I need some advice on an assignment in my economics class. We have to write a pa
ID: 1225247 • Letter: I
Question
I need some advice on an assignment in my economics class. We have to write a paper regarding a recent media article and then we have to apply what we've learned in the class (macroeconomy) to the article. I've decided on two articles but i'm not sure if they're decent to write over so I was hoping someone would help me decide on which one fits the topic of macroeconomy better?? The articles are:
http://www.nytimes.com/2016/07/03/your-money/after-brexit-a-market-recovery-until-the-next-crisis.html?rref=collection%2Ftimestopic%2FUnited%20States%20Economy&action=click&contentCollection=timestopics®ion=stream&module=stream_unit&version=latest&contentPlacement=9&pgtype=collection
and
http://www.nytimes.com/2016/07/14/us/national-health-spending-to-surpass-10000-per-person-in-2016.html?rref=collection%2Ftimestopic%2FUnited%20States%20Economy&action=click&contentCollection=timestopics®ion=stream&module=stream_unit&version=latest&contentPlacement=6&pgtype=collection&_r=0
i'm not saying write the paper for me, i've totally got that down!! I just want to know which article would be a better choice to write over.
Explanation / Answer
The first article relating to brexit will be a better option as it is totally about macroeconomics. Macroeconomics is referred to as that branch of economics which studies economic activities at the level of an economy as a whole. In macroeconomics, attention is focused on such problems as the level of employment, inflation rate, the nation's total output, export-import and other matters of economy-wide significance.
The people of United Kingdom have voted for a British exit or you can say Brexit on June 23 from the European Union recently. This has sent shockwaves to the global economy. The U.K. stocks have fallen worse since the financial crises. The health of the economy of any nation reflects the currency's state.
With Brexit, the value of pound has fallen to the lowest level, almost 15%-20%. There is going to be the variation in pound as well as in euro, causing devaluation of pond and euro, as a result, creating greater demand for dollar. There will be major fluctuations in the currency market. The pound as well as euro will weaken. A weakening currency will lead to higher interest rates, which will be affecting the housing as well as the investment markets. Moreover, this will make dollar the strongest currency. EU has been the largest export market besides United States, the European economy has contributed tremendously that it is counted to be equivalent to the one-fourth of the global GDP. With, Brexit vote, the British export-import business will get affected adversely. The country's GDP has declined causing inflation rate to be higher. Due to this, there is increase in the rate of unemployment. With Brexit, there is going to be a long-term loss of GDP for the economy of UK.
With Brexit, there will be more involvement of dollar in the currency market transactions. Moreover, companies that export goods to UK will detriment from a weak pound. As the pound falls, UK exports will become inexpensive. UK produced goods will become cheaper abroad. Pound depreciation against oil-producing countries's currencies would result in increase in imported petroleum price and decrease in quantity of imported petroleum. There will be new trade agreements. The foreign exchange market is going to see tremendous transition along with market imbalances and liquidity gaps. There will be fall in exchange rate causing disruptions in global trade and eventually lower productivity with higher risks. The households in UK will be delaying their consumption causing decrement in demand. On the contrary, companies will be deferring investment causing lower labor demand which will give rise to the rate of unemployment.
However, there will be increased aggregate demand due to cheaper exports and expensive imports. A higher Ad causes rise in real GDP and inflation rate. A weak pound will cause rise in interest rates. Soon, the economy will start recovering. After few months, this situation will get better. Now, U.K will be making its new trade deals with non-European countries. Trade negotiations will be easier when it comes to deal with U.K now. Britain's productivity has got a little impact after Brexit. Public finances will get much benefits after Brexit. Aggregate consumption has hardly got an impact. Things have changed to a large extent. However, there is freedom to make its own trade deals and agreements.