ECO372 Phoenix Wk 3 Prices in Long Run and Open Economies Assignment

User Generated

gevgr76

Economics

ECO372

University of Phoenix

Description

Purpose of Assignment

Week 3 will help students develop an understanding of what money is, what forms money takes, how the banking system helps create money, and how the Federal Reserve controls the quantity of money. Students will learn how the quantity of money affects inflation and interest rates in the long run, and production and employment in the short run. Students will find that, in the long run, there is a strong relationship between the growth rate of money and inflation. Students will review the basic concepts macroeconomists use to study open economies and will address why a nation's net exports must equal its net capital outflow. Students will demonstrate the relationship between the prices and quantities in the market for loanable funds and the prices and quantities in the market for foreign-currency exchange. Student will learn to analyze the impact of a variety of government policies on an economy's exchange rate and trade balance.

Assignment Steps

Resources: National Bureau of Economic Research

Develop a 2,100-word economic outlook forecast that includes the following:

Analyze the history of changes in GDP, savings, investment, real interest rates, and unemployment and compare to forecast for the next five years.

Discuss how government policies can influence economic growth.

Analyze how monetary policy could influence the long-run behavior of price levels, inflation rates, costs, and other real or nominal variables.

Describe how trade deficits or surpluses can influence the growth of productivity and GDP.

Discuss the importance of the market for loanable funds and the market for foreign-currency exchange to the achievement of the strategic plan.

Recommend, based on your above findings, whether the strategic plan can be achieved and provide support.

Use a minimum of three peer-reviewed sources from the University Library.

Format your paper consistent with APA guidelines.

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Explanation & Answer

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Running head: MONEY AND THE PRICES IN THE LONG RUN AND OPEN ECONOMICS1

Money and the Prices in the Long Run and Open Economics
Student’s Name
Institutional Affiliation
Date

MONEY AND THE PRICES IN THE LONG RUN AND OPEN ECONOMICS

2

Introduction
The position of the economy of the United States is comparatively healthy over the
previous years. However, this could be different in connection to the next five years. As the
economy continued to pull out of recession in 2017 and 2019, the situation might be dissimilar in
the future years. Therefore, in the modern economy, it is essential to establish a progressive
market growth plan to effectively predict the disposition of the United States in relation to
money, prices, and the open economy in the long-run. It is as well important for the plan to be
transparent and trustworthy to have practical outcomes. To comprehend these plans and
projections, it is noteworthy to explore the history and future of the United States’ Gross
Domestic Product (GDP), savings, investments, real interest rates, and unemployment.
Furthermore, it is essential to understand the monetary policy and its repercussions of inflation
and price. The research will as well analyze trade deficits and surpluses and the manner in which
they directly influence the GDP and productivity. Additionally, to determine if the strategic plan
is attainable or not, the scrutiny of the significance of markets for loanable funds and foreigncurrency will be of considerable help.
History and Analysis of Changes in GDP, Savings, Investment, Real Interest Rate, and
Unemployment
Gross Domestic Product (GDP) is defined as a measure of the total value of goods and
services produced and provided in a country over a particular period of time usually one year
(Neill, 2014). Through observing the GDP of the United States, it is possible to evaluate its
history and compare in the future. Historically, the economy of the United States started working
since the year 1929. Regardless of the fall of GDP in the initial years until 1933, the nation’s
GDP grew at considerable levels. Furthermore, despite the undesirable marks of the 1938 and
1946, the GDP of the country has usually remained remarkable. There has been tremendous
growth in double digits in the years from 1940 to 1944 (Trading Economics, 2019). However,
the international economic pressures and other factors have resulted in a reduced speed in the
GDP growth pace of the United States in the last two decades. Nevertheless, as pointed out by
U.S Bureau of Economic Analysis (2017), regardless of the slowdown, the GDP increased to
4.6% level in the first quarter of the year 2014, while in 2016, the GDP attained a high of
18,569.1 billion dollars. The forecast for the coming five years (2019 to 2023) shows continual
growth although at much slower pace. As noted by Amadeo (2019), the GDP growth of the
United States in 2019 will slow to 2.3% from 3% in 2018, and will be 2% in 2020, and 1.8
percent in 2021. The steady incline supports the economy’s health for coming few years. Even
though, the economic well-being is not assured, it offers us with the viewpoint of what to look
ahead to in the coming years and thus we can prepare for it as early as now.
To comprehend the distinctive economic standing of people in the Uni...


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