Gm545 Exercise 1

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Project Paper– Part 2 Business Economics (GM545) Spring Session B 2012 \ \ June 6, 2012 Exercise 1: Chapter 16, Question 5 Our text describes three types of unemployment; frictional, structural and cyclical, all which have different ramifications on the economy (Stone, 2008 pp. 443). Fricitional unemployment occurs when people are inbetween jobs or are recently entering into the job market, this includes contract workers, seasonal workers and newly graduated students. It also includes voluntary unemployement when people make a choice to leave their current job and seek better opportunities elsewhere. This type of unemployment is is much less serious than structural or cyclical unemployment and is viewed as being healthy part…show more content…
When the demand for U.S. dollars increases, the value of the dollar will increase or appreciate (Stone 2008, pp. 685). As a result, U.S. products become more expensive for foriegners causing a reduction in exports and increasing imports. This not only effects the U.S. economy, but also affects the economies in other countries. Monetary policies influence and are influenced by international developments, including exchange rates, and based on these market conditions the U.S. government can make strategic changes to these policies to maintain the country’s economic stability (full employment, stable growth and price stability). For example if Federal Reserve actions raised U.S. interest rates, the foreign exchange value of the dollar generally would rise. An increase in the foreign exchange value of the dollar, in turn, would raise the price in foreign currency of U.S. goods traded on world markets and lower the dollar price of goods imported into the United States (Federal Reserve, 2005). By restraining exports and boosting imports, these developments could lower output and price levels in the U.S. economy and control or lower…show more content…
Nations must make changes to their monetary policies to minimize the negative impacts of globalization. Works Cited (1992, 11 06). (From Inquierer Wire Services) Retrieved 06 04, 2012, from philly.com: http://articles.philly.com/1992-11-06/news/26009561_1_tariffs-wine-drinkers-european-imports Federal Reserve. (2005, 06). Retrieved 06 06, 2012, from federalreserve.gov: http://www.federalreserve.gov/pf/pdf/pf_4.pdf Stone, G. (2008). Core Economics. New York, NY, USA: Worth
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