This week the text readings include a discussion of inflation.  While you are already familiar with the basics of inflation, do read the text with care as it gives you useful fuller detail on the relationships between money supply, monetary policy and inflation.

But at the moment, the world isn't facing any meaningful inflationary pressure.  But there are numerous signs of potential deflation.  And that has several central banks nervous.

However, we rarely discuss deflation in economics courses.  The last time it happened in the US was during the Great Depression.  Japan  deal with deflation during the 1990s and off and on since then.  China has come close, but central bank actions seem to have prevented.  And now the Euro Zone is facing possible deflation to which the European Central Bank has finally started to respond.

This week explore the causes of deflation, why it is considered to have negative consequences for an econ

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Please use South Africa as the country

Economic growth is measured by growth in Real GDP. But many factors contribute to that.

Among the generally recognized factors that contribute to economic growth are:

Increases in the amount of physical capital: this can be measured by changes in investment spending (software is included in this category);
Advances in technology: this can be approximated by research and development spending;
Increases in human capital: this can be approximated by years of education; however, this is a very unreliable measure as educational quality is highly variable;
Other factors such as size of labor force also come into play and can be measured rather easily.  However, to be meaningful that has to be match between the skills possessed by the labor force and the needs of the economy. Thus, mere size of labor for has to be viewed with the human capital va

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We want to focus more directly on the macroeconomic policy responses to the Great Recession. 

Since there are many aspects to the macroeconomic response.  Both in the US and in the Europe, built from the information in Chapter 15 and select one or more aspects of the policy responses to explore in more detail.  Monetary policy as well as fiscal policy responses are appropriate for examination.

Use this as an opportunity to examine as aspect of the US response or the UK's or European Central Bank's response to this challenge that is of particular interest to you.

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The concepts of the Law of One Price and the Theory of Purchasing Power Parity.  In brief these tell us that in the absence of trade barriers, the same product should cost the same in all countries (the Law of One Price).  However, there are transactions costs and not all products can be traded internationally.  And these make the Law of One Price less useful in practice than it is in theory - at least for many products.

The Theory of Purchasing Power Parity, on the other hand, doesn't have the limitations that the Law of One Price does.  Purchasing Power Parity tells us that the same product should take the same amount of purchasing power to buy regardless of the country and currency involved.  This approach is useful for international comparisons of numerous economic variables.

This week we are going to use it to look at currency exchange rates again.  Think back to the currency y

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https://youtu.be/DmlhHLLU3Xs

This is from March 2010, thus, some data is out of date.  However, the point of the video is to help you make the connections between the recent/current economic policies and the events of 1937.

The Topic:
The Great Depression was a low probability event.  It required several negative economic events to occur at the same time.  And for policy makers to respond poorly to those events.  One of the best books on this topic is John Kenneth Gailbraith's The Great Crash, you might want to read it.

The events of 1937 are largely forgotten, even by economists.  But for those who study the relationships between public policy and economic growth, the lessons of 1937 are some of the most important ones from the 20th century.

Table 7.2 page 232 of your text show GDP grow of 12.8% in 1936.  In 1937 it was 6.9% and by 1938 it was -5.5%.  How does

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The factors that contribute to economic growth. Economic growth is measured by growth in Real GDP. But many factors contribute to that.

Among the generally recognized factors that contribute to economic growth are:
    Increases in the amount of physical capital: this can be measured by changes in investment spending (software is included in this category);
    Advances in technology: this can be approximated by research and development spending;
    Increases in human capital: this can be approximated by years of education; however, this is a very unreliable measure as educational quality is highly variable;
    Other factors such as size of labor force also come into play and can be measured rather easily.  However, to be meaningful that has to be match between the skills possessed by the labor force and the needs of the economy. Thus, mere

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Answer Question #1 and Question #2 . APA Format. 2-3 Paragraphs

Question #1
First review the attachments, then provide a step by step solution to the following problem (see the attachments for the steps):
Assume that the case is one of the machine tool industry in a closed economy.  The market begins in equilibrium.  The government imposes 10% VAT tax on all producers of machine tools.
Provide a step-by-step explanation of the changes in the machine tool market as a result of the tax.
Remember that the order of events is important.  Also use correct terminology (see attachments),

Question #2 .
Another important measure of how an economy is performing is the unemployment rate.  But there is more to the unemployment rate than just the headline rate reported on the news.

In particular we are going to look at the U3 rate (the Headline rate), the U6 rate and the labor force participation rate.

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GDP and Per Capita GDP are two of the basic and most widely used economic measures. They are broad measures that provide interesting and useful information about a nation's economy as a whole. And Per Capita GDP is the standard measure of the Standard of Living.

But they are often criticized for not being a measure of Quality of Life.  (Whatever that means as there is no standard definition of Quality of Life.)  However, GDP was never intended to measure "Quality of Life", just output and the income that the production process produces.

Is GDP an adequate measure of national economic activity?
Should GDP be replaced by a new Quality of Life Measure?
Or should there be separate measures of economic output (GDP) and Quality of Life?
Or some combination.

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Review the attached presentations on exchange rates.

Then go to the X-Rates Web site (http://x-rates.com) and find the current:

a) exchange rate for the US Dollar (USD) and any other country's currency that you wish to study.  Do NOT select the Chinese Yuan as your other currency since it is not a freely floating currency;

b) then in the Monthly Average display, select the last 12 months from the drop down menus and click "Go";

c) based on the 12 months of data, which currency is appreciating (gaining value) and which is depreciating (losing value)?  Remember it can do both in a year.