Background:

Increased Foreign Direct Investment (FDI) is one result of Globalization, where companies take advantage of reduced barriers, opening of markets and increased focus on market driven economy and unrestricted trade. Governments have also increasingly offered foreign companies’ various incentives if they would set up a company in their country.

FDI has many advantages and disadvantages for both home and host countries. For many countries, FDI is a lifeline, an opportunity which they can‘t afford to miss. But for others it is more of a threat to the national sovereignty of the country in question.

Whatever the reason, it is obvious that FDI is a big part of international trade and the development of countries, industries, societies and Globalization in general,.

Questions / tasks:

1. Name three of the main benefits of FDI to both governments (home and host)
2. How will reduced focus on Globalization affect the future development of FDI?
3. What explains the strong position of developing countries when it comes to FDI?

essay question:

US-China trade War: A potential trade war has been brewing since April 2017 when Trump directed the Commerce Department to investigate whether imports of foreign steel from China and other countries could be a threat to national security. Critically access and evaluate the implication of both countries to the whole world economy.

• Outline the international impact/importance/concerns relating to this issue.

• Briefly outline your view(s) on this international issue.

• Future prospects/issues

In which type of competition would each of the following businesses be likely to engage? (monopoly, monopolistic competition, oligopoly, etc)

1. Nike

2. Sara's Greenhouse

3.General Mills

4. Columbia Gas

5. B and O Railroad

Why has productivity growth in the U.S. been more rapid than in the other industrialized countries?

A) Because of the greater flexibility of U.S. labor markets and the greater efficiency of the financial system.

B) Because the U.S. government has more restrictive but also more effective regulations that makes the labor and output markets more efficient.

C) Because the opportunity cost of being unemployed is lower in the U.S. than in other countries.

D) All of the above.

Group of answer choices

what is the trade war with China?

Ride-hailing apps have changed the market for private transport in Singapore. Unlike traditional taxi operators, whose fare structure is fixed in advance, ridehailing apps use surge pricing, and fares can change significantly during peak periods.

(i) Some commuters complain that surge pricing during peak periods harms consumers. Using a supply and demand model for rides, discuss the economic benefits of using surge pricing, rather than fixed fare structure pricing for trips. Support your answer with a relevant supply-demand graph.

(ii) Briefly explain what determines short-run, versus long-run, supply elasticity in the private-hire market. Give an example of a business decision that would increase short-run supply, and a business decision that would increase long-run supply.

2018-Jul Q1a

2. Using a demand and supply diagram for the market for loanable funds and an AD-AS model, illustrate and explain what happens when the Federal Reserve decides to lower the reserve requirement.
Sample Multiple Choice Questions
1. A money market account is in:
a. M1 only
b. M2 only
c. M1 and M2
d. neither
2. When the Federal Reserve buys bonds, this is
a. Contractionary Monetary Policy
b. Expansionary Monetary Policy
c. Contractionary Fiscal Policy
d. Expansionary Fiscal Policy
3. Which one is or has been considered commodity money?
a. paper notes declared to be legal tender
b. credit cards
c. bitcoins
d. cigarettes
4. If a person deposits $2500 in a bank and the reserve requirement is 20%, how much is held in reserve

Q1 a. Draw a diagram with money demand and money supply curves. Explain why the money demand curve is downward sloping. Find the equilibrium interest rate. b. Shift one of these curves to show if there is a stock market crash in the U.S. and find the new equilibrium interest rate. c. Draw a figure describing both the U.S. money market and the foreign exchange market, analyze the effects of this U.S. stock market crash on the dollar/euro exchange rate.

Q2 Why might the law of one price fail to hold? List three examples.

Q3 Show the relationship between the public saving and the net export based on the absorption approach. What are the effects of the following events on the U.S. GDP and its components? What are the effects of the following events on the U.S. current account and financial account? (1) Apple Company sold $10,000 computers to a German company. (2) The U.S. Government spent 0.5 million dollars on purchasing printing machines made in Japan. (3) The U.S. Government spent 1 million dollars on social security.

Q4 What is interest rate parity? Assume that the euro interest rate is constant at 2 percent, and that the expected exchange rate is 1.05 dollars per euro. Find the expected dollar return on euro deposits for the following cases: (1) The current exchange rate is 1 dollar per euro (2) The current exchange rate is 0.9 dollar per euro (3) The current exchange rate is 1.1 dollar per euro Based on the interest rate parity, what will happen if the dollar interest rate is 1 percent if the current exchange rate is 1 dollar per euro?

Q5 a. What is the exchange rate overshooting model? b. If the Fed announces that they will lower the interest rate by 0.5% next Wednesday, plot the time paths showing its effects on: (a). The dollar interest rate. (b). The U.S. price level. (c). The dollar/euro exchange rate.

Question 2

Three residents of a peaceful building face a major crisis. Their building is about to undergo an undesired renovation process. However, the renovation will not happen if at least one of the residents will show up to the discussion on this issue at the city hall and object. The residents decide simultaneously and privately (they don't coordinate) whether to go to this discussion or not while considering the following:

• Showing up to the discussion means they need to take a day off, which is equivalent to a loss of $50.
• If no one shows up, they would have to move out for a long period of time, and each one of them will suffer a cost of $1,000.

1. What are the strategies each resident faces?
2. Find the equilibria in this game - how many of the residents would choose to go to the discussion in an equilibrium? how many equilibria are there then?

Note: Do not try build a payoffs table, try think about all the combinations of strategies, and if any or some of those combinations can be an equilibrium.   

Bonus Question (10 points)

In the bicycle market there are two companies A and B. Each company can sell either electric bicycles or regular bicycles.

If they both sell electric bicycles, they will get $2m each.

If one store sells electric bicycles and the other store sells regular bicycles:

• The store that sells electric bicycles will get $5m
• The store that sells regular bicycles will get $2.5m

If they both sell regular bicycles, they will get $1m each.

1. Describe the situation as a simultaneous game.
2. Do any of the stores have a dominant strategy?
3. Is there a dominant strategy equilibrium?
4. Are there Nash equilibria? If so, which one of them is better?

What are the marketing implications for these economies?

• Resource-poor undeveloped economies
• Resource-rich undeveloped economies
• Emerging economies
• Developed economies

For each of the problems below solve for monopoly quantity, monopoly price, total revenue, total cost, profit, and dead weight loss.

Qd = 100 – 0.5p                            TC = 2Q²

Qd = 500 – 0.2p                            TC = Q² + 100Q        

Qd = 30 – 0.6p                              TC = Q² + 10Q +100

QD = 1000 – 0.25p                       TC = 2Q² + 25Q + 100

Suppose, in a nation called Utopian (which happens to calculate unemployment rates the same way the United States does), the number of discouraged workers is 10 million people; the number of full time students is 60 million people; the number of stay at home spouses is 200 million people; the number of underemployed workers is 40 million people; the number of phantom unemployed persons is 25 million people; the number of officially classified employed persons equals 300 million people; number of officially classified unemployed persons equals 40 million people; and the civilian non-institutionalized population equals 600 million people.

(a) Based on this information, calculate the official unemployment rate to the second decimal place (hundredths place). Please show how you got your answer – meaning show your work. Remember to state your answer as a percent (including the percent symbol, since without the percent symbol, your answer becomes meaningless).

(b) In one factual sentence (without any opinion of whether you think your answer is high or low), please clearly explain what information your answer in (a) above tells us.

In other words, the unemployment rate you calculated in (a) above tells us what information?

Make sure to use your answer in (a) in your sentence here.

(c) Now if the number of discouraged workers were reclassified as officially unemployed persons, how would this change the reported unemployment rate?

Again make sure that your unemployment rate number is reported to the second decimal place (hundredths place). Again, please show your work and present your answer as a percent.

(d) Based on your answers for (a) and (c) above, would you say that by the Bureau of Labor Statistics not counting discouraged workers as unemployed persons, that the reported unemployment rate tends to underestimate or overestimate the unemployment situation in the country?  In your explanation, you must support your answer with your numbers from your answers for (a) and (c) above.

(e) Please explain who discouraged workers represent and what is it about discouraged workers that has the reported unemployment rate either underestimating or overestimating the unemployment situation in the country.   

The economy of North Haverbrook is comprised of 30,026 working able inhabitants and hold a capital stock of 45,000. Through empirical work, it was discovered that the share of labour income (wage) was 10% of GDP (turns out they don't have schools), share of capital was 90% and that using a cobb-Douglas production function was able to properly approximate the production behaviour of this economy. And that tech (A) is 1.

1. [2 points] what will be North Haverbrook's output? (my answer:43215)
2. [2 points] what is the equilibrium real wage rate?(my answer:0.14)
3. [2 points] what is the equilibrium real capital rental rate?(my answer:0.8643)
4. [3 points] Given it's current situation, should North Haverbrook follow a policy to increase its labour force, or increase its capital stock? (having for goal to increase output). Why? Show your logic.
5. [3 points] Given it's currency situation (independent of d) ), should North Haverbrook follow a policy which would increase schooling, which will increase the share of labor to 15% (share of capital changes to 85%), or should it alternatively increase capital stock by 1000. Which will be its best option (having for goal to increase output). Why? Show your logic.

Please help me check my answers from a-c, and answer questions d and e!!! Thanks.

1. Here we think about two people, Sally & Tamara, who are in a ridiculously simple place where only two goods exist, apples & Hot Dogs. Sally is indifferent between bundles A, B, C, D, E, F, and G. Tamara is indifferent between bundles H, J, I, K, L, M, and N.

Sally:

Tamara

1. What is the value of 4 apples to Sally? (1)

2. What is the marginal value of the 4th apple to Sally? (1)

3. What is the marginal value of the 4th apple to Tamara? (1)

4. Let us say, Sally has bundle E & Tamara has bundle H. Explain how trade can make each one of them better off (give all relevant details, such as who would trade what for what, what will each person ends up with as the result of their trade, and how you know that what they have after trade is better than what they have started with). (3)

5. What would be the equilibrium outcome of their trade (i.e., how many apples and how many hot dogs would each of them have in equilibrium)? Explain, with reference to maximization, how you know that that outcome is equilibrium. (3)