98. Economic
You will have three essay questions that should be answered in not less than two paragraphs and not more than three paragraphs. For each question,, I am looking for evidence that you can make connections with the various readings/media to address the issue. Please provide references in your answers to not only give credit to the source but also to show that you have synthesized material. Use bold font to highlight an economic concept or term and define it in your own words.
Question 1:
“In the first two days of 2013, large tax cuts passed in 2001 and 2003 will expire and across-the-board cuts to defense and non defense programs in the government will begin a drastic and sudden hit to the economy — a so-called fiscal cliff — that both parties say could be damaging to the unsteady recovery. “ Weisman, Jonathan, Oct. 9, 2012, New York Times online
Explain, using the sources under week 5 module, how the changes described specifically impact economic recovery. Recommend one cut in spending or one tax increase that you feel will have the smallest impact on output (GDP) and jobs. Remember a tax increase or spending/transfer cut will have contractionar effects on the economy. Evaluate why your proposal would be the best. Support your opinion with informed sources such as Naked ch. 4 and POE chapters 32 & 33. You are encouraged to include some of the media links from Week 5 in your references as well.
Question 2:
According to a recent article*, “The Fed has said for months it won’t raise short-term interest rates from near zero until the unemployment rate, which was 7.3% in October, falls below 6.5%, as long as inflation doesn’t move above 2.5%.”
Using Wheelan (ch. 10) and Taylor (ch. 30), explain why recent joblessness would lead the Federal Reserve to maintain their current policy of low rates. In your answer, I am expecting you to show your understanding of the link between money (interest rates and credit markets) and real sectors of the economy such as jobs, output and price levels.
*Hilsenrath, Jon “Fed Debates Low-Rate Peg” November 13, 2013 Wall Street Journal, online
Question 3:
In Naked (ch. 12), Wheelans make a compelling argument in favor of trade. The eminent economist, Paul Krugman also says : “,,, globalization, driven not by human goodness but by the profit motive, has done far more good for far more people than all the foreign aid and soft loans ever provided by well-intentioned governments and international agencies.” But even Krugman knows that he has haters for saying that!
Given your discussion post from week 6 on a WTO trade issue and your understanding of trade and globalization from the readings ( Wheelan, ch. 12, Taylor ch. 3, 6 & web assignments), explain what the theory of comparative advantage is and explain how gains from trade do not come without a cost. Use examples to support your view.
I am a international students, and please use easy grammar. My TOEFL grade is around 60 points, so don’t use perfect grammar or big words.