ECO 221 MCU Macroeconomics Monetary and Fiscal Policies Against Recession Questions

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Answer this question.
Monetary and Fiscal Policies against Recession 
Governments can take actions to avoid a Recession or to mitigate the effect of a Recession. Those governmental actions to affect macroeconomic outcomes (like unemployment, inflation, and GDP growth) are called Fiscal Policy.
a. Did the US government take any actions recently to support the economy and avoid/mitigate the effect of a recession? List those actions and explain how they impact the economy (be precise, avoid general statements).

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Business& Economics Division, MARYMOUNT CALIFORNIA UNIVERSITY
Kossi Makpayo, Ph.D.
ECO 221: MACROECONOMICS
ASSIGNMENT 2: The Virus and the Economy
Answers to this Group Assignment are due back PROMPTLY on Sunday, December 5th , 2021 at 11:59 PM. Please feel free to work
together on the assignment, in groups of no more than THREE (you could work alone or in pairs if you so choose). Note: ONLY
DROPBOX ONE COPY FOR THE WHOLE GROUP! (WORD+PDF formats please).
1.
The Virus and Our Choices (15 points)
Our collective individual choices eventually impact the overall economy (Macroeconomy, which we define as the
performance of the national and global economies). Brainstorm with members of your group.
a. How does the ongoing viral crisis affect your individual choices (shopping, working, meetings etc.)?
Specifically, are there things you no longer do? Places you no longer go to? How did the virus affect your
immediate and future plans? (5 points)
b. How does the ongoing viral crisis affect your family choices (shopping, working, meetings etc.)? Specifically,
are there things your family no longer do? Places they no longer go to? How did the virus affect your family’s
immediate and future plans? You can conduct a phone interview with your family. (5 points)
c. How did the ongoing viral crisis affect your Community choices (shopping, working, meetings etc.)?
Specifically, are there things your community no longer do? Places people no longer go to? How did the virus
affect your Community’s immediate and future plans? (5 points)
2. Main Street to Wall Street (15 points)
a. List the type of businesses (or sector of the economy) that are the most negatively affected by the ongoing
viral crisis. Make sure to clearly explain why. What MUST they do to stay afloat? Feel free to look at stock prices
of few specific firms. (5 points).
b. Do you know of any businesses (or sector of the economy) that might be positively impacted by the ongoing
viral crisis? Make sure to clearly explain why. Feel free to look at stock prices of few specific firms (5 points).
c. What is the Dow Jones Industrial Average (DJIA)? Make sure to list the names of the companies therein and tell
how this stock market indicator has performed before this viral crisis and currently. (5 points)
3. Wall Street to Main Street (20 points)
a. How important is a well-functioning stock market to the economy? (Among other resources, use Chapter 7
Lecture). Make sure to mention the impact on businesses’ ability to obtain financial capital. Clearly explain and
give examples. (4 points)
b. What types of businesses will experience a decline in their stock prices? List few and explain why. (4 points)
c. What types of businesses will experience an increase in their stock prices? List few and explain why. (4 points)
d. What is a Financial Crisis? Do you think the US is in financial crisis now? Why and why not? (4 points)
e. What happens to the overall real economy if the financial crisis persists? Make sure to address unemployment
and real GDP growth. (4 points)
4. Micro to MACRO (30 points)
a. What is a Business Cycle? What is a Recession? (be precise, avoid general statements). (5 points)
b. Learning from the past: List period of recessions and corresponding unemployment rates in the US since
between 1960 and 2019. Use the World Bank Databank. Graph GDP growth rate (%) and Unemployment
rate (%) on the same graph. Comment. (10points)
c. What are some of the characteristics of a recession? (be precise, avoid general statements). (5 points)
d. Is the US economy currently in a Recession? Why and why not? (5 points)
e. Is the US economy potentially in a recession? Why and why not? (5 points)
5. Monetary and Fiscal Policies against Recession (20 points)
Governments can take actions to avoid a Recession or to mitigate the effect of a Recession. Those
governmental actions to affect macroeconomic outcomes (like unemployment, inflation and GDP growth)
are called Fiscal Policy.
a. Did the US government take any actions recently to support the economy and avoid/mitigate the effect of a
recession? List those actions and explain how they impact the economy (be precise, avoid general statements).
(10 points)
Central Banks (in the US, the Central Bank is called Federal Reserve Bank) can take actions to avoid a
Recession or to mitigate the effect of a Recession. Actions by the Central Bank to affect macroeconomic
outcomes (like unemployment, inflation and GDP growth) are called Monetary Policy.
b. Did the Federal Reserve System take any actions recently to support the economy and avoid/mitigate the
effect of a recession? List those actions and explain how they impact the economy (be precise, avoid general
statements). (10 points)

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macroeconomics

Recession

Monetary and Fiscal Policies

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