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PRODUCTION, UNEMPLOYMENT, AND INFLATION

PRODUCTION, UNEMPLOYMENT, AND INFLATION

Choosing a Reference Organization

For the Session Long Project, you will be asked to select an organizationto use as a focus for your application of economic ideas. You must use the same organization for all 5 SLPs.

For the Module 1 component of the Project, please address the following questions in a 2 to 3-page MS Word document:

  1. Identify and briefly describe the organization you are going to use. Why do you think it will be an interesting focus for your application of macroeconomic ideas?
  2. Select three macroeconomic indicators from the link below that you feel have the greatest impact on the operations and/or planning for your SLP organization. Remember that an economic indicator measures a change in the general or in a specific aspect of the economy and you should be assessing how each macro-economic change you have chosen affects your company.

http://www.investopedia.com/university/releases/

  1. Explain why they are important to the current or future condition of your organization.

Assignment Tips

For this Module, think about macroeconomic indicators of performance, and how recent changes in these indicators have affected the performance of your organization. For example, how does the change in GDP affect the sales, profitability, expansion plans or competitiveness of your organization. Or, as another example, has the rise in the national rate of unemployment had any affect on your organizations’ operational performance or management decisions?

Below are three examples of what is required for this assignment. The first two are examples of correct approaches and the third is an example of an incorrect approach.

Sample Mini-Analysis (1):

My organization is a beauty shop/spa that caters to middle class women. With the recession and rise of unemployment the shop has had decreased revenue and profit. This has been particularly true of the spa part of the business because that is more of a luxury service than the simple haircut and coloring end of the business.

Notice that the primary focus was on how this macroeconomic indicator has affected the business. This is a good example of the approach to take.

Sample Mini-Analysis (2):

I will begin with the Employment Cost Index (ECI) and why it is important to the well-being of TLMP. Companies such as TLMP must be able to anticipate inflation and the impact it will have on currency exchanges and how that would impact their international production and trade. The reason ECI is of less importance to TLMP then some of the other indicators, is because it is a lagging indicator. Albeit important, it is not an indicator that will provide advance data that would allow TLMP to make a change in plans to account for an anticipated change in economic policy.

Notice that the above emphasizes the effect the ECI will have on the costs to TMLP and management has to engage in planning if these costs are expected to increase. It also demonstrates that even though ECI is an important index it is limited in its ability for TMLP management to use it because it does not provide the data in time for the company to use it for its planning. This is a good example of the approach to take.

Sample Mini-Analysis (3):

The management of Pleble Corporation uses the Retail Sales report for its planning. They compare the sales of Pleble on a month to month basis, and break it down by its various product lines to spot where sales are falling or increasing.

Notice that this is NOT a correct focus. There is an important macro-economic indicator called the Retail Sales Report but the above analysis, after mentioning it, goes into a discussion of Pleble’s sales report, and that is not a macro indicator because it is only about one company, not the entire economy. The proper focus would have been to utilize the national sales report in a way that would have helped Pleble management to forecast where their sales may be going in the near term future. For example, the downward trend of retail sales over the past 5 months indicates that Pleble should reduce their inventory.

There are literally thousands of macro-economic indicators that are reported. Keep in mind that a given organization, such as a home builder, may be affected by housing starts, even though that indicator may have no effect on a defense contractor. The link to Investopedia lists 25 of the most commonly used macroeconomic indicators.

Module 2 – SLP

FISCAL POLICY

You are to place yourself in the position of being a paid lobbyist for your organization. Pick two or three major fiscal policy initiatives you would lobby Congress about. However, this is not in general, this is for your organization, not for the economy as a whole, so make sure to take that specific focus. Again, if you’re using an unconventional organization, you may have to get a little creative here.

  1. As your organization’s lobbyist, what would you like to see done by the federal government that would be of help to your organization? As a lobbyist it is not your job to be concerned with the deficit, or the environment, or the general health of the financial system (unless, of course, you are lobbying for an environmental, financial, or deficit reduction group). Your answer to this question can give an interesting perspective as to how lobbying can distort economic policy and decisions. CAUTION: I am not looking for general comments that could apply to the country as a whole or any given organization, what I want is comments that are relevant specifically to your organization.

    There are three articles below on the pros and cons of lobbying, feel free to google the subject to find more:

    http://dbp.idebate.org/en/index.php/Debate:_Lobbying

    http://www.chiff.com/society/lobby.htm

    http://www.reuters.com/article/2009/09/13/obama-lobbying-idUSN1348032520090913

  2. The majority of lobbying efforts center around fiscal policy. Please discuss your opinions on lobbying regarding if it is useful and should continue as is, if it should continue but with constraints to limit how much is done, or if it should be eliminated.

Module 3 – SLP

THE MONEY MARKET

For the Module 3 SLP assignment, address the following questions in a 2- to 3-page paper.

  1. Assess the overall financial health of your organization. What are good and bad signs, if any, in your assessment? Measures of financial health may include sales and/or profit increases or decreases, if employees are being hired or laid off, major new orders being placed or orders being cancelled. These are some but not all measures that could be looked at, but if you are using an unconventional organization, you may have to get a little creative here.
  2. To what extent is your organization’s financial health affected by fiscal and monetary policy? Please give at least one specific example.

Module 4 – SLP

INTERNATIONAL TRADE AND FINANCE

Trade Policies

Consider the firm you have chosen and address the questions below in a 2- to 3-page paper:

  1. Suppose the U.S. government removed tariffs in your industry. What impact would that have on your firm?
  2. What are some obstacles your firm might face with production in another country?
  3. Using at least TWO resources that you find on your own, make an argument FOR or AGAINST free trade. Be sure to discuss the advantages and disadvantages of which policy you support. (Wikipedia is not an acceptable academic resource for this course).

Module 5 – SLP

ECONOMIC GROWTH

In this course, we have covered several important concepts such as GDP, unemployment, monetary and fiscal policy. For our final module you will apply these concepts to your firm.

Current Event

  1. Pick a recent newspaper article (New York Times, Wall Street Journal, etc.) that focuses on your firm or industry. Describe the event and the issue for your firm. (summarize article by including, who, what, when, and where)
  2. Describe the basic issue and background behind the event.
  3. What economic principle(s) can be applied to the event or issue? Identify and briefly describe a specific principle that we have covered in one or more of the modules.
  4. How does this event impact the future of the firm or industry? For instance, what do you think would be the future outlook for the firm?
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