Money and the Prices in the Long Run and Open Economies, homework help

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timer Asked: Jun 13th, 2016
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Question description

The organization's strategic plan you wrote about in Week 2 calls for an aggressive growth plan, requiring investment in facilities and equipment, growth in productivity, and labor over the next five years.  It is your responsibility to determine how the U.S economy during this five year period will impact such an aggressive growth plan. To do so, you should:

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.    

Tutor Answer

chemtai
School: University of Maryland

please find the attached file. looking forward to working with you again. good bye

Running head: MONEY AND PRICES IN THE LONG RUN

Money and Prices In The Long Run
Name
Tutor
Course
Institution
Date

1

MONEY AND PRICES IN THE LONG RUN

2

MONEY AND PRICES IN THE LONG RUN
Organisational growth rate is affected by a combination of numerous factors inside and
outside it and all its strategic growth models should be planned in high consideration of these
external factors. Economic growth in the economy that the organisation intends to or is operating
in can be positive for the organisation as well as negative (Asada, 2010). Economic growth is
generally a subset of so many things such as the gross domestic production in an economy,
employment rates, the habit of people to save and invest as well as interest rates.
Statistics show that the Gross Domestic Production growth rate has been increasing
steadily over the last couple of years. Individual expenditure for consumption purposes has the
greatest contribution in GDP growth, while private investments and government expenditure plus
investments follow by significant lower percentages. Since gross domestic product reflects the
general production in a country, it is used to compare the overall performance of a country
economically to that of other countries (Gandolfo, 2002).
Savings refer to the excess money set aside after people have met their domestic needs.
They are amounts of money held by people to meet unanticipated future expenditure and to
measure their liquidity. In current years, savings in the US economy have dropped drastically
and this can be attributed to the exaggerated tax codes that burden the US saver. Savings
determine the investment opportunities that are undertaken in an economy as they provide the
capital to invest other new income generating projects and ideas. Thus, reduced savings means
reduced investment in the economy and hence depreciating infrastructural facilities. Research
has it that even the few people who do invest prefer to do it in economies outside US. Again, this
is due to the unhealthy tax environment set by the government (Williams, 2014).

MONEY AND PRICES IN THE LONG RUN

3

The overall supply and demand of money determines the interest rates attributed to
borrowing and savings plans. Interest rates refer to the extra amounts payable above the principal
by borrowers or to savers, normally calculated based on a certain rate. Increased money supply
in the economy and hence lower demand leads to higher rates whereas reduced supply and hence
higher demand for money supply leads to lower rates (Williams, 2014). Due to reduced savings
and investments in the US economy, interest rates are relatively low.
Unemployment rates are relatively low too and they have maintained stagnancy over the
years. The number of people actively looking for work and ready to work if given a job is no...

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Anonymous
Goes above and beyond expectations !

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