Name: Madisyn Cleveland

Section: ____________

E-Portfolio Signature Assignment

Salt Lake Community College
Macroeconomics - Econ 2020
Professor: Heather A Schumacker
Please type your answers to the following questions. If you need to hand draw the graphs on page 3 you may and then scan them as a
separate document. When you have completed this assignment post it to your e-portfolio along with your chosen article and 20 terms
article write up. (20pts) Make sure to put an explanation of the assignments and a reflection statement on your ePortfolio web site.
For examples of reflection prompts please see SLCCs website: https://www.slcc.edu/gened/eportfolio/docs/ReflectionHandout2.pdf.
(10 pts) Link your ePortfolio URL to your MyPage under the student tab so that instructors can view your work. (5pts)
1.

2.

What are the 3 main macroeconomic goals economists would like to see for an economy: (3pts)
1. Economic Growth
2. Low Inflation
3. Low Unemployment
What is the formula for GDP (write out the full name)? Circle or highlight the largest component and fill in the chart. Under each
put the components and something unique. (19pts) Gross Domestic Product

GDP = Consumption + Investment Spending + Government Purchases + Net Exports and Imports
Components:
Circle the largest sub-category
1. Durable Goods
2. Nondurable Goods
3. Services

Components:

Components:

Components:

1. Business Fixed Investment

2. Residential Investment
3. Inventory Investment
Excludes:

1. Goods
2. Services

1. Imports (+)
2. Exports (-)

1.

Stocks and Bonds

(Real Assets)

Excludes:
1. Transfer Payments
2. Interest paid on national
debt

3.

What is the problem associated with being at AD2 that makes policy makers concerned? (1pt)
Inflation is the issue associated in the graph

Q1

Q Full
Employment

Q2

REAL OUTPUT (quantity per year)

4.

Who does fiscal and monetary policy? What are 2 fiscal policies and 3 monetary policies to correct a situation where the economy
is naturally at AD* but finds itself at AD2, as seen in the graph on the previous page. Briefly explain how each of these policies
would work to correct the situation. (22pts)
Who does fiscal policy: The Federal Government
1.

2.

Government Spending
When the government increases their budget on spending, less money is supplied for consumers to spend. This
leads to less consumer spending which shifts AD2 to AD*.
Taxation
When the government increases the tax rate, consumers demand for goods and services decreases and they
spend less money. This causes the inflation to slowly decrease until AD 2 to AD* where the government believes
the economy is safe and functioning.

Who does monetary policy: The Federal Reserve

1.

Reserve Requirement
The reserve requirement is the amount the Federal Reserve or other central banks hold of deposits. If the reserve
requirement is increased, banks will have more money in their excess reserves. Banks have less money to loan

2.

out, making consumer spending decrease and shifting AD2 to AD*.

Discount Rate
The discount rate is the interest rate the Fed makes when loaning out money to other banks. When the discount
rate is increased, banks are less likely to loan out money because it is more expensive for them for consumer

3.

spending.
Open Market Operations
The Fed can sell bonds to consumers. When this happens, the reserve requirement lowers as well as the money
supply. If the money supply is limited, AD2 will once again become AD*.

5.

Begin in equilibrium in each of the following graphs; draw the effects from question 2 above as they would apply in each graph
below. Next draw the effects of an anti-inflationary policy taken by the fed to correct the result from question 2 - use both graphs.
Explain what is happening in each graph and overall in the economy as the due to the anti-inflationary policy. (20 pts)
Money Supply and Money Demand Graph
Nominal
Interest Rate
Aggregate
Demand and
Aggregate Supply

Money Supply Curve (MS)

PL

Real GDP

AS

Money Demand (MD)

AD

6.

Given the situation our economy has been in the past several years why have fiscal and monetary policy had a difficult time
getting us back to the optimal level of GDP. (5pts)
Since the economy took a hit in 2008-2009, the Fed has lowered the reserve requirement so banks can build up their excess
reserves to a comfortable level. This made people borrow more money with regulations. However, with this change, interest rates
have increased while wages have not. Now consumers are left with high interest rates and prices.

7.

FRED: Follow the instructions for this assignment on PDF handout.

Before you start, make sure to log in to your free account so that you can save your graphs!
FRED unemployment graph:

Watch the video Introduction to FRED and complete your own unemployment graph. Instead of using St. Louis use Salt
Lake City. Have the graph span the last 10 years. Write about what inferences you can make from this graph. Save and paste
the graph here: (5pts for the graph and 5 pts for write-up)

The unemployment rate in Salt Lake City has remained lower than national levels for the past ten years. During the recession
in 08-09, national levels rocketed to ten percent while Salt Lake City hovered around seven percent. Overall, Salt Lake City has been
better off with unemployment than our nation as a whole.

8.

List the 3 types of Unemployment, define each, and put a star next to those that are included in the natural rate of
unemployment. (8pts)
1. Frictional Unemployment *
Frictional unemployment is a natural part of unemployment. This type of unemployment happens when people
are in between jobs. Those who deal with this type have the knowledge and skills for employment, just not at
2.

the moment.
Structural Unemployment *

Structural unemployment is also a natural part of unemployment. However, this type happens because of lack of
skills/knowledge, discrimination, or other factors that make it difficult to find a job. People under this category
3.

9.

will always have a hard time finding employment until they overcome the factors.
Cyclical Unemployment
Cyclical unemployment is the only type that is not natural. This happens when the business cycle is going

through a recession and only during a recession.

What is the difference between nominal and real, why is each important? (4pts)
Nominal is the market value of all final goods and services produced domestically in a year and includes
inflation. Its important because it includes all market prices that change during the year caused from inflation
and deflation. Real is similar to nominal, but its adjusted for inflation instead of including inflation. With real, a

base year is selected and compared to the current years economy.

10. FRED Create a GDP graph following the instructions on the handout:
Based on the graph, what is the Real Personal Consumption Expenditures for the second quarter of 2008?
10,077.90
Based on the graph, what is the Real Government Consumption Expenditures and Gross Investment amount for the second
quarter of 2008?
2,974.98
Based on the graph, what is the Real Gross Private Domestic Investment amount for the second quarter of 2008?
2,472.60
Based on the graph, what is the real net exports of goods and services amount for the second quarter of 2008? (4pts)
-550.40

11. Write about what inferences you can make from this graph. Save and paste the area graph here: (5pts for the graph and 5 pts
for write-up)

Back in the 1950s, our exports and imports were pretty much equal to each other. Just before the year 2000, the nation
started to import more and export. It has remained that way since. Personal consumption is the largest growing category continuously.
Investment and government spending have also increased but at a much slower rate than consumption. Overall, real GDP has
increased immensely over the past sixty years.

12. Change the graph type to a pie graph:

Put the curser over the pie graph: What is the value of the current Real Personal Consumption Expenditures
in billions of chained 2009 dollars and what % of GDP is it

66%

What is the value of the current Real Government Consumption Expenditures and Gross Investment
billions of chained 2009 dollars and what % of GDP is it

17%

2,870.60

in

17%

What is the value of the current Real Gross Private Domestic Investment Expenditures
chained 2009 dollars and what % of GDP is it

11,330.70

2,852.70

in billions of

(6pts)

Paste the pie graph here: (3 pts)

Use the excel sheets provided to complete this problem. Scenario 1: If the initial deposit into a bank is $5,000 and the reserve
requirement is 10% use formulas to fill in the chart all the way to completion (where there will be 0 for new deposits). Use formulas
and cell references whenever possible. Fix the cell references for the reserve requirement when entering your formulas on the first
line such that you can drag your information down the rows. Fixing a cell reference is done by putting dollar signs in front of the cell
row and column references ex. $B$3 this will mean that no matter where you copy that cell to it will always refer to cell B3. For
scenario 2, change the reserve requirement to 40%. (20)