You are to answer one of the questions. Your answers should be typed and for article reviews it should be about one page single-spaced. Be sure to put the assignment number and name at the top of your paper to avoid any recording problems.

1. Now you are well on your way to mastering the supply & demand model that economists use to explain price movements, you can use it to explain two prices - the price of the dollar and the price of stock. To convince yourself (and me) that you have mastered the skill and that you can use it you are to find an article about the value of the dollar that you can translate it into a S-D diagram. For example, an article entitled "Fed rate decreases drive $ lower" would be best represented by the following diagram. The decrease in interest rates in the US would reduce foreign demand for dollars as fewer foreigners would want to buy $s to invest at the lower rates - an inward shift in the demand curve. The result would be a decrease in the price of the $ (P1 to P2).

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2. It's now time to demonstrate your understanding of exchange rates. To convince yourself that you can translate a picture (graph) into a story, I would like you to graph one exchange rate that measures the price of the US $ in terms of another currency. You can choose your variable from the list at the Economic Time Series page. For example what if you wanted to look at the exchange rate. You would go the the Federal Reserve, St. Louis  where you will find US Exchange Rate Data. You are to pick one exchange rate and graph it for the longest possible time period. You should then explain movements in the exchange rate in terms of the S&D model of exchange rates developed in class.

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3. What is the economic story in our first movie.  How can you relate this to some of the ideas we have discussed in class so far this semester? Explain the significance of the setting for this movie in the evolution of thinking about macroeconomic policy in the US.