Eco360 Final. Mathematics and Economics Assignment. (Essay Sample)
There are 3 questions.
• Read the requirement of each question carefully. You will lose
credit if you failed to follow the requirements.
• Write your answers in one file in a well-organized way. The format
should be 12-point Times New Roman font, single-line spacing,
normal margins and justified text alignment.
• Please submit a Word or PDF file on Blackboard before the
deadline. DO NOT write your answers on paper and submit a
picture/photo. That will NOT be accepted! Late submission will
NOT be accepted either!
• Do not commit plagiarism!
Deadline: Saturday May 16, 11:59 EST
• There are 3 questions.
• Read the requirement of each question carefully. You will losecredit if you failed to follow the requirements.
• Write your answers in one file in a well-organized way. The formatshould be 12-point Times New Roman font, single-line spacing,normal margins and justified text alignment.• Please submit a Word or PDF file on Blackboard before thedeadline. DO NOT write your answers on paper and submit apicture/photo. That will NOT be accepted! Late submission willNOT be accepted either!
• Do not commit plagiarism!
1. The pandemic outbreak hit the US economy since March. Findhow the major economic variables changed in the first quarter.These variables may include unemployment rate, real GDP percapita, inflation, real interest rate, money velocity, stock priceindex, and other variables that you think can reflect financialmarkets and macroeconomic conditions.
Hint: You can use the FRED economic data from Fed St. Louis.Notice that these data series may have different frequencies. If it’squarterly or monthly data, show the change in a table. If it’sweekly or daily, show with a graph. If there are many, you shouldalways use the one with higher frequency. In addition, you shouldalso describe with brief words about what are the changes to thesevariables.
2. Summarize the policy responses of the Fed since March 3rd untilthe end of April. What are the policy changes in conventionalmonetary policy (e.g. federal funds rate, discount rate, interestrates on reserves, etc.), and in unconventional monetary policy(e.g. liquidity facilities, paycheck protection programs, etc.)?
Hint: You can find the information on the Federal Reserves’website in the press release. To make it more readable, organizeyour answer with bullets points and concise words. You shouldalso mention the date when the policy was announced. Copy andpaste will result in zero credit for this question!!!
3. For this part, you should use the theories and models we studied inthis course to analyze the current crisis.
a. What do you think are the reasons of the change in moneyvelocity based on your answer in question 1? Specify thetheory you use that supports your argument.
b. What is the type of the pandemic shock? Use the AD-ASframework to show what is the impact on short-run and longrun equilibria. Is it consistent with what you find from data inquestion 1?
c. What are the aims of the Fed’s monetary policy responses asyou summarized in question 2? How do these responses helpsmooth the fluctuations in the short run?
d. Given the current level of the federal funds rate, what type ofmonetary policy (conventional or unconventional) do youexpect the Fed to use if the recession gets deeper in thefuture? Why?
Hint: You should explain using the AD-AS model anddemonstrate with graphs and brief words for part b to d.
Response to Question 1
COVID 19 has affected the United States economy significantly. For instance, it has caused a supply shock by bringing many people into the health systems. Besides, the United States has resulted in shutting down the economy by discouraging and prohibiting citizens from going to work (Curcuru et al.). Supply is measured by what is produced collectively in a country. Unfortunately, the virus caused the labor supply's sudden contraction. Such has reduced the level of confidence among people therefore leading to the demand shock. It is also an indirect impact because of the vital contraction in people's ability to produce goods and services. As a result, the primary economic variables in the United States have changed significantly since March. Such variables include unemployment rate, real GDP per capita, inflation, real interest rate, money velocity, stock price index, and stock price index.
The following table shows the changes in the United States unemployment rate from May 2019 to April 2020. Source: "Trading Economics"
Month (Since May 2019 to April 2019)Unemployment RateMay-193.6Jun-193.7Jul-193.7Aug-193.7Sep-193.5Oct-193.6Nov-193.5Dec-193.5Jan-203.6Feb-203.5Mar-204.4Apr-2014.7
The Following graph shows the changes in the United States unemployment rate from May 2019 to April 2020.
EMBED Excel.Chart.8 \s
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