Grantham ECN206 2023 January Discussions Latest (Full)

ECN206 Macroeconomics

Week 1 Discussion

Government and the Market Economy

Welcome to the Discussion Forum!

Each week, you will be asked to respond to the prompt or prompts in the discussion forum. Your initial post should be 75-150 words in length, and is due on Sunday. By Tuesday, you should respond to two additional posts from your peers. If you have not done so lately, please review the Rules of Discussion.

The origin of economics as a science dates back to the publication of An Inquiry into the Nature and Causes of the Wealth of Nations by Adam Smith in 1776.  Smith believed a market economy would generally bring individual self-interest and the public interest into harmony.

Based upon those notions of self-interest and public interest and the bringing of both into harmony, according to Adam Smith, how would a market economy accomplish that harmony about which he describes?  What is government's place in that market economy?

Think about society's need to choose amongst competing resources and goals.  How does personal gain affect choices by individuals and government?  Opportunity costs.  While we want to do one thing, we can't do others based upon scarcity and opportunity costs.  Resources are finite.  What about incentives as opposed to free offerings?  What about trade?

For your follow up post...review the responses provided by your peers. Engage in conversation, or even civil debate, as you discuss their insights and viewpoints. You may ask questions for clarification (if you are confused by their initial post) or pose questions that advance the conversation. You might even find a topic that leads you to further research in the area!

 

ECN206 Macroeconomics

Week 2 Discussion

Market Equilibrium and Price Controls

Each week, you will be asked to respond to the prompt or prompts in the discussion forum. Your initial post should be 75-150 words in length, and is due on Sunday. By Tuesday, you should respond to two additional posts from your peers.

Markets seek equilibrium, and the demand for goods and services will come to an equilibrium with supply of goods and services.  When markets are not in equilibrium, surpluses and shortages, as well as underground markets, can exist.  Sometimes, the government may want to intervene in markets to try to help reduce economic hardships.        

What is the difference between a price floor and price ceiling?  According to the laws of demand and supply and how market equilibrium, efficiency, and equity are reached, do attempts to repeal those laws and market results with price floors and price ceilings justify legislative bodies to implement price controls?

Review the mechanics of supply and demand.  Disequilibrium between supply and demand will occur if price is above (surpluses) or below (shortages).  Why does a price floor lead to surpluses?  Why does a price ceiling lead to shortages?  Review consumer and producer surplus.  A price floor will lead to a transfer of consumer surplus to producer surplus; a price ceiling will lead to a transfer of producer surplus to consumer surplus; both price regulations lead to deadweight losses, which is a loss of surplus to society.  Why?

ECN206 Macroeconomics

Week 3 Discussion

Politicians and Economic Thinking

Each week, you will be asked to respond to the prompt or prompts in the discussion forum. Your initial post should be 75-150 words in length, and is due on Sunday. By Tuesday, you should respond to two additional posts from your peers.

Politicians have a strong incentive to follow a strategy that will enhance their chances of getting elected and re-elected.  Political competition more or less forces them to focus on how their actions influence their support among voters and political contributors.

Are voters likely to be well informed on issues and the positions of candidates?  Why or why not?

Review concepts like shortsightedness and rent seeking.  What are the effects of government intervention in markets with some of the price regulations like price floors and price ceilings we discussed in chapter 4?

 

ECN206 Macroeconomics

Week 4 Discussion

GDP Deflator

Each week, you will be asked to respond to the prompt or prompts in the discussion forum. Your initial post should be 75-150 words in length, and is due on Sunday. By Tuesday, you should respond to two additional posts from your peers.

Gross domestic product (GDP) is a measure of the market value of final goods and services produced within the borders of a country during a specific time period, usually a year.

What is the GDP deflator?  How does the GDP deflator relate to real GDP?

Review GDP and nominal versus real.  Real adjusts for inflation, so how do we arrive at the real GDP number from nominal GDP?  Review the GDP deflator formula, where GDP deflator = (Nominal GDP/Real GDP) X 100.

 

ECN206 Macroeconomics

Week 5 Discussion      

Short-Run and Long-Run Economics

Each week, you will be asked to respond to the prompt or prompts in the discussion forum. Your initial post should be 75-150 words in length, and is due on Sunday. By Tuesday, you should respond to two additional posts from your peers.

It is important to distinguish between changes that are anticipated and unanticipated because the impact on the economy will differ between the two.  The economy is in long-run equilibrium when the short-run aggregate supply curve, aggregate demand curve, and long-run aggregate supply curve are in equilibrium.  

What are the major factors causing a shift in aggregate demand (inward or outward)?  What are the major factors that will affect short-run aggregate supply?  Long-run aggregate supply?

Review what factors will lead to a shift in the AD, SAS, and LRAS.  An increase in output due to economic growth will increase both short-run and long-run aggregate supply.  Unanticipated changes in either aggregate demand or aggregate supply will disrupt long-run equilibrium and cause current output to differ from the economy's long-run potential.

 

ECN206 Macroeconomics

Week 6 Discussion

Fiscal Policy

Each week, you will be asked to respond to the prompt or prompts in the discussion forum. Your initial post should be 75-150 words in length, and is due on Sunday. By Tuesday, you should respond to two additional posts from your peers.

When the economy is in a recessionary mode, aggregate demand shifting inward is often the culprit.  Deflationary pressures on prices ensue, and output falls, causing problems like higher unemployment and contraction of the economy.  

When the economy is in a recessionary mode, what will likely be the actions by government using fiscal policy?  Is it better to concentrate on aggregate demand or aggregate supply?  Why?

Review how and why aggregate demand and aggregate supply shift inward and outward.  English economist John Maynard Keynes developed a model that provides an explanation for the high and prolonged rate of unemployment of the Great Depression.  According to Keynes, what are the major sources of economic instability?  Fiscal policy is spending and taxation of the executive branch of the federal government; in recessionary times, what initiatives in spending and/or taxation are going to help the economy?

 

ECN206 Macroeconomics

Week 7 Discussion

The Federal Reserve System

Each week, you will be asked to respond to the prompt or prompts in the discussion forum. Your initial post should be 75-150 words in length, and is due on Sunday. By Tuesday, you should respond to two additional posts from your peers.

The Federal Reserve System was established to provide a stable monetary system for the entire economy.  The Federal Reserve Bank (the Fed) has three major tools to control the money supply: 1) reserve requirements, 2) discount window for loans to member banks, and 3) open market operations.

When the economy is in a recessionary mode, what will likely be the actions by the Federal Reserve using monetary policy?  Suppose the Federal Reserve purchases a $100,000 bond from John Doe, who deposits the proceeds in the Manufacturer's National Bank; what will be the impact of this transaction on the supply of money?How do each of the Fed's tools work?  What is the fractional reserve system, and how does it work in relation to the Fed?  Review the Federal Reserve System and how the Fed alters the monetary base to achieve the levels of money supply in the economy.   

 

ECN206 Macroeconomics

Week 8 Discussion

U.S. and China Free Trade

Each week, you will be asked to respond to the prompt or prompts in the discussion forum. Your initial post should be 75-150 words in length, and is due on Sunday. By Tuesday, you should respond to two additional posts from your peers.

Imports increase the domestic supply and lead to lower prices for consumers.  Exports reduce the domestic supply and push price upward.  The net effect of international trade is an expansion in total output and higher income levels for both trading partners (law of comparative advantages).

"The United States is suffering from an excess of imports.  Cheap foreign products are driving American firms out of business and leaving the U.S. economy in shambles."  Evaluate this view.

Review absolute and comparative advantages.  Personal private property protection allows for greater entrepreneurial ventures, and thus an expanding economy and job growth; can import tariffs and quotas reduce the benefits of trade?  Review the mechanics of import tariffs and quotas and world price.