Case Study: Macroeconomic Challenges: Unemployment and Inflation
This assignment is broken in to three parts.
• Part I (Intro and Data): Due in Week 5
• Part II (Analysis and Solution): Due in Week 6
• Part III (Presentation)
A high unemployment rate in any economy is a symptom of dysfunctionality in the economy. People need income 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 two main issues related to unemployment and inflation. 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 (you could also choose different topics) the following.
• 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 facts and 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
The case study itself is a one assignment that is broken into two parts over two weeks. Part I is due in Week 5 and Part II (including Part I from Week 5) is due in Week 6.
The final and complete case study submission that is due in Week 6 must contain the portion of the assignment that was due in Week 5. In other words, the final assignment that is due in Week 6 must contain the following sections: (1) Introduction (2) Data (3) Analysis (4) Reflection (5) Solution (6) References.
The References should include a minimum of five sources in the final Week 6 submission. As an example, 3 sources could have been used in the Week 5: Part I assignment and 2 or more additional sources could have been used for the Week 6: Part II assignment, equaling 5 or more total professional sources in the final combined References page. Note that all references used for Week 5: Part I should be included in your Week 5 submission and in your Week 6 submission.
Part II: Due in Week 6
Writing Style and Page Number Requirements
Font Type: Times New Roman or Arial
Font Size: 12
Number of Pages: Six (6) to eight (8) pages that include Part I and Part II combined. Note that this 6-8 number of pages is not counting the Title page and References page that are also required.
Structure and Requirements
This section needs to contain the following discussions based on the data that was gathered and your understanding of unemployment, inflation, GDP, aggregate supply, and aggregate demand, monetary policy, and fiscal policy.
o Unemployment: Discuss the trends of unemployment rates over the past 10 years and provide your objective analysis of the changes in unemployment and the current rates. Place extra emphasis on the periods where unemployment was either too high or too low (higher or lower than the natural rate of unemployment).
o Inflation: Discuss the trends of inflation rates over the past 10 years and their relationship with GDP growth and decline. Highlight the years that inflation was either higher or lower than usual and state the reason(s). Also state the effect of the high and low rates on GDP.
o Wages: Discuss the changes in real wages by major professions or industries and highlight the periods wages declined or rose and state the reason for this unusual change.
o Two Issues (your choice): Here you will need to discuss the two unemployment or inflation-related issues. 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
This section needs to cover the following areas.
o 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, wages, and GDP to one another and how they impacted each other during periods of economic decline (recessions) and periods of economic growth (expansion).
o Highlight the causes of the two issues that you selected and how they impact the economy negatively and why they do need to be addressed by policy makers.
o State which macroeconomic policy (monetary policy or fiscal policy) that 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 five (5) professional sources to support your argument. The references need to be in APA format. To learn more about APA format, click on the link below.
This reference list should include the references used in Part I that was due in Week 5 as well as the references used for Part II, for a minimum of five sources total from Parts I and II combined.