In this assignment you are being asked to evaluate the economic situation described below. You will focus on the role of the Federal Reserve when the economic activity is slowing down, indicating it may be entering the contraction phase of the business cycle and, possibly, a recession. 

Assume the economy is entering a recession. The Federal Reserve is faced with the task of trying to stabilize the economy with the tools at its disposal. Unemployment has increased from 5 percent to 9 percent. Inflation has decreased from 4 percent to 1 percent. Gross Domestic Product has decreased in the past two consecutive quarters from (-1) percent to (-1.5) percent, which has caused a contraction in output. Consumer confidence has dropped from eighty-five on the Michigan Consumer Sentiment Index to sixty-seven.

You have read the following two headlines in the news (these are fictional headlines but you might use them in goggle to find real articles);

Market turmoil turns all eyes toward Fed

Economists see dramatic Fed action unless economy improves

The research paper must:

  1. Explain the role of the Federal Reserve as the central bank and its mission to stabilize the economy,
  2. Describe the economic indicators the Federal Reserve System will analyze as a basis for its decisions,
  3. Describe which monetary policies the Federal Reserve might use to influence the money supply.
  4. Explain the strengths and weaknesses of using monetary policy in comparison to fiscal policy and;
  5. Analyze the effect of the Federal Reserve’s action on the world financial markets.


Please submit a three – to five – page paper; this does not include your title page or your reference page. The paper should address all questions listed above.

The Paper should be submitted both to the class and to turnitin.

The paper should be in APA Format and incorporate research from a minimum of three Academic sources, which may be textbooks (including the one used for this class), journals, articles or organizational resources. 


All written submissions should be submitted in a font and page set-up that is readable and neat. It is recommended that students try to adhere to a consistent format, which is described below.

  • Typewritten in double-spaced format with a readable style and font and submitted inside the electronic classroom (unless classroom access is not possible and other arrangements have been approved by the professor).
  • Arial 12-point font or Times New Roman styles.
  • Page margins Top, Bottom, Left Side and Right Side = 1 inch, with reasonable accommodation being made for special situations and online submission variances.



  1. All students are expected to commit to the highest level of academic honesty and personal integrity.
  2. When you submit your essay paper, it will automatically be submitted to  You do not need a Class ID or Password.
  3. Students do not receive a grade for plagiarized work.
  4. All incidents of plagiarism are reported to academics for the proper academic sanctions.
  5. Instructions for using are in the first forum directions. 



Construct a Lorenz Curve and calculate the Gini Ratio for the United States, a state of your choice, and a country using recent data.
Data tables, graphs, and calculations for all three will be included in the essay.
Compare and contrast the causes of income inequality and any effects on economic efficiency.
Identify 5 incidences of poverty and create a bar graph similar to 11.4 in your textbook for all three locations.
Compare and contrast your findings between your three locales and discuss the trends.
Speculate implications on the economic growth, jobs, consumption using economic theory and models learned in this class to date.
Include a Works Cited page (does not count toward 3 page total for essay)
Include all references and websites used in constructing your analysis.
To obtain US data and State level Data:

Go to: American Fact Finder Advanced Search( )
If you find yourself at the Fact Finder Homepage instead, click on “Advanced Search.”
In the yellow box enter:
B19082 in table name field to obtain data for constructing the Lorenz Curve. Enter in the name of the state you want to research and Click Go. Do not click on the selections from the pop down menu. Click on the first search result. (Leave second field blank for U.S. level data).
S1701 in table name field to obtain data for incidence of poverty. Leave second field blank for U.S. level data or enter in state name for state specific.
To obtain country level data:

Go to: ( World Development Indicators: Distribution of income or consumption for Lorenz Curve data. Find a country whose survey data is 2010 or later.
Go to: ( World Bank Poverty & Equity Data for incidence of poverty information on your country.
You may need to do some separate Google searches for poverty indicators on your foreign country.


Graphing Lorenz Curve in Excel (
Calculating the Gini Ratio
Creating a Bar Chart in Excel (

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