Analyse what is the adverse effect of an asymmetric shock in a
single currency area such...
Analyse what is the adverse effect of an asymmetric shock in a
single currency area such as the Eurozone. Critically discuss how
Optimum Currency Area (OCA) criteria may mitigate this adverse
effect. [50 marks]
Analyse what is the adverse effect of an asymmetric shock in a
single currency area such as the Eurozone. Critically discuss how
Optimum Currency Area (OCA) criteria may mitigate this adverse
effect. [50 marks]
Compare the effect on GDP of an adverse demand shock in the
closed and open economy cases using graphs based on the open
economy IS-MP model. Assume flexible rate.
What kind of problems are the following: Asymmetric information,
moral hazard problem or adverse selection problem? Match each with
the situations below.Government insurance on bank deposits may
encourage banks to make risky loans.A woman anticipating having a
large family takes a job with a firm, which offers exceptional
childcare benefits.Doctors prescribing more healthcare than is
necessary.
Suppose that a country experiences a reduction in
productivity—that is, an adverse shock to the production
function.
l. What happens to the labor demand curve?
m. How would this change in productivity affect the labor
market—that is, employment, unemployment, and real wages—if the
labor market is always in equilibrium?
n. How would this change in productivity affect the labor market
if unions prevent real wages from falling?
Determine if the asymmetric information problem is adverse
selection or moral hazard. Then briefly explain the structure of
the asymmetric problem for each.
Football Season Insurance offers to reduce the premium on its
auto insurance policies to drivers who install/activate a
monitoring device on their cars.
Determine if the asymmetric information problem is adverse
selection or moral hazard. Then briefly explain the structure of
the asymmetric problem for each.
You are very busy and hired a service to maintain your lawn.
Because of travel, you are unlikely to be home the day they service
it.
If a central bank increases the money supply in response to an adverse supply shock, then which of the following quantities moves closer to its pre-shock value as a result?
a. neither output nor the price level
b. both the price level and output
c. the price level but not output
d. output but not the price level