BU204 Discussion Unit 5

BU204Discussions

See the attached file that contains discussion 5 instructions

Unit1

This Discussion deals with the 12 Principles of Economics. The specific discussion
areas include the economic principles that guide how people make economic decisions
(choices), how people interact in markets, and how the economy as a whole works.

Read Chapter 1 to identify particular economic principles that guide the various
economic decision making processes. Remember to include your references or links to
the websites that are important contributors to your comments.

Economic agents are those individuals, firms, and government officials that make
decisions that affect the economy.

a. Why do economic agents need to make choices in the decision making
process? What are the factors that force us to make choices among the viable
alternatives at our disposal during a given period of time?

b. Why do economic agents face tradeoff in our economic choices (economic
decision making) process? How do we make a rational choice among the viable
alternatives we have as individuals or business owners?

Unit 2

The Discussions includes the differences between microeconomics and
macroeconomics, the two basic economic models of the circular-flow diagram and the
production possibility frontier, and comparative advantage, which is the main force
behind interdependence in the market economy and the gains from trade.

Read Chapters 2 and 5, and remember to include references and links to the websites
that are important contributors to your posts.

The theory of comparative advantage states that there are gains from trade if countries
specialize and optimize their opportunity costs.

a. Why is comparative advantage a driving force behind trade behind trade
between regions and countries?

b. Why does specialization lead to welfare improvement? Why engaging in trade is
better than trying to be self-sufficient

Unit 3

This Discussion topic includes the market forces of supply and demand, supply and
demand model, and supply and demand curves.

Read Chapters 3 and 4, and remember to include references and links to the websites
that you feel are important contributors to your posts (comments).

Supply and demand is the foundation of the market economy and the basis of the study
of economics.

a. Why supply and demand is considered as factors that make market economies
work? Why supply and demand drives the market economy? Provide an
example of the role of supply and demand in business decision making.

b. What is the difference between a movement along and a shift of the demand
and supply curves? What are the factors that lead to shifts in supply and
demand curves?

Unit 4

This Discussion focuses on how a nation’s income is measured using the gross
domestic product (GDP)/ The specific areas of discussion include the various
components of the GDP, the difference between nominal and real GDP, GDP and
business cycles, and the limitations of the GDP in measuring economic welfare.

Read chapters 6 and 7, and remember to include references and links to the websites
that you feel are important contributors to your posts (comments).

Economists use Gross Domestic Product (GDP) to measure the economic activity and
the national income.

1. What are the major components of the USA GDP? Explain the contribution of
each component to the GDP with data.

2. What is the difference between real Gross Domestic Product (GDP) and
nominal GDP? What is the relationship between the real GDP and the business
cycle?

Unit 5

This Discussion focuses on how to measure the cost of living and rate of unemployment
in the economy. Specific discussion areas include the various forms of unemployment
and how they are measured, debates on measuring unemployment rate, and the

imperfections of official unemployment rate. Moreover, consumer price index (CPI), rate
of inflation, and their impacts on the cost of living.

Read Chapter 8, and remember to include references and links to the websites that are
important contributors to your posts (comments).

There are various forms of unemployment. There are also ongoing debates on the
effectiveness of measuring the rate of unemployment and its policy implications.

a. What are the different types of unemployment and how are they related to the
condition of the economy during a given period? Is it possible for the number of
employed workers to increase while the unemployment rate rises? Explain

b. Does an increase in the minimum wage rate result in a higher unemployment
rate? What is your opinion on the relationship between unemployment benefits
and labor market participation of the unemployed people?

UNit 6

This Discussion focuses on the long term economic growth. The specific discussion
areas include measuring economic growth and natural resources.

Read Chapters 9 and 10, and remember to include references and links to the websites
that are important contributors to your posts (comments).

The long-run growth is measured as the increase in real GDP per capita and this
measure has changed over time and it also varies across countries. A country’s
standard of living depends on its ability to produce goods and services (productivity).

a. How do we measure long-term economic growth of a country? What are the key
determinants of long-run economic growth?

b. What is the relationship between economic growth and productivity? What is the
major source of growth in labor productivity?

UNit 7

This Discussion deals with the various forms and uses of money, the roles of the
Federal Reserve System, money supply, money demand, and monetary policy
instruments.

Read Chapters 14 and 16, and remember to include references and links to the
websites that you feel are important contributors to your posts (comments).

The Federal Reserve may increase or decrease money supply depending on the
economic condition.

a. What policy instruments does the Fed use for the monetary policy?
b. What are the pros and cons of using expansionary and contractionary monetary

policy tools under the following scenarios: depression, recession, inflation, and
robust economic growth? Which do you think is more appropriate today?

UNit 8

This Discussion deals with aggregate demand and aggregate supply, and the
introduction to basic concepts in open-economy macroeconomics. The specific areas of
discussion are the AS-AD model, AS and AD curves, shocks in AS and AD demand,
and key concepts in open-economy macroeconomics.

Read chapters 11 and 12, and remember to include references and links to the
websites that you feel are important contributors to your posts (comments).

Aggregate supply (AS) and aggregate demand (AD) models, and AS/AD curves are
essential to understanding macroeconomic fluctuations (business cycles).

a. Discuss the importance AS-AD models are in explaining the macroeconomic
conditions of the economy and business cycles like recessions.

b. What factors shift AS and AD curves? How do you explain macroeconomic
fluctuations using AS-AD models and AS/AD curves?

Unit 9

This Discussion focuses on the effects of monetary and fiscal policy instruments on the
aggregate demand in the economy. The specific areas of discussion include how
monetary and fiscal policy instruments are used to change AD, the differences between
monetary and fiscal policy, and their respective instruments.

Read chapters 13 and 15, and remember to include references and links to the
websites that are important contributors to your posts (comments).

Monetary and fiscal policy instruments are used to affect the aggregate demand (AD) in
the economy.

a. What is the difference between contractionary and expansionary monetary
policy? What is the difference between contractionary and expansionary fiscal
policy? How does each policy affect the AD in the economy?

b. What are the benefits and major problems of the fiscal policy and monetary
policy?

Unit 10

This Discussion deals with the debates over macroeconomic policy, which include
stabilization policy, monetary policy on rules versus discretion, zero inflation target,
public debt, and reforming tax laws.

Read chapters 17 and 18, and remember to include references and links to the
websites that are important contributors to your posts (comments).

There are pros and cons of using monetary and fiscal policy tools to stabilize the
economy.

1. Explain the main arguments in favor of economic stabilization during
recessions. Explain why policy lags could make stabilization policies
counterproductive.

2. What are the justifications given in favor of more government involvement in the
market economy? What are the reasons given in favor of less government
involvement in the market economy?