Economic Analysis of Monetary Policy and Its Effect on Unemp…

This project is closely related to the course objectives and learning resources provided for the course. This project is based on the course learning resources studied in Unit 2 and 5 :

• Chapters 8 of the textbook Unemployment (Unit 2),
• Chapters 9 of the textbook Inflation (Unit 2),
• How the Government Measures Unemployment (Unit 2)
• Monetary Policy and the Economy (Unit 5)
• The Implementation of Monetary policy (Unit 5)

Purpose

To evaluate your ability to analyze monetary policy and its effects on unemployment and inflation in the United States by collecting current economic data, creating visual representations, and providing insightful analysis based on economic principles.

The Project is designed to ensure that students are familiar with the methodology of collecting and analyzing data from the web. Each project includes collecting the required data, creating a graph or table to present this information, and writing three to four double-spaced data analysis pages. Students should aim to provide clear insights and interpretations rather than merely presenting data.

Associated Skills

• Data collection and analysis from authoritative economic sources
• Critical evaluation of economic indicators and their relationships
• Application of monetary policy concepts to real-world economic conditions
• Professional communication of economic analysis

Instructions

Project Requirements

1. Textbook and Learning Resources as a Reference: Students must use the assigned textbook, as well as chapters from How the Government Measures Unemployment book provided in Unit 2, Monetary Policy and the Economy, and Implementation of Monetary Policy provided in Unit 5 as a primary reference for their analysis. This ensures a strong theoretical foundation and context for the data being analyzed.
2. Current Data and References: All data used must be the most recent available data. Students must include references from recent news articles, journals, or other credible sources to support their analysis. This requirement aligns with the expectation to use up-to-date Bureau of Labor Statistics (BLS), Bureau of Economic Analysis (BEA), and the Economic Report of the President data.
3. Focus on Analysis While charts and graphs are necessary to present data visually, the focus should be on explaining the significance of the data.
4. Elimination of First-Person Language: Students must avoid using the first person in their papers. Instead, reflections and analyses should be restated in the third person. This enhances objectivity and professionalism in academic writing.

Evidence Statements

This project requires you to demonstrate your understanding of monetary policy tools and their effects on the economy by analyzing current inflation and unemployment data. You will need to collect data from authoritative government sources, create visual representations, and provide thoughtful analysis connecting economic theory to real-world conditions.

This project consists of two required parts and one optional bonus section:

Part 1: The Inflation Rate and Monetary Policy in the United States (42% of project grade)

Please note that you must use the most recent available data. Using the data from previously published releases and summaries will produce grade zero for this part of the project.

1. Visit the Bureau of Labor Statistics website: Use the “Consumer Price Index Summary” and “Table 1 Consumer Price Index for All Urban Consumers (CPI-U): U.S. city average, by expenditure category” to answer the following questions:

• What month (and year) is summarized?
• What was the level of the CPI-U for that month?
• What was the level of the CPI-U for that month?
• What does this number represent?
• What was the rate of inflation (percentage change in the CPI-U) for the most recent available month?
• How does that rate compare with the rate in the previous month?
• What was the rate of inflation (percentage change in the CPI-U) for the last 12 months for “all items”?
• Which two categories of goods or services had the greatest price increase for the last 12 months?
• Which two categories had the lowest price increase?
• Which two categories of goods or services had the largest price decrease for the last 12 months?
• Who loses from inflation? Who benefits from inflation? Explain your answer.
• Explain the monetary policy tools that can be used to fight inflation and improve price stability.
• What is the current monetary policy target and how is the Federal Reserve fighting inflation?
• Explain how the following monetary concepts are linked: changes in the money supply, interest rates, investment spending, equilibrium GDP, and price levels.
• Please analyze the significance of the data that you received for this Project. Please include references from course learning resources, recent news articles, journals, or other credible sources to support your analysis.
• Reflection Write a paragraph reflecting on what you learned from this assignment and how you might apply this knowledge in the workplace or everyday life.

Part 2: The Unemployment Rate and Monetary Policy (42% of project grade)

Please note that you must use the most recent available data. Using the data from previously published releases and summaries will produce grade zero for this part of the project.

1. Visit the website.

2. Select “Employment Situation Summary” and answer the following questions:

• What month (and year) is summarized? What was the unemployment rate for that month?
• How does that rate compare with the rate in the previous month?
• What were the unemployment rates for adult women, teenagers, blacks, Hispanics, and whites?
• How did these rates compare with those a month earlier?
• What factors make it difficult to determine the unemployment rate?
• Why is unemployment an economic problem? What are the noneconomic effects of unemployment?
• Who loses from unemployment? Explain your answer.
• What does “natural rate of unemployment” mean and how is it related to potential real GDP?
• Using course learning resources, what is the level of the natural rate of unemployment?
• Compare with the actual rate of unemployment from the BLS website and explain the difference.
• What is “the Federal Reserve’s dual mandate”? Explain monetary policy tools that can be used to fight recession or inflation.
• Is it possible for the Federal Reserve to decrease inflation and increase employment at the same time? Please include references from course learning resources, recent news articles, journals, or other credible sources to support your analysis.
• Reflection Write a paragraph reflecting on what you learned from this assignment and how you might apply this knowledge in the workplace or everyday life.

Skill Application (6.5% of project grade):

This assignment provides an opportunity to demonstrate applied understanding of key economic frameworks and policy tools. Your work will be assessed for how effectively and accurately you integrate the following skills into your analysis:

Economic Policy AnalysisFiscal Policy InterpretationMonetary Policy and Tool Application

Bonus Section: Unemployment Data by Labor Force Groups and Duration (10% bonus)

To professors: Please overwrite the grade for the project produced by rubric by up to 20 points if this bonus part is completed. The grade for the project can be greater than 100%.

To analyze unemployment in depth, collect data by Labor Force Groups and Duration, create graphs in Excel and answer the questions below. Attach Excel file with the tables and graphs to your assignment folder. This bonus part of the project will help to increase the quality of your assessment of the unemployment rate and improve your skill level in economic analysis

1. Review the

2. Click on the most recent available Economic Report of the President and download the following data tables as Excel files:

• Table B27.Civilian unemployment rate for each year 2000 to present for three labor force groups: men 20 years and over, women 20 years and over, both sexes 16 to 19 years of age. Present the data in a table. Create one or more charts (line graph, bar graph, etc.)
• Table B27.Civilian unemployment rate for each year 2000 to present by educational attainment (25 years and over) for the following groups: less than a high school diploma; high school graduates, no college; some college or associate degree; bachelor’s degree and higher. Present the data in a table. Create one or more charts (line graph, bar graph, etc.)
• Table B28.Unemployment by duration and reason for each year 2000 to present. Present the data in a table. Create one or more charts (line graph, bar graph, etc.).

3. Write a report (1-2 pages double-spaced) analyzing the results, addressing:

• Which years had the highest and lowest unemployment rates? How do the rates compare among men 20 years and over, women 20 years and over, both sexes 16 to 19 years of age?
• Compare the unemployment rates by educational attainment. How do the rates compare among these groups? What relationship, if any, do you find?
• Compare the distribution of unemployment by duration over these years. Which years had the highest and lowest unemployment duration? What relationship, if any, do you find?
• Demographic studies show that the proportion of teenagers and minorities in the U.S. population is likely to increase in the near future. What implications might this trend have on the unemployment rate?
• Analyze the significance of the data you collected for this project.
• Reflection Write a paragraph reflecting on what you learned from this assignment and how you might apply this knowledge in the workplace or everyday life.

Deliverables

Your completed project should include:

1. A comprehensive report (approximately 6-8 pages double-spaced, not including title page and references) addressing all required questions from Parts 1 and 2.

2. If completing the bonus section, include an additional 1-2 page analysis with accompanying tables and charts.

3. All tables, figures, and charts properly labeled with numbers, titles, and sources.

4. A complete reference list of all sources used, including the course textbook, learning resources, and additional credible sources.

Submission Guidelines / Criteria for Success

1. Format requirements:

• Must be typed, double-spaced, in 12-point Times New Roman or Arial font, with one-inch margins
• Must have professional/business style title page
• Must have appropriate in-text citations and professional/business style reference list
• Must be prepared using word processing software (Microsoft Word preferred)
• If using Excel to calculate or create charts, submit the Excel file as well