Write a 5-pages paper by reading Economic articles

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Please write a five-pages paper by choosing one of two topics in the Topic word document. It's double space and front is 12 in Times New Roman.

You need to read those papers that i post link in the article document. There are 16 papers in the document, but you don't have to read them all.

Once you get enough information, you can choose one topic and write about it.



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Choose one of the following two topics. Make sure that your paper addresses all of the specific points I list under the topic you choose. Make sure that the title of your paper clearly indicates which topic you have chosen. Use as much relevant information from the readings as possible, and refer to readings appropriately. 1) What do Federal Reserve economists believe has happened in recent years to the rate of growth of potential output (also called the natural rate of output)? What will happen in the future if Federal Reserve economists and policymakers are currently underestimating the rate of growth of potential output? i) Define potential output. ii) In general, what determines the rate of growth of potential output? iii) How has the rate of growth of potential output changed over the decades from the 1950s to the present, and why? iv) Suppose that Federal Reserve economists and policymakers are currently underestimating the rate of growth of potential output - potential output is really growing faster than Fed people think it is growing. What will be the consequences for the United States economy? 2) Some Federal Reserve officials and economists outside the Fed believe that the natural rate of interest or "R star" is lower now than it was in decades prior to the financial crisis of 2008, and is likely to remain low for many years in the future. They further argue that this is a reason to raise the Federal Reserve's target inflation rate from 2 percent to a higher number. i) Why is the natural rate of interest lower now than it used to be, according to these people? ii) Why would a decrease in the natural rate of interest be a reason to raise the inflation target? iii) Is there anything that Federal government policymakers (Congress and the president) could do that would tend to raise the natural rate of interest? Number the pages. The introductory paragraph must state your conclusions, e.g. your answers to the specific questions I posed with respect to the topic you chose. The concluding paragraph should restate your conclusions but not in exactly the same words. You may refer to the Federal Reserve system or the FOMC as the "Fed." You may not refer to it as the "FED" (all caps). When you quote, you must give page number e.g. "Dogs bite" (Aaron 1996, 12) Be careful with semicolons. Do not use semicolons at all unless you are sure you know how to. Know the difference between "its" and "it's," between "who's" and "whose," between "effect" and "affect." Look up the difference between "compare with" and "compare to." Usually, what you want to use is "compare with" NOT "compare to." "Relate to," "correlate with." NOT "relate with," "correlate to." "Reason for" NOT "reason of." "Research on" or "research about." NOT "research of." There is no such word as "researches." Avoid the passive voice. NO I was bitten by the dog. YES The dog bit me. NO Models have been designed YES Economists have designed models Avoid unnecessary adjectives and adverbs. NO little universal consensus has been achieved YES little consensus has been achieved oh, wait...that's passive. Better: economists have not come to a consensus NO it is very likely YES it is likely NO of utmost interest YES of interest oh, wait...even better: interesting Avoid fancy, big, odd words Always ask: is there a shorter word that means the same thing? As much as possible, avoid using words you don't use in ordinary conversation. Make sure that the nouns, pronouns and verbs within a sentence all match in gender and number. If the noun is singular, the corresponding pronouns and verbs must be singular. If the noun is singular, the corresponding pronouns and verbs must be singular. Inconveniently, the English language lacks a sex-neutral singular pronoun. If you want to use a sexneutral pronoun to refer to a single human, do not use "they." Use "he or she" or "she or he." https://www.frbsf.org/economic-research/publications/economic-letter/2003/october/thenatural-rate-of-interest/ https://www.frbsf.org/economic-research/publications/economic-letter/2015/july/monetarypolicy-normalization-natural-rates/ https://www.frbsf.org/economic-research/publications/economic-letter/2016/october/newnormal-for-gdp-growth/ https://www.frbsf.org/economic-research/publications/economic-letter/1996/may/economicgrowth-and-monetary-policy/ https://www.kansascityfed.org/Publicat/ECONREV/PDF/2q08billi_kahn.pdf https://www.federalreserve.gov/boarddocs/speeches/2004/20041202/default.htm https://www.bankofengland.co.uk/-/media/boe/files/quarterly-bulletin/1999/the-transmissionmechanism-of-monetary-policy https://www.federalreserve.gov/boarddocs/speeches/2003/20030325/default.htm https://www.richmondfed.org//media/richmondfedorg/publications/research/economic_brief/2016/pdf/eb_16-09.pdf https://www.federalreserve.gov/newsevents/speech/fischer20150227a.htm https://www.federalreserve.gov/newsevents/speech/bernanke20111018a.htm https://www.frbsf.org/economic-research/publications/economicletter/2012/november/federal-reserve-unconventional-policies/ https://www.frbsf.org/economic-research/files/el2017-34.pdf https://www.federalreserve.gov/newsevents/speech/fischer20161017a.htm https://www.frbsf.org/economic-research/publications/economicletter/2016/august/monetary-policy-and-low-r-star-natural-rate-of-interest/ https://ideas.repec.org/a/fip/fedhle/00026.html
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Running Head: POTENTIAL OUTPUT

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Define Potential Output
Name
Institution
Course
Date

POTENTIAL OUTPUT

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Definition of Potential Output

In economics potential output is defined as the natural GDP of a country which denotes
the highest level of natural GDP that a county can sustain over a long time. It is the quantity of
production in a country when all the factors of production and resources such as technology,
labor, equipment, and natural resources are fully utilized. It may also portray the potential GDP
of a country when all its available resources are fully utilized. In essence, potential output is the
point at which a country has all factors of production in place to produce certain units of
production. It is the level at which the capital, labor, land, and human resources are available in
sufficient quantity to enable a country to produce economic output. The quantity that is produced
when these factors of production are available and efficiently used is what is referred to as
potential output. An economy that is in a position to produce at its potential, the output is said to
be operating on full employment capacity. It is the economic activity level at which the
aggregate demand and supply are consistent with a stable rate of inflation (Billi & Kahn 2011).
Determinants of the Potential Output Growth Rate
Natural GDP which is the Key driver of the potential output of a country is subjected to
natural, physical and institutional limits. These constraints have imposed certain restrictions on
the rate of potential output growth to the extent that a country's natural GDP cannot grow beyond
a certain limit. Only in a free market will the potential output remain below the actual GDP
because of the lack of price controls and wages (Parry, 1996). This clearly points out that the rate
of growth of potential output is determined by government policies that determine the rate of
wage paid to the employees and the price controls measures implemented in the economy.
Potential output is also determined by the factors affecting the production possibility
curve of the country’s economy and productivity. Consequently, the balance between a

POTENTIAL OUTPUT

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country’s institutional, technological, and natural constraints will determine the rate of growth of
potential ou...


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