Overview -
You are a campaign advisor for Judy McGovern, who is running for U.S. senator from the state of New Competencia. In this Project you will use your knowledge of economic issues, as well as statistics and probability, to help the campaign.
Directions - This Project has three parts and three corresponding deliverables.
Part One: Federal Reserve Report
With the campaign's first debate coming up, Judy McGovern needs advising on her economic policies. She knows that questions about recent decisions by the Federal Reserve ("the Fed") are going to come up in the debate, but she isn't very well informed about what these decisions mean. As part of the economics team, you are responsible for writing a report that explains some of these important issues.
To prepare to write your report, explore the Project resources to make sure you understand all the concepts that will come up in the debate. The Project resources explaining these concepts are listed in the order that you should review them. Also, read the two news articles about the Federal Reserve.
Write a report that explains the important background concepts to Ms. McGovern. The report should be written so that someone without much knowledge of economics could understand it. Be sure to address all of the following issues in your report:
1. Explain the background concepts of:
- real GDP.
- inflation.
- unemployment.
2. Explain the concepts of aggregate supply and aggregate demand, including recessionary and inflationary gaps.
3. Explain what the Fed does. Use the above background concepts in your explanation, and answer the following questions:
- What is the Fed's "dual mandate"?
- What tools does the Fed use to achieve its goals?
- what happens when the Fed pursues an expansionary or contractionary policy?
4. To provide Ms. McGovern with examples of the Fed's work, include a summary of the two news articles in the report. For each article, explain the main ideas presented, the evidence given to support these ideas, and the conclusions.
Throughout the report, be sure to translate any economics jargon into simple, clear language for Ms.McGovern. Look up any concepts that you do not understand to help your analysis and be sure to use your own words as you write your report.
Part Two: Federal Reserve Statistics
As an addendum to the report, you will analyze three graphs about the Fed so that Ms. McGovern can reference relevant statistics during the debate. Study the graphs in the Federal Reserve Statistics Worksheet in the Project resources and answer all of the corresponding questions. Be sure to show your work.
Part Three: Polling Data
The debate went well! Now you decide to go down to campaign headquarters to see how Ms. McGovern is faring in an early phone poll. You know Ms. McGovern polls particularly well with small- business owners and young people. Use the Polling Probability Worksheet in the Project resources to make predictions about the chances of reaching people in McGovern's target audience.
Federal Reserve Statistics Worksheet -
Answer all of the questions. Make sure to explain in words or show mathematically how you arrived at your answers.
1. Rounding to the nearest 0.1 percent, calculate the mean, median and mode for the Consumer Price Index - All Urban Consumers (CPI-U) for 2012, 2011 and 2002, separately. Show your work. If the three averages differ, explain why. Do you think the Fed should have been more concerned about inflation in 2012 than they were in 2011 or 2002? Why, or why not?
2. Based on the shape of this graph, describe the Fed's policy regarding the Federal Funds Rate from 2003 to 2013. What kind of policy did they have in 2013-expansionary or contractionary? Explain your answer.
3. The Fed's target unemployment rate is 6.5 percent. Based on this graph, describe how the Fed's target unemployment rate compares with unemployment rates between 2000 and 2012. Do you think this is a reasonable target rate? Explain your answer.
Polling Probability Worksheet -
1. Assuming that no calls have been made to New Competencia residents yet, what is the probability that the first phone call will be to someone in McGovern's target population?
2. A few hours into your visit, the polling center has called 37 small business owners, 63 residents between ages 18-25, 12 residents who fell into both categories and 133 non-target residences. What is the probability that the next phone call will be to a resident who is between ages 18-25 or to a small business owner?
3. Your visit is wrapping up, and the polling center is preparing to close in 10 minutes. The polling staff has called 787 residents throughout the day; 212 of those residents are part of McGovern's target population. What is the probability that the last two calls of the day will be to residents in McGovern's target population?
4. As you thank one of the polling staffers for your visit, she tells you that of the 862 people called that day, the call center reached 256 residents in McGovern's target population. She says, "I appreciate what great attention you have paid to our work. Given the information you have gathered today, can you tell us what the likelihood will be that the first call we make tomorrow will be to someone in McGovern's target population? We are really under pressure!" What is the likelihood that this will happen? How would you explain to the staffer your method for coming to that conclusion?
Attachment:- Assignment Files.rar