ECON 101 Chapter 6: Consumer Behaviour

The following equations describe an economy. Refer to equation (8) on page 247, equation (9) on page 248 and equation (23) on page 212 may also help in 12th edition Dornbusch, Fischer, Startz.

IS Function

C=600+(.7) (1-t) y

t= .15

l = 1500-75 (i)

l = 6 (6%)

G = 1000

LM Function

L=.3Y-65 (i)

M/P = 900

a.) what is the equali brium income level and rate of interest?

b.) Suppose there is an increase in t from .15 to .20 . What will be the change in the equilibrium level of income and interest rate?

c.) Suppose there is a decrease in government expenditures (G) from 1000 to 800 given the parameters given in part "a" what will be the new equilibrium income leel and interest rate?

d.) Suppose there is an increase in the money supply from 900 to 1200 given the parameters given in part "a" what will be the new equilibrium level of income and interest rate?

e.) Today Congress and the President are debating the correct economic policy to attain a full employment level of production, price stability and a balanced budget. Here are the 3 proposals:

i: Cut Government expenditures (G) while keeping taxes fixed

ii. Increase the tax rate t while keeping government spending G fixed.

iii. Increase the tax rate t and decrease goverenment spending G

Given your answer in a - e above, what econ omic policy would you advise be implemented? Explain your position completely.

As the prevalence of social media continues to rise, consumers are recognizing ways in which social media can direct them to better sources for purchasing.

As a result, businesses are now jumping on the social media bandwagon at a rapid pace, embracing social networks to achieve their marketing and business goals.
Identify one (1) of the major social media outlets and write a five to six (5-6) page paper in which you:

1. Discuss the four (4) components of a legally astute social media marketing manager who utilizes social media outlets for consumer transactions and how each component can mitigate the risk involved in doing business in cyberspace.

2. List and analyze methods of alternative dispute resolution and determine which would be most effective in resolving genuine disputes that arise with consumers who may make purchases from businesses that provide links via social media.

3. Since consumer transactions on social media can occur across state lines, determine how the federal government can best control these transactions.

4. Examine the three (3) branches of government and discuss which can effectuate the most significant impact on regulating consumer transactions via social media outlets. Support your decision.

5. Explain the agency relationship that exists on social media sites between the social media provider and businesses that utilize the site for advertising.

6.Use at least three (3) quality references. Note: Wikipedia and other Websites do not quality as academic resources.

https://www.wsj.com/articles/u-s-government-bonds-fall-on-strong-manufacturing-data-1530549371

The article notes that US Bonds prices fell Monday after strong manufacturing data signaled the economy has momentum for further growth.

This was based on data provided by the Institute for Supply Management stating that the manufacturing index rose to 60.2 in June, the second consecutive increase.

Economic growth increased in the second quarter, unemployment declined below 4% and forecasters expect solid growth supported by recent tax cuts and strong consumer sentiment.

While predictions related to the number of rate increases in 2018 have been modified, futures have been slow to incorporate the new projections in to market probabilities.

In another article posted the same day, - https://www.wsj.com/articles/u-s-manufacturing-activity-surged-in-june-1530541211?mod=searchresults&page=2&pos=1 economists have concerns that the growth is temporary and a reaction to manufacturers preparing for the anticipated imposing of tariffs showing false results and introducing inefficiencies.

If there are indications that there is room for further growth, why is the Fed anticipating raising interest rates which would cause a slow down in economic growth, while at the same time there is sentiment that the growth may be short lived if tariffs are imposed?

Does imposing tariffs have the same impact on economic growth and raising interest rates?