Eco 502 Selected Topics In Macroeconomics December In 375741
Eco 502 Selected Topics In Macrodecember Intersession 2017essay Ass
Answer both questions: 1) Economic data and the signals they contain are central to business conditions analysis. Economists focus on direct signals and indirect or causal signals. First, explain with examples (not examples taken from the text or lecture) what is meant by a “direct signal” and then what is meant by an “indirect signal”. To illustrate the point further consider the very important macro indicators of employment and the wages that employment generates. To make it interesting let’s consider a different country – the Kingdom of Bahrain. Bahrain, like other Middle East producers of energy, has been through some interesting times of late. With the Arab Spring, the drop in the price of oil, etc., the economy is, well, unsettled. According to the Bahraini Labour Market Regulatory Authority’s quarterly reports we have the following data regarding working Bahraini citizens (one BD, or Bahraini dinar, equals $2.67): Indicator 2015QQ3 Employment 158,426 Median Monthly Wage, Private BD396 BD382 Median Monthly Wage, Public BD685 BD673 Inflation, Year over Year 2.7% Your job is to speculate on the various direct and indirect macroeconomic signals that may be contained in these data. When it comes to direct signals, tell me explicitly what the direct signals are about employment and wages. Be sure to distinguish between real and nominal changes. When speculating on the indirect signals an analyst could get from these data please feel free to be creative – speculate on what kind of correlations you find between employment and other aspects of the economy such as households, firms and the government. If it would help, assume for the moment you are a Bahraini – what might these data mean to you and your household’s economic behavior and what would that behavior do to the economy as a whole? (1.5 to 2 pages, double-spaced, for this question) 2) In the initial lecture on the economic way of thinking we considered the description of cost-benefit analysis in macroeconomics offered by Henry Hazlitt. Some years back policy makers in the Kingdom of Bahrain were faced with rising inflation caused by the fall in the international value of the US dollar. The dinar is pegged to the dollar, so when the dollar goes down the BD goes down. A weaker dollar/dinar means that anything and everything you buy from overseas costs more. You also know that inflation over time can be caused by putting too much money into the economy and that a rise in prices of necessities can hurt consumers, especially low-income citizens. The government agreed at the time to give each low-income Bahraini household (but not non-Bahraini residents, who represent 52.7% of the Kingdom’s population and 70%-plus of its workforce as of the 2010 census) BD50 (equal to $133) monthly to make it easier to buy what food they needed. First, please explain in your own words Hazlitt’s lesson, and second, explain how the lesson would assist an analyst in organizing an evaluation this policy. You need not tell me if the policy makes sense or not; tell me rather how you would go about deciding if the policy makes sense. What questions would you ask and why? To be complete, draw upon any other relevant ideas contained in the economic way of thinking (e.g., real versus nominal, disinterestedness) to explain how someone should approach the analysis of this policy. (1.5 to 2.0 pages, double spaced) 3) Assume the stages of a pipelined architecture have the following latencies: IF 210 ps, ID 220 ps, EX 250 ps, MEM 200 ps, WB 200 ps. a. What is the clock cycle time in this pipelined architecture? b. What is the clock cycle time assuming the architecture is not pipelined? c. Assuming a Store Word instruction passes through this pipeline, and doesn’t actually use hardware in the Write Back phase, what is the latency of the instruction? d. If we can split one stage of the pipeline into two, each with half the latency of the former stage, which stage would you split, and what is the new clock cycle time? e. Assuming 1000 arithmetic instructions are executed consecutively with no branches being taken, what is the time required to complete these instructions? Remember, the pipeline is not full when you start and when you finish.
Paper For Above instruction
Analyzing economic data involves deciphering a complex web of signals that reflect the underlying health of an economy. These signals can be classified broadly into direct signals, which provide immediate information about specific economic variables, and indirect signals, which reflect broader causal relationships and correlations within the economy. To illustrate this, consider the macroeconomic indicators from Bahrain, particularly employment and wages, and examine what these data might reveal about the economic conditions and the behaviors of households, firms, and the government.
Understanding Direct and Indirect Signals
Direct signals are straightforward measurements that directly indicate the state of a particular economic variable. For example, the employment figure of 158,426 employed Bahrainis is a direct signal of labor market activity. An increase in employment typically signals economic growth, indicating more job opportunities and potentially higher economic output. Conversely, a decline suggests a slowdown. Similarly, wages serve as direct signals; higher wages relative to previous periods may point toward labor shortages or increased productivity, whereas stagnant or declining wages could imply slack in the labor market or deflationary pressures.
It's important to distinguish between nominal and real changes when analyzing these signals. Nominal wages refer to the wages paid without adjustment for inflation, while real wages are adjusted to reflect changes in purchasing power. Given the inflation rate of 2.7%, a nominal wage increase that is less than this rate would imply a decline in real wages, potentially reducing household purchasing power even if nominal income appears unchanged.
In Bahrain, private median wages decreased from BD396 to BD382, a real wage decrease when accounting for inflation, possibly indicating that workers’ purchasing power has diminished. Public wages, slightly lower in nominal terms, also reflect similar trends. These direct data points suggest a scenario of sluggish or declining real wages, which could influence household consumption and savings behaviors.
Speculating on Indirect Signals
Beyond the immediate data, indirect signals can be inferred by considering the relationships between employment, wages, and other economic facets. For instance, a decline in employment combined with stagnant wages might indicate reduced consumer spending capacity, leading to lower demand for goods and services, impacting firms' revenues and possibly prompting them to reduce investment or lay off additional workers.
Furthermore, a drop in employment coupled with static or falling wages may signal a tightening of the labor market, possibly prompting households to increase savings as a precaution against economic uncertainty. This behavior reduces consumption, which could further slow economic growth.
From a government perspective, declining employment and wages might be a signal of the need for policy intervention, such as increasing public expenditures or implementing stimulus measures to stimulate demand.
As a Bahraini, these data suggest a cautiously pessimistic view of economic prospects. Household economic behavior might shift toward increased savings and reduced consumption, which, in aggregate, could slow economic recovery. For the economy as a whole, these signals highlight potential challenges such as increased unemployment, decreased household spending, and a sluggish economic environment.
Evaluation of the Dinar Peg and Inflation Policy
Turning to the second question, Henry Hazlitt’s lesson emphasizes the importance of considering the full consequences of economic policies over time. Hazlitt warns against focusing solely on immediate benefits or visible effects, advocating instead for an analysis of the broader and longer-term impacts, including unintended consequences. When evaluating the policy of giving low-income households BD50 monthly to offset rising food costs, an analyst must consider not just the apparent relief but also potential distortions or adverse effects on inflation and economic stability.
To assess whether the policy makes sense, I would ask questions such as: Does this subsidy lead to increased demand that could further stoke inflation? Is it effectively targeting those in need, or does it create market distortions? How does it impact government budget and fiscal sustainability? Does it encourage dependency or incentivize behaviors that may harm economic productivity? These questions reflect Hazlitt’s emphasis on understanding the unseen effects—such as the opportunity costs of resource allocation and potential inflationary spirals.
Moreover, analyzing the policy involves differentiating between nominal and real impacts. For example, the BD50 amount may seem beneficial nominally but could be insufficient if inflation erodes its real value over time. The concept of disinterestedness—making decisions based on rational analysis rather than short-term political gains—guides the evaluation process. An unbiased approach would involve examining costs and benefits, considering alternative policies, and understanding how the policy interacts with broader economic variables, including exchange rates, monetary policy, and inflation expectations.
Overall, Hazlitt's economic thinking encourages a comprehensive, long-term perspective that accounts for indirect effects, opportunity costs, and the balance between immediate relief and sustainable economic growth. Such an approach ensures a more nuanced evaluation that considers the full spectrum of consequences rather than just the visible or immediate effects.