INSTRUCTIONS:
Read the detailed description of this assignment as posted in our classroom. Then, answer the following five questions to help the committee members understand basic economic principles.
Post your answers in the five blank cells shown below. Your individual responses should beapproximately 200 words; your five responses in this table should sum toapproximately800-1,050 words.
Explain the role of an economist as a scientist as well as a policymaker.
Include at least one real-world example of an economist (a real person) and the role he or she plays. For example, N. Gregory Mankiw is an economist who teaches at Harvard and has served as an advisor to government agencies.
Explain the interconnections displayed in the circular flow model with specific real-world examples of: (1) households, (2) firms, (3) product (goods/services) market, and (4) factor markets.
Explain the flow of money and goods in an economy.
For example, my wife and I are an example of a household. An example of a product market for goods and services is the coffee I buy from McDonalds (a firm). An example of a factor market is the labor I supply to the University of Phoenix.
Explain how an economy's scarce resources are allocated by: (1) the forces of supply and demand, (2) prices, and (3) government policies.
Include at least one specific real-world example of one of the above allocation mechanisms. For example, in the U.S., the minimum wage, which is a government allocation mechanism, was set at $0.25 per hour on October 24, 1938. (U.S. Department of Labor, n.d., para. 1)
Define the term gross domestic product (GDP) and provide a specific real-world example of each of the four major components of GDP.
For example, the cup of coffee I bought at McDonalds yesterday morning would be included in the consumption component of GDP.
Explain the five steps in how the consumer price index (CPI) is constructed.
The course text lists three problems inherent in the measuring changes in the cost of living - from your experience as a consumer, provide a specific real-world example of one of those three problems.
An example of the problem of accounting for quality improvements in the CPI is the last two desktop computers I bought, which both cost about $1,500. My newer desktop computer runs much faster than my older desktop computer. Consequently, my newer desktop is much higher quality than my older desktop, which should be reflected in the CPI as a drop in price.
Purpose of Assignment
The purpose of this is assignment is for students to review the basic principles of economics and the concepts of the circular flow model, showing the connectivity of society's economic players and the flow of goods and money within an economy. Students will learn how society allocates its scarce resources and how economists are both scientists and policymakers. Students will define GDP and CPI and how they are calculated.
Scenario: Imagine the chief executive officer (CEO) of General Electric (GE) is concerned that members of the GM's strategic planning committee are unfamiliar with basic economic principles. The CEO has assigned you the task of developing a table to review those basic principles.
Complete the blank cells in the table that is included in the document Table for Week 1 Assignment 372.
In the table, explain the following to help the committee members understand how markets work: (1) the role of an economist as a scientist as well as a policymaker, (2) the circular flow model, (3) how an economy's scarce resources are allocated, (4) gross domestic product, and (5) consumer price index.
Hints: Again, you should use the following chapters from Mankiw's Principles of Macroeconomics (our course textbook) as your source of background information:
- Chapter 1 (Ten Principles of Economics).
- Chapter 2 (Thinking Like an Economist).
- Chapter 3 (Interdependence and Gains from Trade)
- Chapter 4 (The Market Forces of Supply and Demand).
- Chapter 10 (Measuring a Nation's Income).
- Chapter 11 (Measuring the Cost of Living).
Please note: You are allowed to use other sources for your real-world examples. Also note: Throughout Week 1, I will post messages in our Learning Activities related to this assignment; you will be expected to read those messages as well as the discussions of the information posted in those messages and incorporate any relevant information from those discussions into this assignment.
Also note: Your grade on this assignment will be based on the content of your answers, on your in-text citations, and on your references list. Your grammar, punctuation, spelling, and other writing mechanics will not be graded, but you might lose points if your answers are unintelligible.
Again, the only APA formatting that is required are: (1) in-text citations for all quotes and paraphrases and (2) a reference list.