Answer the questions below properly citing information from the Taylor textbookand the listed Wall Street Journal articles and other sources (use the AU library’s Wall Street Journal database to get copies of the WSJ readings).
• Provide essay responses to the questions using economic reasoning and terminology whenever possible. Use the graphing/drawing tools in Word to create your illustrations or take photos of hand-drawn graphs and insert into your Word document.
• Grades will be dependent upon successfully meeting the following criteria:
? Questions are addressed with accurate use of economic reasoning and terminology.
? Clearly and completely illustrated graphs/diagrams are included when requested.NOTE: The diagrams/graphs submitted must be created by the student – do not cut and paste diagrams/graphs from other sources.
? Opinion is supported with economic rationale properly citing the textbook and readings.NOTE: You are expected to cite information from the Taylor textbook (include page numbers) for each problem in addition to the sources listed for that problem.
? Writing is free of spelling and grammatical errors and meets minimum word requirement of 250 words per problem.
? Responses are provided for all problems and sections by the due date/time.
Problem 1: Warnock, E. & Landers, P. (2016, Feb. 11). How Japan’s ‘Abenomics’ reached an impasse. Wall Street Journal (Online).
1. Briefly explain the macroeconomic problems that Japan has been facing for the past 20 years. When did Abenomics start and why? What are the three arrows of Abenomics?
2. Explain how the monetary policy arrow of Abenomics is designed to help the Japanese economy. Analyze how these actions will in theory affect Japan’s interest rates, consumption, business investment spending, exports, inflation and economic growth. Include a well-labeled AD/AS graph in your answer.
3. Why in practice are these policies not working as intended? What other actions could Japan’s government take to improve the country’s economy?
Problem 2: Ip, G. (2016, Feb. 3). U.S. debt burden: It’s gotten a bit less bad. Wall Street Journal (Online).
1. At what percentage of U.S. GDP is the U.S. Federal Government debt now? What was the debt-to-GDP ratio in 2008? In 2009, what was the debt-to-GDP ratio forecasted to be in 2016? What is the reason for the difference between the forecasted and actual debt ratios for 2016?
2. What are two critical financial problems that threaten to widen the public debt in coming decades?
3. What is one fiscal policy action that can be taken to reduce the Federal debt? What are the short-run effects of this action on consumption, unemployment, and economic output? Include a well-labeled aggregate supply/demand graph with your explanation to show how this policy action would affect price levels and output.
Problem 3: Kurmanaev, A. &Castr, M. (2016, Feb. 13). Venezuela’s collapse brings ‘savage suffering’. Wall Street Journal (Online).
1. What are the macroeconomic challenges that Venezuela is experiencing in 2016? How are Venezuelan citizens and businesses being hurt by these macroeconomic problems?
2. How did the government contribute in part to the country’s current problems? What global event directly caused Venezuela’s economy to spiral out of control last year, and why?
3. Given the problems listed above, identify one fiscal policy action Venezuela’s government could take to improve the macroeconomic situation? What would be one practical problem with launching this policy?Include a well-labeled AS/AD graph with your explanation to show how this policy action would affect price levels and output.
4. What is one monetary policy action that Venezuela’s central bank could take to help the economy? What are the negative side-effects of this policy action? Include a well-labeled AS/AD graph with your explanation to show how this policy action would affect price levels and output.
5. What policy action, if any, do you think would help Venezuela the most right now?
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