In this paper, you will apply what you have learned in Chapter 5 to the firm or business you selected in order to see how the concepts can be applied to a business situation. In this paper, you will be using actual unemployment rate data to answer the questions and to form the basis of your arguments. Take a little bit of time to examine the overall trends and what the unemployment rate has been over the recent past history of the United States. As in the previous paper, if your country is outside the United States, you may assume that the unemployment rate in your firms country parallels that of the unemployment rate in the United States.
Go to the St. Louis Fed FRED (Federal Reserve Economic Data) website and search for unemployment. You can also find unemployment data (and many other data series) by clicking on Categories, then Population, Employment & labor Markets and then Current Population Survey (Household Survey). Finally, click on Unemployment Rate. For either method, select the Civilian Unemployment Rate and you should see a graph of the U3 unemployment rate.
Given the data that you found, what business decisions might the firm you chose in Week 1 make? How would their hiring decisions be affected? What quality of employees might they be able to obtain, and how much would they have to pay their new employees to attract willing employees?
Might your chosen firm need to adjust the price of their output? Should they increase or decrease their output, or should they maintain the same level of production? Why? Are there other changes to the business environment that could affect your firms decisions or profitability (perhaps relating to other competing businesses or suppliers to the market in which your firm produces)?
If this was 1995-2000, or 2005-2007 (and you only had data through either 2000 or 2007), how would you answer those questions? What if this was 2010-2011?
Writing and Submission Requirements
1.5-2 pages (approx. 300 words per page), not including title page or references page
For standard requirements, review the Discussion and Written Assignment Expectations.
Tips for Success
- As with each writing assignment, be sure to refer to the Essay Tips for Success. Also, this week you might have effects that might drive the firm in different directions with regard to hiring; the second and third paragraphs in the prompt likely will lead to conflicting answers. That reminds me of the supposed request by President Truman for a one-armed economist, because his economic advisors repeatedly answered questions by saying on one hand , but on the other hand . (O’Sullivan, 2010). This is not to be feared; oftentimes there are forces that push in opposite directions. The only tricky thing is figuring out which is more important.
- Also remember, as with the GDP questions, to take some time to answer the question about the different time periods; those questions refer to times at which the unemployment rates were at different levels, and those differences can help your analysis, particularly if you explain why different decisions should be made at those different times.
O’Sullivan, J. (2010, June 7). One-armed economists. Buttonwood’s Notebook. The Economist.
Weekly Learning Goal(s): 1, 4
Calculate unemployment rate and the labor force participation rate from given data and show what happens to those rates when events occur in the economy. (CLO 3, 4)
Explain how business decisions may change if the unemployment rate or the inflation rate change. (CLO 3, 4)