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Homework answers / question archive / For the project paper please write an essay of 1,000 words approximately using theories and concepts learned in Macroeconomics to explain a real-life economic situation
For the project paper please write an essay of 1,000 words approximately using theories and concepts learned in Macroeconomics to explain a real-life economic situation. You have your choice as to reference and format.
An example is included as below:
During the past year and in particular recently, I found prices in Canada, and more specifically food prices, have been rising quite fast. Based on what I learned in Macroeconomics this semester, I can explain that by the following:
1. The equation of exchange M*V=P*Q, and the derivative formula: inflation rate=money supply growth rate-real GDP growth rate. (chapter 12). Money supply in Canada grew 20% in Feb 2021 compared with same period last year (source: Bank of Canada); real GDP for the year 2020 dropped 5.5% (source: Statistics Canada). assuming money velocity does not change much, inflation rate = 20% - (-5.5%) = 25.5%. Based on that, I expect inflation rate will go even higher for the rest of the year.
2. Food prices have increased even more than general prices since foods are non-durable goods. We learned non-durable goods consumption generally does not drop much even in a recession such as the one we are in right now. (chapter 6). Therefore, the demand of non-durable goods such as food remains high while the demand of durable goods such as cars and computers will drop dramatically during a recession. Therefore, the increase in the price of food far exceeds the increase in the price of cars and computers.
Please reminded that this is just a very simple example. For your essay, please include more details such as data, charts, numbers, quotes, interviews, reports and your analysis to make your point. This project paper is an individual paper.
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