Economics

Unit 10

Unit 10 Exercise

Due no later than 11:00 p.m. on Sunday of Unit 10

Worth 5% of final grade

Note: For time management purposes, students are strongly advised to submit their assignments by the due date above, relative to their local time zone. Late penalties, however, will not be applied until after 8:00 a.m. Atlantic Time the following day.

Late Submission Policy

This assignment is subject to the Late Submission penalty policy, namely 5% per day for three days.

This page will close and will not allow further submissions after this Late Submission period has expired.

In the event of an emergency preventing you from submitting within this time frame, special permission must be obtained from your instructor. Documentation substantiating emergency is required. In such a circumstance, if the extension is granted, the professor will reopen the submission function for you on an individual basis.

Please do not email your submissions to your professor, either before or after the due date; all coursework should be submitted through the online course (Moodle).

Objectives

The purpose of the Unit Exercises is to assess the student’s ability to apply the economics concepts learned in the unit to practical problem-solving scenarios.

Instructions

Complete the questions below that are based on your chapter readings. Submit your answers in a Microsoft Word document (no PDFs) by 11:00 p.m. on Sunday of Unit 10.

1. a. What is fiscal policy? What kind of fiscal policy is needed to reduce unemployment problem?

b. What is monetary policy? What kind of monetary policy is needed to fight inflation problem?

2. Write an essay on debt and deficit and include answers to the following in your essay:

What is budget deficit and how is it related to Government debt?

What is cyclical adjustment to deficit and how does it help to understand the stance of fiscal policy?

What is crowding out? How does budget deficit crowd out investment?

Why is a high level of government debt is a matter of concern?