Economics Assignment

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ALEINA THE LAST TWO POINTS WHICH ARE AVAIALABILITY OF FINANCING AND THE CONCLUSION ARE THE ONE I HAVE TO COVER I HAVE SENT THE ATTACHMENT OF THE REST OF THE ASIGNMENT YOU WILL CONTINUE FROM THEIR.

In Part 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 Part 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' Part 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 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 Part 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 Part 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 at https://research.stlouisfed.org/fred2/, which is referred to as FRED, publications by the Congressional Budget Office, and information in the Economic Report of the President.

Lastly, you need to format your report consistent with APA guidelines and click the Assignment Files tab to submit your report. Good luck!

Part 2

Aleina these are participation questions they are usually short but should be answered correctly because they give me points. I am from San juan Puerto rico just for reference since some questions are personal.

Question 1

Hello, Everyone -- The Part 3 team paper as your team to:

Analyze how U.S. monetary policy could influence the long-run behavior of price levels, inflation rates, costs, and other real or nominal variables.

A good place for us to start is with the Federal Reserve, which is responsible for monetary policy. According to Mankiw (2015):

Whenever an economy uses a system of fiat money, as the U.S. economy does, some agency must be responsible for regulating the system. In the United States, that agency is the Federal Reserve, often simply called the Fed. If you look at the top of a dollar bill, you will see that it is called a "Federal Reserve Note." The Fed is an example of a central bank--an institution designed to oversee the banking system and regulate the quantity of money in the economy. (p. 223)

Class -- Where did the Fed gets its power? Who granted the Fed the power to regulate the U.S. money supply? What are the two main duties of the Fed?

P.S. The Federal Reserve is often referred to as The Fed, and the Federal Bureau of Investigation (FBI) and law enforcement officials are often referred to as The Feds. Please be careful that you use those terms properly.

References

Mankiw, N.G. (2015). Brief principles of macroeconomics,7e (7th ed.). Stamford, CT: Cengage Learning.

QUESTION 2

Hello, Everyone - The Part 3 report requires your team to:

Analyze how U.S. monetary policy could influence the long-run behavior of price levels, inflation rates, costs, and other real or nominal variables and to gather current and historical information on the inflation rate.

In addition, according to Mankiw (2015):

What determines the value of money? The answer to this question, like many in economics, is supply and demand. Just as the supply and demand for bananas determines the price of bananas, the supply and demand for money determines the value of money. Thus, our next step in developing the quantity theory of money is to consider the determinants of money supply and money demand. (p. 243)

Class - Let's start with the supply of money. In the U.S., what organization is responsible for monetary policy? How does that organization control the supply of money?

QUESTION 3

Describe how trade deficits or surpluses can influence GDP.

In addition, the Part 3 Economic Indicators Table requires you to gather information on exchange rates. Let's start with factors that influence net exports (exports minus imports). According to Mankiw (2015), "those factors include the following:

The tastes of consumers for domestic and foreign goods.
The prices of goods at home and abroad.
The exchange rates at which people can use domestic currency to buy foreign currencies.
The incomes of consumers at home and abroad.
The cost of transporting goods from country to country.
Government policies toward international trade." (p. 269)

For example, here in the Adirondacks of NYS, which is in close proximity to Canada, the tourism industry is strongly by the US/Canadian dollar exchange rate. For example, when the Canadian dollar weakens relative to the U.S. dollar, tourism related businesses, such as hotels, restaurants, and marinas, experience a decline in sales; often times, those businesses with offer to accept the Canadian dollar at par with the U.S. dollar in order to encourage Canadian tourists.

In addition, a drop in Canadian tourists would reduce U.S. exports and GDP.

Class - Choose one of the items in the above bulleted list and relate it to a real-world example. In your Part 3 paper, how will you describe how trade deficits or surpluses can influence GDP?

QUESTION 4

Money is an asset that can be quickly exchanged for any other asset or good. Money serves three functions:

A medium of exchange.
A unit of account.
A store of value. (p. 219)

The first two functions -- a medium of exchange and a unit of account -- are straight forward concepts. For example, a $20 dollar bill is exchangeable for goods or services that cost $20 or less; it is worth 20 one-dollar "units."

The third function, a store of value, is bit more difficult. Money's store of value is measured by its purchasing power over time. It's measured by various price indexes, such as the consumer price index, the producer price index, and various other price indexes, which are compiled by the Bureaus of Labor Statistics and Economic Analysis. Even in the U.S., which has the most acceptable currency in the world, few people hold money as a long-term store of value because it loses a significant amount of its value over time. For example, according to the Bureau of Labor Statistics Inflation Calculator at http://data.bls.gov/cgi-bin/cpicalc.pl, if you "stored" $100 under your mattress 25 years ago, that $100 would have retained less than one-third of its purchasing power.

Class - What real-world examples do you have of the three functions of money?

QUESTION 5

Reserve Requirements One way the Fed can influence the reserve ratio is by altering reserve requirements, the regulations that set the minimum amount of reserves that banks must hold against their deposits. Reserve requirements influence how much money the banking system can create with each dollar of reserves. An increase in reserve requirements means that banks must hold more reserves and, therefore, can loan out less of each dollar that is deposited. (p. 232)

Class - Why would banks oppose increases in reserve requirements?

QUESTION 6

Fed Lending to Banks. The Fed can also increase the quantity of reserves in the economy by lending reserves to banks. Banks borrow from the Fed when they feel they do not have enough reserves on hand, either to satisfy bank regulators, meet depositor withdrawals, make new loans, or for some other business reason.

There are various ways banks can borrow from the Fed. Traditionally, banks borrow from the Fed's discount window and pay an interest rate on that loan called the discount rate. When the Fed makes such a loan to a bank, the banking system has more reserves than it otherwise would, and these additional reserves allow the banking system to create more money.

The Fed can alter the money supply by changing the discount rate. A higher discount rate discourages banks from borrowing reserves from the Fed. Thus, an increase in the discount rate reduces the quantity of reserves in the banking system, which in turn reduces the money supply. Conversely, a lower discount rate encourages banks to borrow from the Fed, increasing the quantity of reserves and the money supply. (p. 231)

Class -- What comments and/or questions do you have on the discount rate?

QUESTION 7

Examine what money is and how the Federal Reserve controls the quantity of money.

Also according to Mankiw (2015):

The Fed is an example of a central bank -- an institution designed to oversee the banking system and regulate the quantity of money in the economy. Other major central banks around the world include the Bank of England, the Bank of Japan, and the European Central Bank. (p. 223)

Again, in the U.S., our central bank is the Federal Reserve System, and the words "Federal Reserve Note" are printed on the front top portion of U.S. paper money. Our money is an IOU from the Federal Reserve. In a previous ECO372 class, we had a discussion of what backing the Federal Reserve provides for the U.S. money supply.

Class -- If you turned in a Federal Reserve note (cash) into the Federal Reserve what would they give you for this IOU? What backs the U.S. money supply?

QUESTION 8

As Shirley noted ". . . store of value, here we have a situation where it seems that the money itself has lost its units, when in fact a dollar is still one hundred pennies, ten dimes and so on." Please note: According to Mankiw (2015), a store of value is used "to transfer purchasing power from the present to the future" (p. 219).

The Bureau of Labor Statistics has a handy Inflation Calculator posted on it's website at http://data.bls.gov/cgi-bin/cpicalc.pl that measures how well the US$ stores value. To use this calculator, you enter the following information:

A dollar value, such as $100.

The two years you want to compare, such as 2016 and 1980.

When I did this, the calculator said that "$100 in 2016 has the same buying power as $34.25 in 1980." So, prices nearly tripled between 1980 and 2016.

Class -- What real-world applications could you use an inflation calculator for?