5.3 Assignment

5.3 Assignment

Getting Started

In this section of Workshop Five, you will analyze what does and does not constitute money, how the Federal Reserve Bank in the United States functions, the macroeconomic problems of deflation, and the causes of the financial crisis of 2007−2009.

 

 

Background Information

In this section, you will learn how money emerged in ancient times to help facilitate exchange in economies relying on market-based transactions, how money serves as a unit of account to standardize measurement for anything denominated in financial terms, and how (in normal times) money serves as a store of value. Furthermore, you will discover how the U.S. fractional reserve banking system works, the Federal Reserve Bank’s response to the financial crisis of 2007−2009, the connection between money supply and inflation, and how deflation (a drop in the overall price level over some period of time) is symbolic of insufficient aggregate demand in an economy.

This section concludes with an analysis of how monetary policy (administered by the Federal Reserve Bank in the United States) is implemented to attain a host of macroeconomics goals (such as high employment and overall price stability), how supply and demand interact in the money market to determine nominal interest rates, and the quantity of money exchanged (that is, flowing through) in the economy. Lastly, this section includes an analysis of the “transmission mechanism,” whereby changes in the money supply (through their impact on nominal exchange rates) affect the components of aggregate demand.

 

 

 

 

Instructions

1. For this activity, please complete the following questions in your textbook, Macroeconomics:
   1. 6 (page 504)
   2. 7 (page 509)
   3. 3 (page 549); please make a graph and upload it with this assignment.
   4. 8 (page 554)
2. Be specific in your responses and use personal examples to frame your writing.
3. Show all of your work in your submission for this activity (as appropriate). Use in-text citations and APA format for direct quotes and references to the reading.
4. When creating your graphs, you have the option to either draw your graph freehand using pencil and paper or use a program such as Excel. Keep in mind that the objective of this assignment is an accurate graph, and not the program itself. Freehand graphs are perfectly fine for this assignment. To submit your graph(s), follow these steps:
   1. If you draw your graph(s), you can either:
      1. Scan your graph using a scanner and upload the image or PDF file or

• Take a picture of your graph using your phone. If you use this method, send the image to yourself (e.g., via email) and place the graph in a Word document. Then enlarge and crop the image to make sure it is clear and legible before saving your document as a PDF to upload.

1. If you use Excel, you can save your graph directly as a PDF file by selecting File, then Save As. In the “Save as type” drop-down menu, select PDF.

 

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