP statistics at www.bea.gov (Links to an external site.) -The St. Louis Federal Reserve Bank has made available a wonderful resource for finding and evaluating macroeconomic time series data for the United States. The St. Louis Fed has developed FRED (Links to an external site.) (Federal Reserve Economic Data) which provides complete data sets on virtually every economic measure that is freely available for the United States: https://fred.stlouisfed.org/ (Links to an external site.) -Trading Economics (Links to an external site.) has a variety economic indicators, historical data and forecasts for many countries including the United States. For U.S. data see: https://tradingeconomics.com/united-states/indicators (Links to an external site.)
-The most important data source for employment and unemployment is the Bureau of Labor Statistics Employment Situation Report. (Links to an external site.) This report is probably the most anticipated of all economic reports
—it measures the growth (or loss) of jobs, whether individuals are in the workforce, and household earnings. You can find the latest Employment Situation Report and other labor market statistics at https://www.bls.gov/eag/eag.us.htm (Links to an external site.) -You can find the “Jobs Report” at https (Links to an external site.) :// (Links to an external site.) research.stlouisfed.org/dashboard/5461 (Links to an external site.) There is also a convenient Unemployment Data Dashboard (Links to an external site.) on FRED that includes key data that will is used to assess the health of the economy.
The link is: https://research.stlouisfed.org/dashboard/13831 (Links to an external site.) You can find everything you need to know about the Consumer Price Index (Links to an external site.) at the Consumer Price Index page on the Bureau of Labor Statistics (Links to an external site.) website: https://www.bls.gov/cpi/ (Links to an external site.)
-The FRED Inflation Data Dashboard (Links to an external site.) provides some useful inflation data for the United States: https://research.stlouisfed.org/dashboard/13847 (Links to an external site.) -The FRED Policy Dashboard (Links to an external site.) : https://research.stlouisfed.org/dashboard/8781 (Links to an external site.) is a good source to review some of the key macro indicators that we have studied in Econ 2 Online.