For the analysis paper, you will need to find an article online that describes an event that can be interpreted as a shock to the economy. A shock is something that disturbs the economy’s equilibrium. You will then use the basic to predict the effects of the shock on all of the variables of interest: output, the interest rate, consumption, investment, real wages, and work effort. You should discuss the importance of the shock for the economy as a whole; that is, is it a large or a small shock. The paper must be based on an article from the last six months and should include a link to the article. The paper should double spaced, size 12 font, and no more than two pages long. You cannot use graphs or jargon in the paper. Instead, you should write your paper for an audience of intelligent lay people who, by misfortune, have not taken the principles of macroeconomics.
Criteria for Grading:
1) Correct and complete analysis
2) Clarity of exposition to the chosen audience
3) Interpretation and assessment of your article
Examples of things that you shouldn’t do:
|The marginal propensity to consume is one for a permanent change in income.||Marginal propensity to consume is jargon|
|The production function shifts to the left.||Production function is jargon and this is “talking graphs.”|
|The new technology increases labor demand.||This sentence fails to give a reason why labor demand increases. Instead write something like: The new technology makes workers more productive and as a result companies will want to hire more employees. This sentence avoids the jargon “labor demand”, and asserts that companies hire more workers because the workers are going to be more productive.|
These examples are far from exhaustive!