First, read http://www.northseattleonline.org/ECON202TC/lectures/lectureIII.htm and http://www.northseattleonline.org/ECON202TC/reading/readingIII.htm
a. What and why might a negative impact on investment spending occur when the federal government expenditures become far greater than tax collections. (Your answer should refer to the injections equal leakages equation. Your answer should also address the negative impact on the multiplier process.)
b. Under the scenario above, describe what happens in the loanable funds market. (Your answer should refer to supply and demand curves and the change in equilibrium in the loanable funds model.)
c. How is international finance impacted under the same scenario as ‘a’ and ‘b’ above. (Your answer should refer to supply and demand curves and the change in equilibrium in the foreign exchange market model. Your answer should also refer to the balance of payments.)
Remember that your goal is to demonstrate how the questions’ answer connects to what you are learning. Write a very thorough answer to each question.
News Analysis Assignments
You are required to find a news article from the world-wide-web that relates to the material that we have been recently learning. This means that your research and writing should be about the principles of the course from the section that was most recently covered. (You are not allowed to do a news analysis on a future section that has not yet been covered nor a past section.) Connect to the principles of the course that you learned during the previous week!
Your goal is to show how an article can connect (can be analyzed) by the principles of economics. Your effort toward this goal is evaluated.
Try to read an article perhaps from sources that are linked to EconExpress(http://northseattleonline.org/thcookhub/common/econexpress.htm) – a website established to direct students to economics oriented articles. (Admittedly, there are few odd periodicals, but a substantial number of links are associated with news and magazines that publish the types of articles that are appropriate for college students of economics.) If you cannot find appropriate articles at EconExpress, then you are welcome to do your own search. The articles should have been recently published.
250 words minimum must be written.
The first line of your composition – type the topic of the news you are analyzing – do not use the headline from the researched article.
On the next line, put the name of the news source and the web address (url) where the article can be found. (The url must be specific enough so that other students could go to the very place and read the same article that you read.)
The first paragraph should contain one or two sentences summarizing in your own words what you read. (You may not use phrases, sentences or quotes of any kind from the source article in the first two sentences or any sentences in your composition.)
The next paragraphs should explain in your own words how the article connects to what you have been learning. You need to connect to the most recent principles that you have learned from the section of the course most recently completed. REQUIRED: You must use terms/principles from that section of the course. Please type the terms in bold (or use CAPS) as seen in the example(below).
News Analysis – Composition Example
Subject/Post Title: President’s Proposed Defense Budget Illustrates Decision Making with Limited Resources (Place a discriptive title here.)
Source: CNN (Name the news or magazine source.)
(Use a specific url so that the reader can find the article with only one click.)
The President contends that the defense budget needs to increase by next year to a total of $344 billion. He wants to increase spending in order to provide better compensation to military personnel and to provide more equipment for military readiness. (The first two sentences summarize in your own words.)
Military personnel are labor, and equipment is capital as defined in this course. They are part of the stock of limited resources available to address the unlimited wants of individuals and society. In this case they would help produce military preparedness (i.e., national defense). This issue involves decision-making by the government in the face of economic problem of scarcity. The government has to decide whether or not the increase in the defense budget is efficient. The problem is that by increasing the defense budget, an opportunity cost occurs. The article identifies the dollar expenditures associate with additional defense, but it does not speculate on the real opportunities forgone. That is, since resources are limited, the decision will either a) reduce other government service or require future taxation of citizens and, therefore, a reduction in privately consumed goods and services.
The marginal benefits should include a better-equipped and prepared military that will be more able to defend the country. To make a good decision, political leaders need to fully understand the marginal benefits of national defense vs. the opportunities foregone. If the expected marginal benefits are greater than the expected marginal costs, the decision would seem rational and a net benefit to society. If not, the decision should not be taken because it is inefficient. (The terms and principles are bolded or in CAPs.)
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