Question

Week 7 includes three applications in three major areas in Macroeconomics: 1) Gross Domestic Product; 2) Unemployment and Inflation; and 3) Macroeconomic Policy. You must complete all three applications. Each of the application options are located in the textbook. You will select one of the Options listed for each of the applications and will complete a draft essay for each of the applications. The drafts will be submitted for grading by the end of Week 7. The Week 7 Assignment grading is as follows: Application 1: 9 points Application 2: 12 points Application 3: 5 points Articulation and APA: 4 points The grading rubric for Week 6 is located on the Week 7 Assignments page. You will complete your Final Essay for each application as part of the Economics Assessment due by the end of Week 8. Final Assessment grading is as follows: Applications 1, 2, and 3: 35 points each Articulation and APA: 15 points The grading rubric for the Economics Module Assessment is located on the Economics Module Assessment - Assignments page.

APPLICATION 1 – Gross Domestic Product: Prior to completing the application, students will need to review Chapter 5 and 6 to best prepare for the applications.

OPTION 1: USING VALUE ADDED TO MEASURE THE TRUE SIZE OF WALMART

Option 2: The Links Between Self-Reported Happiness and GDP

APPLICATION 2: Unemployment and Inflation: Prior to completing the application, it is highly recommended that students review Chapters 5 and 6 to gain a solid foundation.

Option 1: DECLINING LABOR FORCE PARTICIPATION

option 2: More Disability, Less Unemployment?

option 3: THE INTRODUCTION OF CELL PHONES AND THE BIAS IN THE CPI

APPLICATION 3: Macroeconomic Policy Prior to completing the application, students will need to review Chapter 17 – Macroeconomic Policy Debates.

Option 1: CREATING THE U.S. FEDERAL FISCAL SYSTEM THROUGH DEBT POLICY

option 2: WOULD A POLICY RULE HAVE PREVENTED THE HOUSING BOOM?

option 3: IS A VAT IN OUR FUTURE?

Answer 1

OPTION 1: DECLINING LABOR FORCE PARTICIPATION

1) Gross Domestic Product : The labor force participation is the section of the labor force who are economically active . This means that it constitutes the summation of employed and unemployed people or the working population from among the adult population . So when the proportion of working population declines that means that employed and unemployed people both have declined . DEcline of labor force participaion leads to lower GDP or reduction economic growth rate . The production falls due to less number of working people among adult population .

2) Unemployment and inflation : Unemployment will not increase since unemployed people or people actively searching for job are also counted amongst working population . Decline in labor force participation causes more dependent people than working people . Inflation is likely to decline or there will be instances of recession since aggregate demand falls in the economy because of fewer working people .

3) Macroeconomic Policy : Policies such as monetary and fiscal policies are used to control the economy . An expansionary policy will lead to growth and rise in aggregate demand . People will get benefited from extra government spending on constructive works and infrastructure which will lead to growth of human capital or more number of working people . Hence labor force participation will gradually increase .