Money and the Prices in the Long Run and Open Economies

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WCevpr33

Economics

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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 12- to 15-slide Microsoft® PowerPoint® presentation for 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 you talked about in your week 2 presentation can be achieved and provide support.

Make use of Speaker Notes for explanations.

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

Format your presentation consistent with APA guidelines.

Click the Assignment Files tab to submit your assignment.

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Explanation & Answer

Attached.

Money and the Prices in the Long
Run and Open Economies
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Introduction
❖The

economy is dynamic and it is important to develop a market plan that will
appropriately project the United States disposition in terms of prices, money, and the
open economy in the long run.

❖Understanding essential behavioral effects determines economic impacts on the key
indicators such as foreign exchange, monetary policies, and trade deficits.

❖ By

implementing key economic developmental principles such as sustainability,
exports, and productivity, the US remains competitive and maintains an equilibrium
through a balanced national budget that generates stabilizers and excesses that
result in smooth operations.

History of Changes in GDP, Savings, Investment,
Real Interest Rates, and Unemployment
❖ The

average yearly GDP for the growth of the United States economy in the last
eight years has been 1.2% (Cross, 2016).

❖ Analyzing

the United States GDP in the previous five years, one identifies that it
has not been steady with a slump being witnessed at the beginning of the five years
in 2016 being at 1.6% and the highest being 2.9% at the start of 2015(Cross,
2016).

❖ Household

savings were at decline before the beginning of 2014 because they
were at 4% whereas the highest point was in the beginning of 2013 when they were
at the rate of 10.5%.

History of Changes in GDP, Savings, Investment,
Real Interest Rates, and Unemployment. Cont.….
❖The

rate of interest was steady at 25% at the start of 2017 and with an
increment in i...


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