Description

Purpose of Assignment 

Week 3 will help students develop an understanding of what money is, what forms money takes, how the

banking system helps create money, and how the Federal Reserve controls the quantity of money. Students

will learn how the quantity of money affects inflation and interest rates in the long run, and production and

employment in the short run. Students will find that, in the long run, there is a strong relationship between the

growth rate of money and inflation. Students will review the basic concepts macroeconomists use to study

open economies and will address why a nation's net exports must equal its net capital outflow. Students will

demonstrate the relationship between the prices and quantities in the market for loanable funds and the prices

and quantities in the market for foreign-currency exchange. Student will learn to analyze the impact of a

variety of government policies on an economy's exchange rate and trade balance. 

Assignment Steps 

Resources:  National Bureau of Economic Research  

Develop a 2,100-word economic outlook forecast that includes the following:

•  Analyze the history of changes in GDP, savings, investment, real interest rates, and unemployment

and compare to forecast for the next five years.

•  Discuss how government policies can influence economic growth.
•  Analyze how monetary policy could influence the long-run behavior of price levels, inflation rates,

costs, and other real or nominal variables.

•  Describe how trade deficits or surpluses can influence the growth of productivity and GDP.
•  Discuss the importance of the market for loanable funds and the market for foreign-currency exchange

to the achievement of the strategic plan.

•  Recommend, based on your above findings, whether the strategic plan can be achieved and provide

support. 

Use a minimum of three peer-reviewed sources from the University Library. 

Format your paper consistent with APA guidelines. 

Money and the Prices in the Long

Run and Open Economies

Grading Guide

ECO/372 Version 10

Individual Assignment: Money and the Prices in the Long Run and Open Economies

Purpose of Assignment

Week 3 will help students develop an understanding of what money is, what forms money takes, how the banking

system helps create money, and how the Federal Reserve controls the quantity of money. Students will learn how

the quantity of money affects inflation and interest rates in the long run, and production and employment in the

short run. Students will find that, in the long run, there is a strong relationship between the growth rate of money

and inflation. Students will review the basic concepts macroeconomists use to study open economies and will

address why a nation’s net exports must equal its net capital outflow. Students will demonstrate the relationship

between the prices and quantities in the market for loanable funds and the prices and quantities in the market for

foreign-currency exchange. Student will learn to analyze the impact of a variety of government policies on an

economy’s exchange rate and trade balance.a