The Real Economy in the Long Run

Students examine the long-run determinants of both the level and the growth rate of real GDP per person and the factors that determine the productivity of workers and what governments might do to improve the productivity of their citizens. Students will learn how saving and investment are coordinated by the loanable funds market and will see the effects of taxes and government deficits on saving, investment, the accumulation of capital, and ultimately, the growth rate of output. Students will be introduced to tools that people use when they participate in financial markets. Students will see how people compare different sums of money at different points in time, how they manage risk, and how these concepts combine to help determine the value of a financial asset, such as a share of stock. Students will be introduced to the labor market and how economists measure the performance of the labor market using unemployment statistics. Students will address a number of sources of unemployment and some policies that the government might use to lower certain types of unemployment.

Assignment Steps

Resources: National Bureau of Economic Research

Scenario: The organization's strategic plan calls for an aggressive growth plan, requiring investment in facilities and equipment, growth in productivity, and labor over the next five years. It is your team's task to determine where, outside the United States, your organization should locate its new manufacturing plant.

Write a 1,050-word report recommending an off-shore country and support your choice with the following data:

• The factors determining the country's productivity
• How the country's policies influence its productivity growth
• How the country's financial system is related to key macroeconomic variables
• How your organization can reduce the risk they would face in relocating
• The current and projected unemployment over the next five years 

********Cite a minimum of three peer-reviewed sources not including your textbook. ********