WebQuest

Macroeconomic Policy

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ALL Answers need to be labeled by "Section Number."  Thanks!


 
Aggregate Demand (AD) is the total spending of the economy & Aggregate Supply is the total production of the economy,  Click through to 

Grokking Econ and expand your understanding of AD/AS.  Answer Section II questions 3 -15 ONLY!!  Please write down the shift and reason why on a separate piece of paper.  You will need to login to Grokking before clicking the link.
 


Part 1

Okun's Law explains the relationship between GDP and unemployment.


  • Based on the information in the graph above answer the following on a separate piece of paper...
  1. What is the relationship between Real GDP and Unemployment? 
  2. Explain why this relationship exists...how does one lead to more less of the other (connection)?  Please make sure you are very thorough and do not skip any steps with your explanation.

 




Watch the "Whiteboard" video review of Monetary and Fiscal Policy and on a separate piece of paper copy the chart below and summarize the tools/effects of Fiscal Policy and Monetary Policy as you watch the video.


Link to Video:


 


Policy

Tools

Graph Affected?

During a Recessionary Gap?

During an Inflationary Gap?

Fiscal

1.

 

2.

 

 

 

 

Monetary

1.

 

2.

 

3. 



4.                                               

 

 

 

 






Go to the following website to analyze how the government dealt with past recessions...you'll need headphones to listen to the content.

Recessions of the Past---Click the Link as well as "Allow Flash Player" when the website appears 




 

Look at & listen to the 5 documented recessions & answer the following for EACH of the 5 time periods on a separate piece of paper...

  1. What was the major problem(s) with each recession (state of the economy)?  Briefly explain.
  2. What type of economic policy was used for each?  What were the "tools" used?  Be specific!




The "Great Recession!"
 

2. Next, use the following website, as well as the previous video to answer the questions:         The Nation's Unemployment Landscape

 

1.       What is the time period portrayed in the video of the "The Decline: Geography of a recession?"

2.      What was the unemployment rate at the start of the video?  Which types of the unemployment are present when the unemployment rate is this low?  

3.      At the beginning of the video, which three states have the highest levels of unemployment?  Give an educated explanation as to why this is so...

4.      What happens as you progress through the video?  Which type of unemployment is growing? Explain.

5.      Which areas of the country seemed to be unaffected by the recession?  Give an educated explanation as to why this is so...


Finally, visit GEO FRED to get an update on the unemployment rates for each state.

1.       How does the economy look today?  Explain.

2.      What is the unemployment rate in your state (click on the state)? What types of Unemployment exist?Explain.

3.      Which states have the lowest unemployment rate?  Why do you think this is so?

4.      What is Full Employment?Are any of the states fully employed? How do you know? 


 
 





Part 1

 Back to Grokking Econ one more time...practice the multiplier.   Go to questions that have the graphs after the screeen that says "Spending Multipliers Interactive."  Write your answers down for questions 1,2,3,4,& 5.
 
 
 
 Part 2

As you know from class, the U.S. Federal Government's Debt is $18 Trillion.  Please go to the following website and fix the federal budget.  Make sure you read the instructions thoroughly and answer the questions that follow.

  • Fix The Federal Budget...if you have questions about each expenditure click on the "Learn more" after each. Click on "Next" at the bottom of the page.

  1. What is the goal of the activity? Short term and long term?  Why?
  2. Which areas of the Federal Budget did you decrease spending? Explain why you decided to do this.
  3. Were there any areas in which you increased the Federal Budget? Explain why you decided to do this.
  4. Did you reach the goal (from #1)?  Why or why not? 

Part 3

Watch the following video on Exchange Rates:

               Exchange Rates Graphs

A little Exchange Rate Practice....go to the Grokking Econ practice page and write down your answers on a separate piece of paper (no need to draw the graphs!).  

image of number 7
Performance Task...please perform on a separate piece of paper and attach to your answers from your work on Sections 1-6.

Assume the economy is fully employed and is in long-run equilibrium. Read the scenarios and answer the questions that follow:

 A. An increase in aggregate spending causes the economy to produce above full employment. 

                                                             i.     Full employment is $250 trillion. 

                                                           ii.     The economy is currently producing at $350 trillion and the MPC is .80.

1.      Graph the current state of the economy from part A.

2.      Explain an event that might have caused the problem stated in A.

3.      Which fiscal policy solutions would move the economy towards full employment and price stability?  Would this cause a short run deficit or surplus? Explain.

4.      What is the spending multiplier?  Tax multiplier?

5.      How much would government spending have to change to fix the "Gap?" Taxes?

6.      Show the result of the implementation of your policies stated above in #3 on the graph you drew for  #1.

7.      Explain what would happen to the economy in the long-run if no interventions were implemented.


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