PART A
1) Explain, give a real life example and a solution for the the 4 Types of Market Failures – 1) Public Goods, 2) Externalities (positive and negative), 3) Monopoly Power, and 4) Inequality. Please use a Reputable Source, (such as the Wall Street Journal, Bloomberg News, The Economist, etc.) to find your real life example.
PART B
1) Using the St. Louis Federal Reserve – Fred website: http://research.stlouisfed.org/fred2/search, Find current economic indicators for real GDP, Prices, Inflation, Unemployment and Economic Growth . 2) Download the (Monthly data) for Prices, Inflation and Unemployment and the (Quarterly data) for GDP and Economic Growth for the last 3 years in an excel spreadsheet and insert an excel a graph for each series overtime in a separate graph. 3) Describe each series relationship and comment on whether it is increasing or decreasing and how do they compare to one another.
1) CPI – Consumer Price Index For All Urban Consumers: All Items, SA – seasonally adjusted – (Prices)
2) Percentage change in CPI from a year ago – (Inflation)
3) Civilian Unemployment Rate (Unemployment)
4) Real Gross Domestic Product, 3 Decimal (GDP) – Real GDP
5) Change in Real Gross Domestic Product, (Economic Growth)
PART C
1. Calculate and graph what happens to G, AD, GDP, and Prices if the government increases government spending by 100 billion and the MPC = .80.
2. Calculate and graph what happens to T, C, AD, GDP, and Prices if the President raises taxes by 100 billion and the MPC = .80.
3. Calculate and graph what happens to AD, GDP and Prices if the government raises both taxes and government spending by 200 billion and the MPC is equal to .75.
PART D
• Go to the Committee for a Responsible Federal Budget website: http://www.crfb.org/debtfixer/
• Following the instructions and get the Debt to 80% of GDP in the next 10 years, and 50% by 2050.
• Once you have are done, print the last page that includes the programs that you added or cut and write 1-2 paragraphs about why you should be President based on your budget proposal.
