MACROECONOMICS WORK
Why are some economists concerned about a massive short run increase in government spending?
Visit Economics U$A videos and watch Program 17: “The Great Depression and the Keynesian Revolution”:http://www.learner.org/vod/vod_window.html?pid=2469
During the early 1930s, when the country was struggling with the beginning of the Great Depression, President Hoover told the people that the economy would soon improve. How could he persist with this message amid the ominous realities of the time?
As a sort of drastic measure in 1932, Hoover was driven to create the Reconstruction Finance Corporation (RFC), a funding agency from which large industries and financial institutions could obtain investment capital. Though the RFC contributed about $2 billion in investment to the economy, why was the measure largely a failure??
Economics historian Robert Heilbroner suggested that from the classical economists’ perspective, the appropriate metaphor to describe our economy might be that of a rocking boat but that from Keynes’s perspective, a more accurate metaphor might be that of an elevator. What did Heilbroner mean by this comparison?
The narrator suggests that Keynes’s economic idea was so revolutionary that it “changed the nature of capitalism forever.” To what idea does he refer?
Why did Roosevelt’s efforts not resolve the Great Depression sooner? What finally ended it?
Visit the Federal Reserve, our nation’s central bank, to review their recent summary of national economic conditions in their Beige Book:http://www.federalreserve.gov/FOMC/BeigeBook/2012/
CLICK on the most recent HTML.
What is their assessment of the current state of our national economy? Briefly summarize.
CLICK on Chicago..
What is the assessment of the Chicago region’s economic conditions?
How healthy do consumer spending and business spending appear to be? Briefly sumamrize.
Visit the Bureau of Economic Analysishttp://www.bea.gov/iTable/iTable.cfm?ReqID=9&step=1Under Section 1, CLICK on Table 1.1.6. CLICK on OPTIONS in the right corner and press the QUARTERLY button. Change the FIRST YEAR option to 2007 and the LAST YEAR option to 2011. CLICK UPDATE to find the QUARTERLY value of REAL GDP. On a piece of graph paper, plot the value of Real GDP on the vertical axis and the year on the horizontal axis. (DO NOT SUBMIT THE GRAPH).
Identify the quarter and year when EACH PEAK occurred. (Ignore the first and last point).
Identify the quarter and year when EACH TROUGH occurred.(Ignore the first and last point).
How many cycles appear over this period?
Now, repeat the exercise. CLICK on OPTIONS in the right corner but now press the ANNUAL button. Change the FIRST YEAR option to 1929 and the LAST YEAR option to 1945. CLICK UPDATE to find the ANNUAL value of REAL GDP. On a piece of graph paper, plot the value of Real GDP on the vertical axis and the year on the horizontal axis. (DO NOT SUBMIT THE GRAPH).
Identify the year when EACH PEAK occurred.(Ignore the first and last point).
Identify the year when EACH TROUGH occurred.(Ignore the first and last point).
How many cycles appear over this period?
This was the period of the Great Depression. Why is there no data before 1929?
Visit the Conference Board, a private organization which has assumed responsibility for computing the leading, coincident, and lagging composite indexes:http://www.conference-board.org
CLICK on the U.S.Indicators and then CLICK on Leading Economic Index:
Based on the findings of the most recent report, what is the Conference Board’s view of the current state of the economy? What do you think about their conclusions?
CLICK on Technical Notes in the upper right corner “Underlying detail, diffusion indexes, components, contributions and graphs”. How do the leading, coincident, and lagging indicators relate to the overall economy, according to the Conference Board?
How many economic variables are included in each of the indicators? List one from each indicator.
In the most recent report on the Leading Index, which variables were positive? which variables were negative?
Visit the Federal Reserve Bank of San Francisco:http://www.frbsf.org/publications/education/unfrmd.great/greatschls.html
What is the meaning of the word Oikonomikos?
How did the mercantilists view the role of government in economic activities?
Who were the physiocrats? Did they advocate a policy of laissez-faire? Explain.
When did the classical school of economic theory begin? What is the main idea of the classical school?
What did the marginalists have to do with demand and supply analysis?
Did the institutionalist school believe in government controls? Explain.
How did these various theories contribute to the modern view of the self-regulating economy?
Visit the NBER, the National Bureau of Economic Research. This non-profit organization has the responsibility for assigning dates to the phases of a business cycle. They also have the responsibility for declaring whether and when a recession has occurred.http://www.nber.org/cycles/cyclesmain.html
When did the MOST RECENT recession begin and end in the United States?
When did the PREVIOUS recession in the United States begin? When did this recession end?
SCROLL down the page. How does the NBER define a recession? How does this differ from what is given as the traditional definition of a recession in our textbook?
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