Week 6 Case Study: Macroeconomic Analysis: Unemployment and Inflation
A high unemployment rate in any economy is a symptom of dysfunctionality in the economy. People need income to be able to consume, and consumption leads to production and production leads to higher demand for labor (employment), so unemployment is a crucial macroeconomic issue that confronts all modern economies. A lower unemployment rate, however, is not the end of the problem. The type of employment and the price of labor (wages) have to be sufficient in order for consumption (which is the major component of GDP) in the economy to be healthy. If wages are low or if the prices in the economy are high, consumption would be low and thus, production and demand for labor would be low, too. High unemployment rate, high part-time employment rate for economic reasons, low wages, and high inflation could have negative effects on economic growth.
In this assignment, you need to identify only two main issues related to unemployment and/or inflation. You can choose two unemployment related issues, or two inflation related issues, or one unemployment related issue and one inflation related issues. Then you are going to study their past trends, provide an overview of their current status, and provide solutions to overcome them. You will use data, articles, experts opinions, and government reports to draw a clear picture of the current unemployment and inflation issues.
Some areas you might consider are the following (you could also choose different topics).
• Part-time employment rates for economic reasons
• Unemployment rates among young college graduates
• Unemployment rates by gender
• Unemployment rates among Black and Hispanic communities
• Low supply of labor (professionals) in certain industries
• High supply of labor in education
• Low wages by profession and their causes
• Low demand for labor in some industry (you could choose whatever industry you wish)
• Low wages in some parts of the country
• High unemployment rate among workers with high school diploma or less
• The increase in the price of housing and its effect on investment
• The increase in the price of healthcare and education and their effect on consumption
Your research needs to be structured with consistent and clear thoughts. It also needs to be supported by actual data. Your results need to be based on solid facts. Your conclusion and recommended solution need to be thorough and based on your findings and understanding of macroeconomic challenges and macroeconomic policies.
Writing Style (APA) and Page Number Requirements
Font Type: Times New Roman or Arial
Font Size: 12
Number of Pages: Three to five pages, not counting the separate Title page and the separate References page
Structure and Requirements
• Title Page
o Title of the paper
o Name of the author
o E-mail address of the author
o Class name
o Professors name
Your introduction needs to include the following.
o Include a clear definition of unemployment and inflation and how and why they occur and rise in the economy.
o Briefly provide your understanding of the relationship between GDP growth and/or decline, high/low unemployment, and high/low inflation rates.
o Include a brief description of the two unemployment or inflation-related issues that you are going to address in this paper and their importance. Basically, why do you think they are important to research and resolve?
Use tables, graphs, and figures to support your argument. You can find the latest unemployment and inflation data at www.bls.gov (Bureau of Labor Statistics).
o Obtain data from at least three credible sources (not Wikipedia) to provide facts about unemployment, inflation, their growth pattern, and their current status.
o Obtain historical data (10 years or more) about GDP growth rate (percentage).
o Obtain historical data (10 years or more) about the two issues you are going to address, as well as data about their current status.
This section needs to contain the following discussions based on the data that was gathered and your understanding of unemployment, inflation, and GDP.
o Unemployment and Inflation: Discuss the trends of unemployment and inflation rates over the past 10 years and provide your objective analysis of the changes in unemployment and inflation rates and the current rates. Place extra emphasis on the periods where unemployment or inflation was either too high or too low. Also state the effect of the high and low rates on GDP.
o Two Issues: Discuss the two unemployment or inflation-related issues you selected. Provide an overview of their trends and use facts to highlight the major changes in their trends and their current statuses. State the reason(s) why you believe these two issues represent a challenge for the economy.
• Reflection and Critical Thinking
Connect all of the dots together by relating your above analysis to other areas in the macroeconomy. Basically, you will link changes in unemployment, inflation, and GDP to one another and how they impacted each other during periods of economic decline (recessions) and periods of economic growth (expansion).
o State which macroeconomic policy (monetary policy or fiscal policy) might resolve the issues you highlighted above, and state how this policy could be implemented and why it would solve these problems.
o Finally, provide your own solution. Basically, answer the following question.
What would you do to solve the macroeconomic issues you addressed if you were in charge of the U.S. economy? State why.
• Reference List
Use at least three professional sources to support your argument. The references need to be in APA format.
To learn more about APA format, click (and hold your CTRL key) on the link below or copy/paste the link into your browser address bar.
APA Resources: http://libguides.devry.edu/c.php?g=181472&p=1194156