Philips Curve & John Meynard Keynes
I only need 4 pages (1100 words)
This is a term paper.
The following questions and instructions are here. Please do Question 1 and Question 3
The Term Paper consists of three short essay problems of which you must answer two. Answer Question 1, which is compulsory, and then either Question 2 OR Question 3. Utilize concepts, theories and principles from class to explain your assumptions. You can further support your answers with outside research. If you use sources from the Internet, a textbook or anything outside the class slides, you must provide citations in footnotes or endnotes.
Each essay should be about 700 words, single-spaced, font size not to exceed 12. Essays must be typed and printed. Handwritten essays will not be accepted. In addition to this, you may add diagrams, tables or other illustrations. It is very important that you use your own words in writing these essays. University guidelines on academic integrity will apply in cases where copy/paste from the Internet is observed (except for diagrams) or identical papers from students. Use care in writing. Re-read your essays before finalizing. Neat presentation and carefully drawn diagrams will also get credit.
Use the Introduction/Body/Conclusion model for the papers. Introduce the idea and the background to the question in the Intro, state your assumptions, the alternatives and the analysis using graphs, tables or examples in the Body, and then formulate your Conclusion at the end. Remember: What might work for one setting, may not work for another. Ambiguity is OK. Just tell me why there is ambiguity, drawing from what you learned in class. Consider drawing real world examples from various settings and time periods to illustrate your arguments.
Each essay is worth 25 points. 15 points is based on your use and application of macroeconomic principles; 10 points is based on writing quality, clarity of expression and creativity. I am looking for your ability to analyse economic situations using the instruction and experience you have received in class so far. Credit will be given for use of economics terminology and reference to the macroeconomic situations we have studied. Please note that I am not looking for a single right answer. Rather, you can describe several options or outcomes based on your analysis of the problem. Include real world examples to illustrate the theories. I will be looking for originality of thought and expression and how tightly you can bind your arguments to the material we have learned in class. The assumptions you make, supported by economic theory and principles, may lead you to suggest various alternatives. That is OK!
Question 1 (700 words) – COMPULSORY (Everyone has to do this)
It is John Maynard Keynes’s 133th birthday. You have been asked by a leading economic journal to write a short article celebrating the legacy of this great man. Explain, giving real world examples why the principles and theories he advocated in 1936 are still relevant today for both developing and developed economies. Focus on how Keynesian theories were formed during the Great Depression (e.g. lack of aggregate demand creates unemployment) and used most recently during the Recession of 2008-09. Cite examples and state your assumptions. There is no right answer. I would like to see you Keynes’s theory and policy recommendations with observations from the world today. You can choose one or more country to illustrate your argument or draw from several examples.
Question 2 (700 words)
Governments around the world were stunned that Mindonesia survived the 2008/2009 crisis largely unscathed. Some say this was due to high domestic consumption. Finance Ministers from emerging economies with rapidly growing middle classes have asked you to write a short briefing note explaining why this occurred. Draw macroeconomic principles from class to support your assumptions. Explain the role of consumption in boosting aggregate demand, the tradeoffs they may want to consider between consumption and other drivers, and the factors that may affect the propensity to consume. Use diagrams to illustrate your points if appropriate.
Question 3 (700 words)
You are the governor of the Central Bank of Brokeistan. You see a Phillips curve with low inflation but high unemployment The President has asked you to devise a short-term policy to reduce unemployment. Explain your approach and the underlying assumptions using the tools at your disposal and macroeconomic principles from class. Devise a step-by-step approach with diagrams. You can include multiple options for the President to consider. Consider the factors that cause unemployment, the tradeoffs you may have to make with inflation, and the relationship of unemployment with aggregate demand. It is important not to just say you will do ‘this’ and ‘that’ will happen. Explain the reasons why these outcomes will happen, again sticking closely to macroeconomic principles.