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Specifically, the following critical elements must be

I. Identification of


a. Using the aspects of risk outlined in Chapters 5–8,
identify the types of economic risk that certain broad varieties of activities
expose business entities to.

b. Identify and describe two areas of your chosen firm’s
operations that are subject to significant economic risk of each of the
following: idiosyncratic, systematic, and systemic varieties.

c. Identify specific macroeconomic variables that are
associated empirically with an increase in the identified varieties of risk,
and which may indicate increase or decrease in systematic and systemic risk

d. Graphically and/or mathematically illustrate a movement
in macroeconomic variables that would theoretically be associated with this

II. Analysis of
Macroeconomic Data

a. Document recent fiscal and monetary actions taken by U.S.
authorities addressing business cycle phenomena.

b. Calculate annual percentage changes in GDP and the
Consumer Price Index (CPI-U) in the United States from 1948 to the current

c. Partition your data into the periods of 1948–1972, and
from 1973 to the most recent year available. Plot annual percentage changes in
GDP for these two periods. Compute a trend and assess variation, and describe
patterns that you discern in relation to what you know about business cycle

d. Consult FRED (Federal Reserve Economic Data) to determine
what has been identified to be the natural rate of unemployment and the current
rate of unemployment in the current period. Using the FRED data, characterize
the current relationship between actual and potential output (Okun’s law may be
used to guide your assessment).

e. In light of what you identify to be the current
relationship between actual and potential output, and the policy actions
documented in “step a” above, graphically or mathematically illustrate the
current macroeconomic risk factors and explain why this result is of
significance to the firm that you are considering.

f. Describe the theoretical basis of each documented policy
action that you have assembled and, using data collected here, evaluate its
effectiveness. Did the policy achieve its intended economic outcomes? If so,
what indicates that it was successful? If it was not successful, why did it
fall short? Use examples to illustrate your point and back up your argument
with research.

III. Implications of
Government Fiscal and Monetary Policies on Firm’s Business

a. Apply your analysis of macroeconomic data and recent
policy and policy effectiveness completed in Part II to predict trends in GDP
growth, inflation, and interest rates.

b. Identify likely effects of predicted trends on your
chosen firm’s operations. In other words, what should managers be especially
attentive to, based on your research? Use examples to illustrate your points
and back up your argument with research.

c. Based on your conclusions regarding areas of risk that
are systematic in origin, describe one or more ways that the firm’s operations
may be significantly influenced by shifts in money and capital markets, and
government regulation of these.

d. Identify and describe one ongoing policy initiative
currently underway that might raise or mitigate systematic risk, if it is
successful. Describe the empirical or historical basis of this action, and
evaluate the potential effectiveness of this policy. Illustrate the theoretical
basis of this action using research. If this action is successful, how will
this be beneficial or detrimental to the firm you have selected to review here?

IV. Conclusion:
Economic Risk Mitigation Proposal

Propose strategies to mitigate systematic
economic risk for your firm. Be sure that your strategies are justified, based
on your own research of macroeconomic data, economic outlook, and
identification of possible risks expected in the next 1-5 years.

Final Submission: Economic Risk
Mitigation Proposal, you will submit a 12–14 page comprehensive economic risk
mitigation proposal. Your submission should be a polished artifact containing
all of the critical elements of the final project. Conclude your project with
proposed strategies to mitigate systemic economic risk as outlined in Section
IV. It should reflect the incorporation of feedback gained throughout the

Specifically, the following critical elements must be addressed:




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