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04/10/2020 Client: sarahhitz Deadline: 7 Days

 


Week 1 - Demand Concepts




1. Opportunity Costs


What do economists mean by "opportunity cost?"  What are your opportunity costs in taking this course?


2. Demand v. Quantity Demanded


What is the difference between a decline in the quantity demanded and a decline in demand?  Given an example of something for which your demand has fallen.  Is it an example of a decline in the quantity you demand or a decline in your demand?


3. Behavioral Economics


Traditional economic theory makes a number of simplifying assumptions that may not always be true, e.g., that people always make rational decisions that are in their own best interest.  In recent years a new subdiscipline of economics has emerged called behavioral economics that attempts to employ a more realistic set of assumptions about how people behave to explain economic decision-making. 


Based on information in this link (Behavioral Economics For Dummies Cheat Sheet) present two examples from your own experience that illustrate principles of behavioral economics.  


Further reading for those with an interest:


Ariely, Dan. 2009. The End of Rational Economics. Harvard Business Review, Jul-Aug.


Connick, Hal. 2018. Read this Story to Learn How Behavioral Economics Can Improve Marketing. Marketing News. Jan.




 Week 3 - Incentives and Externalities 


 


 1. Externalities and the Environment


Meyer describes the "Tragedy of the Commons." The IMF article explains how this type of problem is an example of an "externality."  What is an externality? What might be a good government policy to solve the problem of the environmental externality that leads to high green house gas emissions?


2. Moral Hazard and Adverse Selection


"Moral hazard" is a term often used in the context of peoples' behavior once they have insurance.  Szuchman and Anderson explore the idea of moral hazard in personal relationships.  How would you define moral hazard?  Provide an example of moral hazard that you have observed in your own community or workplace.


How does moral hazard differ from adverse selection?  Provide an example to illustrate this concept.  




Week 5 - Monetary Policy and Inflation 



1.  The Fed and Monetary Policy


Monetary policy is the action taken by the Federal Reserve to expand or contract the money supply and influence interest rates. 


What are the Fed's target levels for the inflation rate and the unemployment rate?  What are the inflation and unemployment rates today?  As the top advisor to the chair of the Federal Reserve, define contractionary and expansionary monetary policies and explain which you advise the Fed to pursue today - given the inflation and unemployment targets versus the current rates. 


 2.  Inflation - Winners and Losers


We  often hear of inflation characterized as a bad thing, but Meyer describes both winners and losers from inflation.  Give an example of one way in which you would win from unexpected inflation, and an example of one way in which you would lose from unexpected inflation.




Week 7 -  Classical or Keynesian?




1.  Classical v. Keynesian Approaches to Smoothing Business Cycles


Fiscal policies are the actions of Congress on spending and taxing.  (Note that this is different from monetary policy, which is the action take by the Federal Reserve to change the money supply and interest rates.)


a. Explain and compare the Keynesian and classical points of view on whether or not to intervene during the business cycle (an expansion = positive real GDP growth; and a recession = negative real GDP growth).   


b. Are we in recession today? Use today's real GDP growth rates to explain your answer.   


c. As the President's chief economist, describe the Keynesian fiscal policy you think the administration should follow given today's economic conditions.  Support your point of view using principles of Keynesian economics, as described by Mayer in Chapter 16 of "Everything Economics." 


2.  What Role for Government?


In Chapter 3, Wheelan describes a number of ways in which the "government is your friend" in a well-functioning society and economy.  List and explain two ways that, in your everyday lives, there is a need for an effective government role in an economy.


Explain how this government role does, or does not, solve a market failure such as an externality.

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