The questions should be written succinctly at least a paragraph and a half, using the proper terminology, while showing and explaining all work.
1. How could war stimulate the economy? Explain in detail, making sure to mention the impact government purchases have on Gross Domestic Product (GDP). Also, make sure you make mention of how government purchases affect the private sector. Finally, describe how government purchases, in your opinion, have helped to stimulate or hinder the U.S. economy. You must provide sound economic analysis in your answer.
2. Do you think the government, using both fiscal policy and monetary policy, faces any trade-offs in trying to control for inflation vs. unemployment. What do you believe is more of a problem towards long-term economic growth: persistent inflation or unemployment? Make sure to use your readings and what you learned in the modules to justify your arguments.
3. It will always make economic sense for you to start a business if your business can make economic profit. How does economic profit differ from accounting profit? Have you ever considered starting a business? If you were to start your own business someday, describe the revenues and costs you would consider (make sure you are describing economic profit in your analysis).
4. Suppose you wanted to open a new business in your hometown. Based on what you learned about the different market structures:
a. Describe your business (the product or service, the ideal size of your firm, the requirements needed to enter this market, etc.).
b. Describe the market you would operate in, making sure to detail the characteristics of the market structure and also the opportunities and challenges you might face.
5. Describe the functions of money and consider the U.S. dollar as an example. Although the U.S. dollar has little or no intrinsic value, why do people want it so much? Can you think of other examples of things that act as “money” in our society?
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