Question;week 1 discussion;Opportunity Cost (graded);Give an example of how the Principle of Opportunity;Cost applies to your life. Think of a recent decision you made. It could be a;decision as simple as whether to eat out or cook your own dinner, or it could;be a decision to quit your job and go back to school. What alternatives did you;consider? How did you arrive at your final decision? Did you implicitly weigh;marginal cost and marginal benefit? How does the concept of opportunity cost;apply to production possibilities curve (PPC) analysis? How can we use PPC;analysis to examine what we do?;Economic Systems (graded);Think of a business firm you;recently visited (such as Walmart, Home Depot, Red Lobster, Barnes & Noble;McDonald?s, etc.). What motivated the producers of all the individual products;in the store to make them and offer them for sale? How did the producers decide;on the best combinations of resources to use? Who made those resources;available, and why? How does the market determine who will get the goods and;services? Who decides whether these particular products should continue to be;produced and offered for sale? How do these decisions differ between capitalist;and socialist systems?;week 2 discussion;Demand, Supply, and Market Equilibrium;Think about a product that you have purchased;recently (e.g. soda, diapers, takeout meals, milk, shoes, manicure/pedicure;video game, etc.). Explain how the law of demand affected your purchase. Give;specific examples of how the determinants of demand and supply affect this;product (T-I-P-E-N and P-R-E-S-T). What happens to the demand curve and the;supply curve when any of these determinants change? Give examples of scenarios;that would cause a change in demand versus a movement along the same demand;curve and supply curve for this product. Discuss the new equilibrium price and;quantity that result from these changes. Can you demonstrate some of these;changes graphically?;Price Elasticity of Demand;Think of another good that you;have purchased recently (or you could continue with the good you selected in;TDA I). Be specific (e.g. is it breakfast cereal in general or Cheerios cereal;specifically). If the price of this item increases, how would this affect the;quantity of the good that you consume? Is the Demand for;this good Price elastic or Price inelastic? Justify your;classification by talking about the determinants of elasticity as they apply to;this product. Say price is on the rise for this product and you are the manager;of a store, would you be thrilled to be selling this product? Under what;circumstances would you want to own a business that sells this product? In;other words, how does an increase in price for this good affect your Total Revenue?;Using specific examples, relate the concepts of Cross Elasticity and Income;Elasticity to this product.;week 3 discussions;A Firm?s Shut Down Decision (graded);Say you are the manager of a;perfectly competitive firm selling a product. Your business is making a loss;because total revenue is less than total costs. What would you do--shut down or;continue to operate? Use hypothetical numbers to explain. Information you need;to provide include--state the product you are selling, the price of the;product, the quantity of the product you produce, fixed costs, total cost;figure out total revenue, total and average variable costs. Then go ahead and;make your decision. Explain carefully why it makes better sense to shut down;rather than continue to operate or to continue to operate rather than shut;down, as the case may be. How do fixed costs play a role in your analysis? What;is the difference between shutting down and going out of business?;Market Structure Classification;(graded);Think about a firm that you have done business with;recently. What industry does this firm belong to? For example, McDonald's is a;firm in the fast food industry. What market structure would this industry fall;under? What are the names of other firms in this industry? Is it monopolistic;competition, oligopoly, monopoly, or perfect competition? Justify your;classification of the firm. Use the characteristics/features of the different;market structure to determine which market structure to classify your chosen;firm.;week 4 disussion;GDP (graded);Go to the Bureau of Economic Analysis website;www.bea.gov, and access the BEA interactively by selecting "National;Accounts" and then "National Income and Product Account Tables.;Select "Frequently Requested NIPA Tables," and find Table 1.1.1 on;GDP. What is the current GDP growth rate for the U.S.? Examine the trend over;the past few years. What trends interest you? What stage of the Business Cycle;would the U.S. economy be in currently given the trends? Why might GDP not be;considered an accurate measure of economic well-being of a country? Identify at;least three limitations of GDP as a measure of economic well-being.;Unemployment and Inflation (graded);Go to the Bureau of Labor Statistics website;www.bls.gov/news.release/empsit.toc.htm, and click on "Employment;Situation Summary" to get the most up-to-date summary of unemployment in;the U.S. or the "Employment Situation Summary Table A. Household data, seasonally;adjusted." What interests or surprises you about the summary table? How;does that rate compare with the rate in the previous month or quarter? Discuss;the differences in unemployment rates by gender, age, education, etc.week 5 discussion;Aggregate Demand and Aggregate Supply;(graded);Go to the BEA website www.bea.gov.;On the left tab under Publications, go to the Interactive Data Tables. Select;National Income and Product Accounts. From Table 1.1.6 and 1.1.7 examine;all four components of GDP (C, I, G, and Xn). Which of;these four components of AD declined the most during the 2007 and 2009;recession? Do you think an increase in government's spending (G) can boost the;Aggregate Demand (AD) in a recession? Analyze why the economy may operate below;full-employment GDP in the short run. How can the multiplier have a negative;effect? What is the relationship between the multiplier and the marginal;propensities? Explain.;Fiscal Policy (graded);Give an example of an event or incident that has;taken place in the U.S. economy which has a major economic impact--be specific;e.g., 9/11 attack, natural disaster, rise or fall in oil prices due to OPEC;policies, consumer optimism or pessimism about an expected economic expansion;or downturn, increase in government spending on healthcare, tightening of the;legal and institutional environment, and so forth. What effect would this event;have on AD or AS, other things being constant? What would be the resulting;effect on equilibrium price level? Explain. What will be the effect of the;different tools of fiscal policy to stabilize the economy? Give an example of a;built-in stabilizer and explain how it would work to reduce this rise or fall;in the level of AD.;week 6 discussion;Money and Banking (graded);What factors led to the mortgage default crisis?;How did mortgage defaults affect banks involved in mortgage lending and;mortgage investing? Securitization? TARP? What do these mean? How did;mortgage-backed securities spread losses during the mortgage default crisis?;How does TARP illustrate the problem of moral hazard? What did the Federal;Reserve do during the financial crisis of 2008 and 2009? How did the recent;financial crisis affect the financial services industry? What are some of the;major provisions of the Wall Street Reform and Consumer Protection Act?;Monetary Policy and the Federal Reserve (graded);What is the Federal Reserve (Fed);all about? Which Federal Reserve District Bank is closest to you? Who is the;current Chairman of the Fed? Should the Fed remain independent from political;authority or should the President and Congress have a say in their operations?;Why? Why not? What is FOMC? What is the current Federal Funds Rate? How does;the Fed implement monetary policy to manage the economy? At the last meeting of;the FOMC, what was done to the federal funds rate--increased, decreased, or no;change from previous meeting? Given the current state of the U.S. economy;should the Fed be using expansionary monetary policy or contractionary monetary;policy? Why? Why Not?;week 7 discussion;Free Trade (graded);Are you for or against;free trade? Are you for or against NAFTA? What is the economic basis;for trade? Explain the underlying facts that support free trade and give an;example of a good that you purchased recently that is based on resource;differences. What are some examples of goods that the U.S. has comparative;advantage in producing? Take a look at the tag of the shirt/dress/pants you are;wearing today. Where was it made? Anyone wearing ?Made in America? items of;clothing today? We sometimes hear people say ?Buy American." Why don't we?;What is the basis of international trade? What are the benefits and the costs?;Under what conditions would you advocate for trade restrictions?;Foreign Exchange (graded);What is happening to the value of the U.S. dollar;these days? What causes the value of the U.S. dollar to rise or fall? Who;demands U.S. dollar? Who supplies U.S. dollar? When we purchase German;products, does our demand for euro go up or down? What are freely floating;exchange rates all about, and how do they work? How can the falling U.S. dollar;impact your travel expenses? Why would a cheap dollar relative to other;nations' currencies be good or bad for U.S. trade?
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