UNDERGRADUATE
BE334
Financial Markets and Monetary Policy
2019
Individual Coursework
Individual Coursework (30%)
As a manager of a large U.S. firm, one of your assignments is to monitor U.S. economic conditions so that you can forecast the demand for products sold by your firm. You recognize that the Federal Reserve attempts to implement monetary policy to affect economic growth and inflation. In addition, you recognize that the administration of the federal government implements spending and tax policies (fiscal policy) to affect economic growth and inflation. Yet, it is difficult to achieve high economic growth without igniting inflation. It is often said that the Federal Reserve is independent of the administration in Washington, D.C. yet, there is much interaction between monetary and fiscal policies.
Assume that the economy is currently stagnant, and some economists are concerned about the possibility of a recession. Some industries, however, are experiencing high growth, and inflation is higher this year than in the previous five years. Assume that the Federal Reserve chairman’s term will expire in four months and that the president of the United States will have to appoint a new chairman (or reappoint the existing chairman). It is widely known that the existing chairman would like to be reappointed. Also assume that next year is an election year for the Presidential administration.
Question A:
Given the circumstances, do you expect that the administration will be more concerned about increasing economic growth or reducing inflation?
(30 marks)
Question B:
Given the circumstances, do you expect that the Fed will be more concerned about increasing economic growth or reducing inflation?
(35 marks)
Question C:
Your firm is relying on you for some insight on how the government will influence economic conditions and therefore the demand for your firm’s products. Given the circumstances, what is your forecast of how the government will affect economic conditions?
(35 marks)
(Total: 100 marks)
Word limit: 2,500
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Note:
The word count is to be declared on the front page of your assignment and the assignment cover sheet. The word count does not include:
Title and Contents page
Reference list
Appendices
Appropriate tables, figures and illustrations
Glossary
Bibliography
Quotes from interviews and focus groups.
Please note, in text citations [e.g. (Smith, 2011)] and direct secondary quotations [e.g. “dib-dab nonsense analysis” (Smith, 2011 p.123)] are INCLUDED in the word count.
If this word count is falsified, this will be regarded as academic misconduct.
Students are advised that they may be asked to submit an electronic version of their assignment for plagiarism check.
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Degree Classification Requirements:
1st Class There should be constructive criticism on the methods used when incorporating risk in the capital budgeting process. There should also be individual opinion on what the author thinks would be the most appropriate method. In addition to thorough explanation of concepts, there should be supporting empirical evidence and relevant case-studies and examples.
2nd Upper There is lack of individual opinion and/or constructive criticism. However, there must be evidence of thorough explanation of concepts, there should be supporting empirical evidence and relevant case-studies and examples.
2nd Lower There is lack of individual opinion and/or constructive criticism and insufficient empirical evidence and case-studies. However, there must be evidence of thorough explanation of concepts, there should be some supporting empirical evidence and relevant case-studies and examples.
3rd Class Mainly discussion of theories and concepts with no individual analysis, supporting empirical evidence and examples.
Fail Only stating down concepts and theories without answering the question closely.