Objectives

By the end of this assignment, students should be able to evaluate the key macroeconomic indicators data of a country and determine the best fiscal and monetary policies for managing growth, inflation and unemployment, while formulating recommendations for the future.

Instructions

Each student will research and assess one country according to the criteria listed below. Students will determine appropriate responses to the questions provided and summarize their findings in a few page formal essay following style guidelines. At the end of this document, a few sources have been cited that will provide a starting point for research relating to the Canadian economy. Data on the economy of the United Students of America (USA) is available easily from the web page of the Federal Reserve System and other federal statistical agencies. If you choose a country other than Canada and USA, the web pages of United Nations (UN) agencies will be helpful.

Choose the country you would like to research:

• U.S.A.

In your essay, you will consider and address the following questions and points:

• What is the current state of the economy that you have chosen? Collect the latest available data on nominal GDP, real GDP, per capita real GDP, unemployment rate, inflation rate, interest rates, exchange rate(s), and any other important macroeconomic data.
• Is the country experiencing an inflationary gap or a recessionary gap?
• What kind of macroeconomic policy should this country follow?
• Is the real GDP growing and at what rate?
• What is the per capita real GDP on Purchasing Power Parity basis? What is the trend in this variable? Is the per capita real GDP increasing? Can you find the relevant data for the last couple of years or more?
• Is the current unemployment rate close to NAIRU? Higher or lower?
• At what stage of the Business Cycle is this country presently in? Is there an inflationary or recessionary gap?
• What kind of fiscal and monetary policies is this country presently following? Expansionary or contractionary?
• What kind of exchange rate policy is this country presently following? Fixed exchange rate or flexible exchange rate?
• How is this country's economy going to perform in the coming years? What does the future look like? Will the unemployment rate and inflation rate change? Why or why not?