Reference no: EM131745411

Purpose of Assignment

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

In Week 2, you created a strategic plan for a U.S.-based manufacturing firm; that plan included an aggressive growth plan for setting up a manufacturing plant in a foreign country that required: (1) investment in facilities and equipment, (2) growth in productivity, and (3) growth in employment from 100 to 2,000 over the next five years.

Now, imagine your team has been given the responsibility to determine whether the firm should locate its new manufacturing plant in the U.S. or in one of the countries evaluated by your and your teammates in their Week 2 papers. Consequently, your team needs to develop a 2,100-word (the word count includes the table) economic outlook/forecast. Use the bolded words/phrases shown below as first-level headings for your paper. Your paper should include the following:

Economic Indicators Table. Complete the economic indicators table with statistics for the U.S., which you can compare to the country that was the subject of one of your teammates' Week 2 papers; the economic indicators table is posted with this assignment as a Student Material. OPTIONAL FORMAT FOR TABLE: Your team has the option of incorporating this table into your paper or creating a separate PowerPoint presentation for the indicators listed in the table. If you choose a PowerPoint presentation, your team needs to devote one slide to each economic indicator listed in the table, and your team still needs to submit an MS Word document with the other elements of this assignment as described below. The following sections of your paper should refer to the statistics included in this table.

Government Policies. Discuss how specific U.S. government policies, including fiscal policies and trade policies, can influence economic growth. Provide a specific, real-world example of a U.S. fiscal or trade policy.

Monetary Policy. Analyze how specific U.S. monetary policies could influence the long-run behavior of price levels, inflation rates, costs, and other real or nominal variables. Provide statistics on inflation rates, costs, and other real or nominal variables to support your discussion.

Trade Deficits or Surpluses. Describe how trade deficits or surpluses can influence GDP. Discuss the trends in the U.S. balance of trade over the last 25 years.

Availability of Financing. Discuss the importance of the market for loanable funds to the achievement of the strategic plan. Include information on the trends in interest rates to support your discussion.

In your conclusion, include recommendations on whether the new manufacturing plant should be located in the U.S. or in one of the countries evaluated by your teammates in their Week 2 papers. Base your recommendations on the information you gathered for this paper, especially the information included in your economic indicators table and for your Week 2 paper. In addition, your conclusion should review all the major elements of this assignment.

Cite a minimum of three peer-reviewed sources not including your textbook (Mankiw). Appropriate sources could include the Bureau of Economic Analysis, the Bureau of Labor Statistics, the Federal Reserve, the St. Louis Federal Reserve web page, which is referred to as FRED, publications by the Congressional Budget Office, and information in the Economic Report of the President.

Please note: Throughout Week 3, I will post messages in our Learning Activities related to this assignment; you will be expected to read those messages as well as the discussions of the information posted in those messages and incorporate any relevant information from those discussions into this assignment.

Attachment:- Economic Indicators.rar