What are some economic implications of climate change and/or environmental protections? How has COVID-19 impacted the implications on the environment?

Describe and explain the powers held by legislature within the system oif checks and balances which checks the powers of the governor and how the governor can check the powers of the legislature?

What explains the origins of wealth in the New World?

This week’s discussion topic is about Gross Domestic Product (GDP), Per Capita GDP and Quality of Life. GDP is the market value of all final goods and services produced in an economy in a year. Per Capita GDP is GDP/Population and shows how much of total GDP is theoretically available to each individual in the society. Per Capita GDP is the normal measure of Standard of Living when comparing nations.

Quality of Life has no standard definition. It is broader concept that attempts to embrace the multitude of variables that make people happy. There are many measures of it, but all include GDP and/or Per Capita GDP.

The ultimate question for this week is: “Is GDP a good measure of national economic well being?”

38. When insiders have a much greater impact on the wage-bargaining process than do outsiders, the negotiated wage is likely to be the equilibrium wage.

    A. about one-quarter of B. much less than
    C. almost equal to
    D. about one-half of

    E. much greater than

39. All of the following do not cause of structural unemployment, except: A. sectoral shift.

    B. efficiency wages.
    C. mismatch of skills
    D. employment-insurance.
    E. workers moving from one job to another

40. Workers unemployed as a result of wage rigidity are:
    A. actively searching for a job to match their skills.
    B. not eligible to receive employment-insurance benefits.
    C. waiting for a job to become available.
    D. relocating to another part of the country as a result of sectoral shifts. E. actively seeking retirement.

41. Employment insurance increases the amount of frictional unemployment by: A. softening the economic hardship of unemployment.
    B. making workers more frantic in their search for new jobs.
    C. inducing workers to accept the first job offer that they receive.

    D. making employers more reluctant to lay off workers.
    E. making retired workers more willing to reenter the labour market.

42. Economists call the changes in the composition of demand among industries and regions: A. insider-outsider conflicts.

    B. sectoral shifts.
    C. moral hazard.
    D. adverse selection. E. efficiency wages.

Incentives

Economics is about how people (or governments, firms, etc) make choices under uncertainty. We assume that people are rational, meaning that when they make decisions, they weigh the costs and benefits of the different choices, and then choose whatever will make them better off. Incentives are a reward or punishment. Combined with our rational actor, incentives give us a framework for trying to influence behavior. If we want people to drive more slowly in a school zone, we can change the costs of speeding or the benefits of driving slowly. Fines and cameras are (negative) incentives to get people to slow down. If we want people to stay at home during a pandemic, we just need to change the incentives. We are seeing this happen in real-time: some localities are arresting or fining people that ignore the stay at home order, raising the cost of leaving the house for an approved reason. Other approaches have tried to encourage people to stay home by increasing the benefit. For example, HBO has made many of their old shows available free online to encourage people to stay home (If you haven't seen them Silicon Valley and Barry are both highly recommended)

Incentives and Vaccines

We desperately need a vaccine if we are ever going to return to anything resembling normal life. So how can we use what we know about incentives to encourage people to develop new ideas like a vaccine? Watch the following video and then write a paragraph (or so) about incentives and vaccines.

Use the money market model to conduct the following analysis. For each of the following events, (i) say which curve shifts, (ii) say in which direction it shifts, and (iii) say in which direction the equilibrium interest rate changes.

a. Stock prices fall significantly.

b. The U.S. price level rises.

c. The Fed engages in an open market sale of bonds.

d. Credit card fraud becomes a major problem and people start making more payments using money.

Based on the simplified model of a choice between a domestic currency deposit in dollars and a foreign currency deposit in Euros, illustrate and explain the derivation of the AA curve of Krugman-Obstfeld-Melitz. What does the AA curve represent?

a) What is the difference between the short-run AS curve and the long-run AS curve? Define each and explain the underlying assumptions. What would cause each to shift either to the right or left? b) What does the concept “sticky wages” refer to? Explain its implications within the AD/AS model.

Please explain the difference between judicial review and parliamentary sovereignty and the trend towards judicial review after the end of the Second World War.

1. A kebap shop and a fancy café are adjoin. Due to the kebap shop cause too much smoke and smell, the café loses costomers.

There are number of costomers and profit assoicated with them are given below. Profit of café decreses as the number of costomers of Kebep shop increases. Depending on these data, can Coase Theorem find a solution for this externalities problem? Why?

Kebap shop                                                   The Café

Number of costomer     Profit                                  Profit                   Total

0                                          0                                          4000                     4000

100                                      3000                                   2500                     5500

200                                      5000                                   1500                     6500

300                                      6000                                   1000                     7000

QUESTION B3

The figure below depicts aggregate demand and aggregate supply in the nation of Pacifica in 2018.

At the beginning of 2019, a wave of business optimism led producers to sharply increase their planned investment expenditure.

1. What effect, if any, will this increased investment expenditure have in the short-run on the Aggregate Demand curve? The Short-Run Aggregate Supply curve? [TYPE YOUR ANSWER BELOW]

2. After the increased investment expenditure, will short-run equilibrium real GDP be above or below potential GDP? How do you know? [TYPE YOUR ANSWER BELOW]

3. After the increased investment expenditure, if the government takes no action how will Pacifica’s economy adjust over time to move towards its long-run equilibrium? (Note: for full credit you must explain not only what happens to move the economy to long-run equilibrium, but also why it happens.) [TYPE YOUR ANSWER BELOW]

The president of Pacifica is concerned about the effect of this new investment expenditure on the economy, and she wishes to use monetary policy to move equilibrium GDP back toward potential GDP. (For the remainder of the question, assume that the Pacifica Central Bank is Pacifica’s version of the United States Federal Reserve and that Pacifica’s banking and financial systems work exactly like the United States’ banking and financial systems.)

4. Which one of the following policies would help the president achieve her aim? [TYPE YOUR ANSWER BELOW]

1. Direct the Pacifica Central Bank to sell Pacifica Treasury Bills
2. Direct the Pacifica Central Bank to purchase Pacifica Treasury Bills

The figure below represents the money market in Pacifica just after the increase in investment expenditure but before the government undertakes the monetary policy you chose in part (d).

5. Explain why the Money Demand curve has a negative slope. (Note: you must say more than that money demand increases as the interest rate decreases, and vice versa. You must explain why this is the case.) [TYPE YOUR ANSWER BELOW]

6. What effect (if any) will the monetary policy you chose in part (d) have (in the short-run) on the Money Supply curve? The Money Demand curve? The equilibrium interest rate? [TYPE YOUR ANSWER BELOW]

7. What impact (if any) will this monetary policy have (in the short-run) on Aggregate Expenditure? (If it does have an effect on Aggregate Expenditure, explain which component or components of Aggregate Expenditure will be most affected.) [TYPE YOUR ANSWER BELOW]

8. What impact (if any) will this monetary policy have on short-run equilibrium real GDP and the short-run equilibrium Aggregate Price Level? [TYPE YOUR ANSWER BELOW]