Name: Kealey Gill

Section: 402

E-Portfolio Signature Assignment

Salt Lake Community College
Macroeconomics - Econ 2020
Professor: Heather A Schumacker
Please type your answers to the following questions. If you need to hand draw the graphs on page 3 you may and then scan them as a
separate document. When you have completed this assignment post it to your e-portfolio along with your chosen article and 20 terms
article write up. (20pts) Make sure to put an explanation of the assignments and a reflection statement on your ePortfolio web site.
For examples of reflection prompts please see SLCCs website: https://www.slcc.edu/gened/eportfolio/docs/ReflectionHandout2.pdf.
(10 pts) Link your ePortfolio URL to your MyPage under the student tab so that instructors can view your work. (5pts)
1.

2.

What are the 3 main macroeconomic goals economists would like to see for an economy: (3pts)
1. ___economic growth____________________
2. __low inflation_________________________
3. _low unemployment_____________________
What is the formula for GDP (write out the full name)? Circle or highlight the largest component and fill in the chart. Under each
put the components and something unique. (19pts)

GDP = __Consumption___ + _______Investment____ + __Government Spending____ + ____Net Exports____

Components: Consumption
Circle the largest sub-category
1.Durable
2.Nondurable
3.Services

Components: Investment

Components: Gov. Spending

Components: Net Exports

1.Business Fixed Investment

2.New Construction
3.Inventories
Excludes:

1. Goods
2. Services

1. Exports
2. Imports

1.Stocks and Bonds

1. Transfer Payments

Excludes:

2. Interest payment on debt

3.

What is the problem associated with being at AD2 that makes policy makers concerned? (1pt)
_____inflation___________________________

Q1

Q Full
Employment

Q2

REAL OUTPUT (quantity per year)

4.

Who does fiscal and monetary policy? What are 2 fiscal policies and 3 monetary policies to correct a situation where the economy
is naturally at AD* but finds itself at AD2, as seen in the graph on the previous page. Briefly explain how each of these policies
would work to correct the situation. (22pts)
Who does fiscal policy: _____Congress________
1.

Government Spending_____________________________________
A decrease in government spending will shift Aggregate Demand (AD) inward.

2.

__________________________________________________________________________________________
__________________________________________________________________________________________
__________________________________________________________________________________________
__Taxation___________________________________
___An increase in tax on consumers will shift aggregate demand (AD)
inward____________________________________________________________________________________
__________________________________________________________________________________________
__________________________________________________________________________________________
__________________________________________________________________________________________

Who does monetary policy: ______The Federal Reserve__________________

1.

_Reserve Requirement____________________________________
An increase in the reserve requirement will result in les money to loan out, thereby raisning the interest rate.
Businesses and consumers will not buy big ticket items, shifting aggregate demand (AD) inward.
_________________________________________________________________________________________

2.

__________________________________________________________________________________________
_Discount Rate____________________________________
Raising the discount rate will force the banks to keep more money and loan out less money, shifting AD
inward.___________________________________________________________________________________
__________________________________________________________________________________________

3.

_Federal Open Market Sales____________________________________

_FOMS purchases bonds, the public gives money to the Federal Reserve, decreasing the money supply. This
will shift Money Supply (MS1) and increase interest rates. Aggregate Demand (AD) will shift in because of
higehr interest rates, C and I dont want to borrow money at high interest
rates._____________________________________________________________________________________
__________________________________________________________________________________________
_________________________________________________________________________________________

5.

Begin in equilibrium in each of the following graphs; draw the effects from question 2 above as they would apply in each graph
below. Next draw the effects of an anti-inflationary policy taken by the fed to correct the result from question 2 - use both graphs.
Explain what is happening in each graph and overall in the economy as the due to the anti-inflationary policy. (20 pts)
Money Supply and Money Demand Graph
Nominal
Interest Rate
Aggregate
Demand and
Aggregate Supply

Money Supply Curve (MS)

PL

Real GDP

AS

Money Demand (MD)

AD

When bonds are purchased by the FOMS the money supply will decrease, shifting in to MS 1, increasing interest rates (i1) and
decreasing the quantity of money (Qm1).
An increase in taxes on consumers will decrease aggregate demand (AD1), decreasing price level (PL1) and decreasing gross domestic
product (GDP1).

6.

Given the situation our economy has been in the past several years why have fiscal and monetary policy had a difficult time
getting us back to the optimal level of GDP. (5pts)

Fiscal policy will not work because our economy has already reached our debt ceiling. Monetary policy cannot work because we
cannot lower our interest rates anymore. The only policy we have left to try is structural and we do no want to change our structural
policy. We have run out of options and have had to deal with high unemployment and high inflation.

7.

FRED: Follow the instructions for this assignment on PDF handout.

Before you start, make sure to log in to your free account so that you can save your graphs!
FRED unemployment graph:
Watch the video Introduction to FRED and complete your own unemployment graph. Instead of using St. Louis use Salt
Lake City. Have the graph span the last 10 years. Write about what inferences you can make from this graph. Save and paste
the graph here: (5pts for the graph and 5 pts for write-up)

The lowest point on this graph is right before the recession, at just a 2.3% unemployment rate in salt lake, half of the national
rate. The graph shows that there was a recession in 2008. Due to the recession, unemployment rates peaked in 2009, with an
unemployment rate of 7.5% in Salt Lake City and a 10% national rate. Throughout the graph, the unemployment rate is lower than the
national unemployment rate. The unemployment rate for Salt Lake is currently going back down. Right now it is at 3.3%, still lower
than the national rate of 5%. I would conclude from this graph that salt lake is doing well in industry compared to the nation, however
we should be careful that we do not slip into a recession, as we did in 2008 when our rates were low.

8.

List the 3 types of Unemployment, define each, and put a star next to those that are included in the natural rate of
unemployment. (8pts)
1. __*Frictional___________________________________
__Frictional unemployment consists of search unemployment and wait unemployment, for workers who are
either searching for jobs or wariting to take jobs in the near future. Frictionally unemployed workers have
marketable skills and either live in areas where jobs exist or are able to move to areas where they do. It is more
likely to be short term._
2.

__*Structural___________________________________
__Economists use the term structural in the sense of compositional. Changes over time in consumer
demand and in technology alter the structure of the total demand for labor, bot occupationally and
geographically. Structurally unemployed workers find it hard to obtain new jobs without retaining, gaining
additional education or relocating. It is more likely to be long term and consequently more
serious.___________________________________________________________________________________
____________________________________________________________________________________

3.

_Cyclical____________________________________
_Unemployment that is caused by a decline in total spending is called cyclical unemployment and typically
begins in the recession phase of the business cycle. It results from insufficient demand for goods and services. It
is a very serious problem when it occurs.________________________________________

9.

__________________________________________________________________________________________
__________________________________________________________________________________________
__________________________________________________________________________________________
What is the difference between nominal and real, why is each important? (4pts)
__Nominal income is the number of dollars received as wages, rent, interest, or profit. Real income is a measure
of the amount of goods and services nominal income can buy; it is the purchasing power of nominal income, or
income adjusted for

inflation.__________________________________________________________________________________
__________________________________________________________________________________________
__________________________________________________________________________________________
10. FRED Create a GDP graph following the instructions on the handout:
Based on the graph, what is the Real Personal Consumption Expenditures for the second quarter of 2008?
10,077.9
Based on the graph, what is the Real Government Consumption Expenditures and Gross Investment amount for the second
quarter of 2008?
2974.98
Based on the graph, what is the Real Gross Private Domestic Investment amount for the second quarter of 2008?
2472.6

Based on the graph, what is the real net exports of goods and services amount for the second quarter of 2008? (4pts)
-550.40000
11. Write about what inferences you can make from this graph. Save and paste the area graph here: (5pts for the graph and 5 pts
for write-up)
Real personal consumption has increased to eight fold over the past 76 years, while government consumption and domestic
investment have stayed fairly constant with slight increases. Real exports of goods and services has actually declined, but
remained constant until about 16 years ago.

12. Change the graph type to a pie graph:

Put the curser over the pie graph: What is the value of the current Real Personal Consumption Expenditures
in billions of chained 2009 dollars and what % of GDP is it

66%

What is the value of the current Real Government Consumption Expenditures and Gross Investment
billions of chained 2009 dollars and what % of GDP is it

17%

2870.6

in

17%

What is the value of the current Real Gross Private Domestic Investment Expenditures
chained 2009 dollars and what % of GDP is it

11,330.7

2852.7

in billions of

(6pts)

Paste the pie graph here: (3 pts)

Use the excel sheets provided to complete this problem. Scenario 1: If the initial deposit into a bank is $5,000 and the reserve
requirement is 10% use formulas to fill in the chart all the way to completion (where there will be 0 for new deposits). Use formulas
and cell references whenever possible. Fix the cell references for the reserve requirement when entering your formulas on the first
line such that you can drag your information down the rows. Fixing a cell reference is done by putting dollar signs in front of the cell
row and column references ex. $B$3 this will mean that no matter where you copy that cell to it will always refer to cell B3. For
scenario 2, change the reserve requirement to 40%. (20)