Problem regarding the consumption spending

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Reference no: EM131263637

Agriculture economics: Read the article (1 and 1/2 page) attached below then write a short essay. 

CBO uses the same model to make their predictions as the one we use in class.  More sophisticated and detailed, yes, but it's got aggregate demand, aggregate supply, potential output, money demand and money supply.  They predict real GDP growth, inflation, unemployment and interest rates with those tools.  So, don't be surprised that, after only half a course in introductory economics, you can already understand a real report relied upon by economists, legislators, reporters and Wall Street investors.  Concentrate on what the CBO thinks will happen between now and 2020.

In your essay, you should include the following:

  • Explain what the CBO thinks will happen to consumption spending, and give reasons why.
  • Explain what the CBO thinks will happen to business investment spending, and give reasons why.
  • Explain what will happen in the money market, using money demand and money supply.  Be sure to include the effects of Federal Reserve policy.
  • Use the goods market and potential output to explain what will happen to output, unemployment and inflation.

These four points are the "rubric" for the essay, the things to write about in a good essay.  The four calibration questions will be based on these four points.

Reference no: EM131263637

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