This is the first component that discusses the decision-making process of monetary policy and analyzes how a particular recommended policy will affect the U.S. economy.

In this Part 1, you will collect data and information about the current economy and submit a short background report in a document in three to five pages.

Tasks:
Using legitimate business publications and governmental Web sites, research the answers to the following questions:
1. What is the current average national income?
2. What is the current unemployment rate?
3. What is the current inflation rate?
4. What factors affect each of these economic variables?

Solution Preview

The Bureau of Labor Statistics is part of the U.S. Department of Labor that is responsible for calculating and tracking statistics such as the National Average Income, Unemployment rate and measuring the rate of inflation.

1: Based on the Bureau of Labor Statistics website, located at http://www.bls.gov/oes/current/oes_nat.htm the average national income (wage) for an individual worker is: $45,790

2: Based on a news release from the Bureau of Labor Statistics in October of 2013 (found here: http://www.bls.gov/news.release/pdf/empsit.pdf) , the current national unemployment rate is 7.3%

3: The current inflation rate is measured by the CPI, or Consumer Price Index. This index is tracked by the Bureau of Labor Statistics and for the past rolling 12 months through Sept 30th 2013 the CPI, or inflation rate is measured to be 1.2%. The latest data can be found here: http://www.bls.gov/news.release/cpi.nr0.htm

4: Average income, Unemployment rate, and the CPI/inflation rate are considered to be good measurements of the state of the economy. There are many factors that can affect each of these variables.

Average national income- This is the mean (not median) pay for a worker in the United States. Wages are a price that company pay for labor. Prices are determined mostly by market forces or sometimes regulations. The minimum wage for example is set by government regulations. ...

Solution Summary

A summary of how average income, unemployment rate, and inflation rate impact the economy.

Provide an argument to describe the current state of the economy in terms of the following:
-The economic goals
-The definition of the phases of the business cycle
-The key economic variables described in the text

If you were to choose a total of 10 variables irrespective of the perspective, which ten variables would you choose and why? What is it about each of these variables that you think is so important that it should be included in almost any study of crime causation? Suppose you were to further select only five out of these ten var

Using the example of NI = [U*(P-VCu)] - FC, NI is a dependent variable and the rest are independent. What this means is, the answer to Net Income depends on what the values are for Units, Price, Variable Costs per unit, and Fixed Costs.
Identify at least three variables in the workplace whose value is dependent on the value

In the equation below what are the dependent and independent variables? Does the way we use the equal sign change which variables are dependent and independent? Explain
Sales
______________________
Average Accounts Receivable

The market demand for cotton socks is given by:
Q=1,000+.5I-400P+200P'
where,
Q = Annual demand in number of pairs
I = Averageincome in dollars per year
P = Price of one pair of cotton socks
P' = Price of one pair of wool socks
Given that I = $20,000, P=$10, and P'=$5, determine:
A. The price elasticity, e(Q,P)
B

There is a correlation between income and education. We find that people with higher income have more years of education.
GIVE A STATISTICAL EXAMPLE OR EQUATION OF THIS: When we know there is a correlation between two variables, we can make a prediction. If we know a group's income, we can predict their years of education.

A bakery uses 700 bags of flour per week and works 45 weeks per year. The flour costs $25 per bag. Each time that order is issued it will cose the bakery $100. Carrying costs of the inventory are 15% of unit costs. Determine the economic order quantity, reorder point, and the average inventory for this bakery.