Business Finance

For Question 1: Part a; explain how government spending affects GDP (using the GDP equation will help you do that). Part b; indicate how government spending affects the private sector for both war goods and consumer goods, i.e., do they increase, decrease, or stay the same – answer for each type of good. Part c; describe how government spending has stimulated or hindered the U.S. economy during a wartime period (use World War II for this part of the question).

For Question 2: Part a; indicate if there are any tradeoffs between inflation and unemployment when using fiscal and monetary policies and how each of these policies affects inflation and unemployment, i.e., tell me how expansionary fiscal policy and expansionary monetary policy affect inflation and unemployment and how contractionary fiscal policy and contractionary monetary policy affect inflation and unemployment. Part b; indicate which of the following situations is more of a problem for long-term economic growth, persistent inflation or unemployment, and explain why you believe that to be the case.

For Question 3: Part a; define accounting profit and economic profit. Make sure you indicate the components of each type of profit. Show the difference between the two types of profit (doing the above will make it easy to show the difference). Part b; describe the revenues and costs of starting your own business (even if you have never thought of starting a business). Will you use economic profit or accounting profit to decide whether to open your business? Use numbers for revenues and costs to show why you would open or not open a business.

For Question 4: Part a; describe the business you want to open ensuring you indicate the product or service, the ideal size of the business (employees, buildings, and equipment), licenses needed, etc. Part b; identify the market structure of your firm, i.e., perfect competition, monopolistic competition, monopoly, or oligopoly, the characteristics of the market structure you pick, and why you think the market structure you picked is correct for the business you want to open.

For Question 5: Part a; identify the four functions of money we learned about in the Week 7 Whiteboard Chat Session and describe what each function means. Part b; even though the U.S. dollar is just paper money, why do people want to have it so much, i.e., what good is it to you if you have a lot of it? Part c; identify at least two other examples of things that act as money (other than cigarettes, gold, or paper money).