In 2018 the United States and China entered into a trade dispute that led both countries to impose tariffs on each other’s goods. Economists concluded that the tariffs contributed to slower growth in real GDP for both countries, though the effects were greater in China. Using aggregate demand and supply analysis explain and graph how a trade surplus can lead to a slowing real GDP in both countries.

9.T/F

a. A tax increase will have less of a direct impact on income, employment, and output than will an equivalent increase in government spending.

b. Currency fluctuations affect aggregate supply and demand.

c. In June 2013, the Bank of Japan announced that it was continuing its easy money policy through open market operations. The Bank must have decided to continue to sell securities.

Is it true that for any production function diminishing marginal return to each factor implies decreasing returns to scale? (with proof using the general production function, if possible)

one of the marketing characteristic of packaging is to drive association created by advertising into the consumer mind. Discuss specifically what this means, using several marketplace illustrations to support your explaination.

For Friedman inflation is a monetary phenomenon - given increases in the Money supply in the US and in other countries, are we seen inflation increasing? Why yes or why not?

The economy is estimated to be growing at .02% annually, what policy will keep the economy out of a recession? Use the three economic variables: Government spending, Taxes, and Money supply in your reasoning. Your goal variables are: Real Gross Domestic Product, Prices, Interest rates, wages, and employment. Describe your proposed policy changes, how they might be implemented, and what effect they are expected to have on various sectors of the economy.

In the Solow growth model with diminishing marginal returns to capital, explain what happens when the savings rate increases.

Explain two theories or frameworks for understanding how Western Europe emerged out of 1,000 years of feudalism.

(e.g. 2-3 well-reasoned paragraphs).

How would the S/D curves shift if a $3 tax was imposed on suppliers for each unit of caviar and milk sold? With visuals please explain how the economic incidence, DWL, and welfare effects differ between the two goods and why?

How do you determine if the demand and supply or elastic or not?

Can Aishwarya Verma not respond please. I would like to understand from someone else's explanation.

Explain the difference between a market penetration strategy and a market development strategy.

Which notion from below best explains people's decision-making process from an economic perspective?

People's behavior reflects rational self-interest

Costs are more important than benefits

Land is a scarce resource while labor is not

Scarcity is more important than choice

The government Yelpia decides to build more four-year universities. Consequently, the resources used for the program become unavailable for improvements in the high school system. This problem demonstrates the concept of:

Unintended consequences.

Industry-specific unemployment.

Opportunity cost.

Production expenses.

Economics studies remarkably complex problems of real life by constructing models. Those models are made by using:

Tradeoffs

Simplifications

Predictions

Value judgments

Angela notes that "a study shows that there is a high level of student debt in the US." Greg agrees and adds that "government should make the college free."

Both Angela's and Greg's statements are normative

Both Angela's and Greg's statements are positive

Angela's statement is positive while Greg's statement is normative

Angela's statement is normative while Greg's statement is positive

Assume a direct relationship is graphed. What is true?

Such relationships rarely exist in economics

Slope calculation gives a positive number

As one variable increases the other declines in value.

The line is down-sloping.

IS-LM-BP Model (Open Economy)

Question 2

Goods Market

C = Co + cYD

YD = Y- T +TR

T = To + tY

I = Io – bi

G = Go, TR = TRo

X = Xo + λθ + γYf

M = IMo + mY – ψθ

Money Market

L = kY - hi

Ms/P = Mo/P + ΔRE/P

Foreign Exchange Market

NX = NXo – mY + vθ + γYf   

CF = CFo + f (i – i_f)   

ΔRE/P = NX + CF

Endogenous Variables: C, YD T, I, X, IM, L, Ms, CF, NX, Y, i and .RES/P

Exogenous Variables: Co, To, Io, Go, TRo, Xo, Yf, IMo, Mo, CFo, NXo, i, i_f and P

Parameters: c, t, b, λ, γ, ψ, m, f, k, h and v

Policy variables: Fiscal policy: (G, t and TR) Monetary policy: (Mo, P) and Exchange Rate: (θ)

1. Explain the general role of parameters λ, γ, ψ, m, f, k, h, v in the algebraic model

2. For the macroeconomic model given, identify the ER (exchange rate) system and the extent of capital mobility (perfect or imperfect) in this economy.

3. Assume that the economy is initially in internal-external equilibrium, show the effects of a devaluation of the real exchange rate (increase in θ), on interest rate i* and output Y*, in an IS-LM-BP space.

4. Provide a brief written description of the adjustment process that occurs in no. 3 above.

5. Use qualitative analysis (state direction of change, do not calculate any values) and clearly describe in words, the ultimate impact of the above policy on the equilibrium level of the following endogenous variables:

• Private Consumption
• Private Savings
• Net Exports
• Money Supply
• Government Revenue
• Investment- Savings balance

6. Explain the costs of devaluation and the ‘J Curve effect’

Suppose an inflationary economy can be described by the following equations representing the goods and money markets:

C = 20 + 0.7Yd

M = 0.4Yd

I = 70 – 0.1r

T = 0.1Y

G = 100 X = 20

Ld = 389 + 0.7Y – 0.6r

Ls = 145

where G represents government expenditure, M is imports, X is exports, Y is national income, Yd is disposable income, T is government taxes (net of transfer payments), I is investment, r is the rate of interest, C is consumption, Ld is money demand, and Ls is money supply.

i) Use the inverse matrix method to solve for the equilibrium level of national income and the equilibrium rate of interest in this economy. (Note: ½ of the marks in this part are given for the correct set up of the equations. Explain what you are doing, including how equilibrium is established in each market.)

ii) Now use Cramer’s rule to find your answer.