E - Portfolio Assignment-1 Econ 2020 Valeria Finised

Name: Valeria Prieto
Section: TR
E-Portfolio Signature Assignment

Salt Lake Community College
Macroeconomics - Econ 2020
Professor: Heather A Schumacker
Please type your answers to the following questions. If you need to hand draw the graphs on page 3 you may and then scan them as a
separate document. When you have completed this assignment post it to your e-portfolio along with your chosen article and 20 terms
article write up. (20pts) Make sure to put an explanation of the assignments and a reflection statement on your ePortfolio web site.
For examples of reflection prompts please see SLCCs website: https://www.slcc.edu/gened/eportfolio/docs/ReflectionHandout2.pdf.
(10 pts) Link your ePortfolio URL to your My Page under the student tab so that instructors can view your work. (5pts)
1.
What are the 3 main macroeconomic goals economists would like to see for an economy: (3pts)
1. Economic Growth
2. Low Unemployment
3. Low Inflation
2. What is the formula for GDP (write out the full name)? Circle or highlight the largest component and fill in the chart. Under each
put the components and something unique. (19pts)
GDP = Gross Domestic Product
GDP =
Consumption
Consumption
+ Investments
+ Government
sumptio
Components: Consumption
Components: Investment
+ Net Exports
Components: Government
Components: Net exports
1. Durable Goods
Cars
1. Business Fixed investment

Machine for business
1. Purchases of final goods
2. Nondurable Goods
shirt
3. Services
Doctor
2. Construction Investment
Home
3.Inventory Investment Goods
bonds
Excludes:
1) Investments in stocks and
bonds
2. Purchases of final services
3.
1.
Exports
Electronics
2. Imports
Vehicles
Excludes:
1. Transfer Payments
2. Interest Paid on Government
debt
What is the problem associated with being at AD2 that makes policy makers concerned? (1pt)
Inflation will occur at higher levels
Q1
Q Full
Employment
Q2
REAL OUTPUT (quantity per year)
4.
Who does fiscal and monetary policy? What are 2 fiscal policies and 3 monetary policies to correct a situation where the economy
is naturally at AD* but finds itself at AD2, as seen in the graph on the previous page. Briefly explain how each of these policies
would work to correct the situation. (22pts)
Who does fiscal policy: Congress, and approved by the President
1.
Taxes
Taxes influence the economy by determining how much money the government has to spend in certain
areas and how much money individuals have to spend. The government could raise taxes to remove more
money from the economy in efforts to reduce inflation.
2.
Government Spending
Government spending include purchases of final goods and services within the economy. In order to combat
inflation, the government should reduce spending in order to remove excess funds from the economy
Who does monetary policy: The Federal Reserve

1.
Discount Rate
Interest rate the Fed charges commercial banks to borrow reserves. Since reserves earn no interest, banks have
an incentive to maintain excess reserves at the minimum federal level. An increase in the discount rate will
cause reserves to retract. This will help avoid Possible Inflation.
2.
Open Market Operations

Buying and selling treasury securities (bonds), Primary tool for affecting the supply of bank reserves and supply
of money. Open-market operations are most important. The Fed will sell bonds to cause the money supply to
decrease this will fix possible inflation
3.
Reserve Requirement (rr)

The minimum amount of reserves a bank is required to hold (banks can choose to hold more, just not less)
The reserve ratio is rarely changed since this could destabilize banks lending and profit. The Fed would
Increase the Reserve Requirement causing banks to hold more and there would be less money to lend causing
inflation to decrease.
5.
Begin in equilibrium in each of the following graphs; draw the effects from question 2 above as they would apply in each graph
below. Next draw the effects of an anti-inflationary policy taken by the fed to correct the result from question 2 - use both graphs.
Explain what is happening in each graph and overall in the economy as the due to the anti-inflationary policy. (20 pts)
Money Supply and Money Demand Graph
Nominal
Interest Rate
Aggregate
Demand and
Aggregate Supply
Money Supply Curve (MS)
PL
Real GDP
AS
AD
Money Demand (MD)
Effects of Inflation
Steps taken by the Fed to avoid inflation:

1. An increase in AD causes shift out
2. Causing output to expand in the short run
3. Overtime, AS shift in due to reserve requirements or increased taxes
4. Output returns back to natural level.
6.
Given the situation our economy has been in the past several years why fiscal have and monetary policy had a difficult time
getting us back to the optimal level of GDP. (5pts)
Inters rates cannot be lowered and people are unwilling to pay more taxes.
7.
FRED: Follow the instructions for this assignment on PDF handout.

Before you start, make sure to log in to your free account so that you can save your graphs!
FRED unemployment graph:
Watch the video Introduction to FRED and complete your own unemployment graph. Instead of using St. Louis use Salt
Lake City. Have the graph span the last 10 years. Write about what inferences you can make from this graph. Save and paste
the graph here: (5pts for the graph and 5 pts for write-up)
From this graph Salt Lake City, has a lower unemployment rate than the rest of the nation. During the 2008 2009 recession
(shaded in gray) SLCs unemployment rate only rose by 4%, while the national average rose by almost 5%.
8. List the 3 types of Unemployment, define each, and put a star next to those that are included in the natural rate of unemployment.
(8pts)
1.
2.
3.
8.
9.
Frictional Unemployment
Short term unemployment as individuals are between jobs.
Cyclical Unemployment
Unemployment that occurs during a recession
Structural Unemployment
Causes by changes in the structure of the demand for labor, as certain skills become obsolete
What is the difference between nominal and real, why is each important? (4pts)
Nominal is the market value of all goods and services produced within countries boarders in a year. Real is the same, the only
difference is that nominal includes inflation and real is adjusted for inflation.
FRED Create a GDP graph following the instructions on the handout:
Based on the graph, what is the Real Personal Consumption Expenditures for the second quarter of 2008?
10077.9
Based on the graph, what is the Real Government Consumption Expenditures and Gross Investment amount for the second
quarter of 2008?
2974.81
Based on the graph, what is the Real Gross Private Domestic Investment amount for the second quarter of 2008?
2472.6
Based on the graph, what is the real net exports of goods and services amount for the second quarter of 2008? (4pts)
-550.40
10. Write about what inferences you can make from this graph. Save and paste the area graph here: (5pts for the graph and 5 pts
for write-up)
On this graph we can see the amount of net exports is negative. That is because the amount of imports is much greater than
the amount of exports. Personal consumption is the larger category.
.
11. Change the graph type to a pie graph:
Put the curser over the pie graph: What is the value of the current Real Personal Consumption Expenditures
in billions of chained 2009 dollars and what % of GDP is it
66%
What is the value of the current Real Government Consumption Expenditures and Gross Investment
billions of chained 2009 dollars and what % of GDP is it
17%
2870.6
in
17%
What is the value of the current Real Gross Private Domestic Investment Expenditures
chained 2009 dollars and what % of GDP is it
11330.7
2852.7
in billions of
(6pts)
Paste the pie graph here: (3 pts)
Use the excel sheets provided to complete this problem. Scenario 1: If the initial deposit into a bank is $5,000 and the reserve
requirement is 10% use formulas to fill in the chart all the way to completion (where there will be 0 for new deposits). Use formulas
and cell references whenever possible. Fix the cell references for the reserve requirement when entering your formulas on the first
line such that you can drag your information down the rows. Fixing a cell reference is done by putting dollar signs in front of the cell
row and column references ex. $B$3 this will mean that no matter where you copy that cell to it will always refer to cell B3. For
scenario 2, change the reserve requirement to 40%. (20)

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Name: Valeria Prieto

E-Portfolio Signature Assignment

Components: Net exports

1. Business Fixed investment

1. Purchases of final goods

2. Purchases of final services

REAL OUTPUT (quantity per year)

Who does monetary policy: The Federal Reserve

Open Market Operations

Reserve Requirement (rr)

Money Supply Curve (MS)

Money Demand (MD)

Steps taken by the Fed to avoid inflation:

FRED: Follow the instructions for this assignment on PDF handout.

Paste the pie graph here: (3 pts)

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