Final Research Project-

This research project is designed to apply the theories and principles of Economics to the real world.

SECTION A: Text into Context Assignment

1. Price Restrictions in the News

a) Provide a textbook definition for price restrictions and differentiate between the different types. 

b) Review the following article and identify the type of restriction being proposed.

http://www.bbc.com/news/world-europe-30599341 

c) Summarize the article and say how it relates to the topic covered in class.

d) Carefully advise the president of Russia by examining the pros and cons of his proposal. 

2. Externality in the News

a) Provide a textbook definition for externality and differentiate between the different types. 

b) Review the following articles and identify the type of externality.

http://consumerist.com/2013/10/29/city-sues-sriracha-hot-sauce-factory-over-eye-burning-chili-stench/ 

http://www.eater.com/2013/11/27/6322765/judge-orders-california-sriracha-factory-to-halt-odor-making

c) Summarize the articles and say how it relates to the topic covered in class.

d) Do you agree with the corrective remedy imposed in the article? Suggest THREE alternate remedies clearly highlighting how your suggestions would solve the problem.

SECTION B: Data Collection and Analysis

1. Balance of Payment

a) Extract and plot using a line graph the Exports, Imports and Balance of Trade from 2000 to 2014 for your country.

b) Extract and plot using a line graph the annual Nominal Exchange Rate between your country and the US$ from 2000 to 2014.

c) Comment on the trends in the Exports, Imports and Balance of Trade from 2000 to 2014. Is there any relationship between the movement in the exchange rate and the Exports, Imports and Balance of Trade over the period?

d) Based on the relationship between the exchange rate and the exports, imports and balance of trade observed in part c, discuss the likely impact on Exports, Imports and Balance of Trade if the Government of your country devalues the currency. Use references to support your discussion.

2. Money and Inflation

a) Extract and plot using a line graph your country's inflation rate from 2000 to 2014.

b) Extract and plot using a line graph the your country's nominal money supply from 2000 to 2014.

c) Comment on the trends in the inflation rate and money supply from 2000 to 2014. Is there any relationship between the movement in the money supply and the inflation rate over the period?

d) The central bank of your country has just recently announced that due to the high price level, which has led to rising inflation, it would mop up excess money from circulation. Based on the relationship between money supply and inflation observed in part c, do you think there is any justification for the central bank to mop up money from circulation? Use references to support your response. 

e) Carefully discuss the available tools/instruments the central bank of your country could utilize to achieve its objective. Ensure that your discussion is specific to the objective outlined.