Competency
In this project, you will demonstrate your mastery of the following competency:
Assess how changes to macroeconomic policies impact the economy
Scenario
You work for Quantigration, Inc., a semiconductor manufacturing plant headquartered in the United States. Capitalizing on advancements in its product, Quantigration has aggressively expanded and acquired fabrication plants and workers around the world.
Although Quantigration has been expanding, the world is an ever-changing place. Your manager has assigned you to the EWC, an employee-run Economic Watch Committee tasked with reporting on and analyzing events that might impact the overall economic environment, or the macroeconomy.
The U.S. economy recently went through a major shift, and the committee is preparing a substantial report for Quantigration’s leadership. They have tasked you with writing a section about possible policy responses from the government.
For purposes of this project, you may choose one of the following economic situations:
Bust, also known as a recession: Recessions are a decrease in economic activity and are measured by a decrease in real GDP.
Boom, also known as an economic expansion: Expansions are an increase in economic activity, and they are measured by an increase in real GDP.
In addition to these economic changes, a potential increase in tariffs has been a hot topic in the news lately. In your report, the committee would like you to draft a brief statement describing how tariffs can impact trade.
Directions
POLICY CHANGE REPORT
Select an economic situation, to focus on in your project. Indicate if it is “boom” or “bust.” You do not need to go into additional detail about the nature of the situation.Note: Optionally, you may use the template from the Deliverables section to complete your project.
Using your selected event, make a list of possible fiscal and monetary policy responses to the economic situation
What are some potential fiscal policy responses?
What are some potential monetary policy responses?
Choose one of the fiscal policy responses from your list above. Explain how your chosen fiscal policy response will drive a change in the economy.
Explain the policy response in macroeconomic terms. Specifically, how might the policy affect the total demand for goods and services in the country? Describe the shifts that may occur.
Choose one of the monetary policy responses above and explain how your chosen monetary policy response will drive a change in the economy.
Explain the policy response in macroeconomic terms. Specifically, how might the policy affect the total demand for bonds in the country? Describe the shifts that may occur.
Describe the limitations of fiscal and monetary policies in achieving their intended goals.
Describe the limitations of the following:
Increasing/decreasing taxes
Increasing/decreasing interest rates
Increasing/decreasing spending
How might they not work as intended?
Finally, summarize the impact of a tariff on trade of a good. To do this, choose one of the examples from the articles in the Supporting Materials section. Using the article as a reference, explain how the tariff has impacted demand for that particular good in the United States. Consider the following:
Price (imported and domestic)
The quantity demanded of the imported good
The demand for substitutes (substitution effect)
What to Submit
Every project has a deliverable or deliverables, which are the files that must be submitted before your project can be assessed. For this project, you must submit the following:
POLICY CHANGE REPORT (SHORT RESPONSES, APPROXIMATELY 1,000–1,500 WORDS)
Complete this report on possible policy responses to your chosen economic situation. You have the option of using the Policy Change Report Word Document.
