1. The World Bank is concerned about depreciating currencies in developing countries (typically SOEs). What fiscal policy should the Bank advise large foreign countries (that have influence on the world market of loanable funds) to implement in order to reverse the exchange rate depreciation (want ↑e) of the SOEs? For simplicity, assume that the SOE is Mexico and that the large foreign country is the U.S.. The exchange rate e = US$/Peso. Answer the following questions.
a. According to the Mundell-Fleming model, what is the American fiscal policy that should be implemented to promote an appreciation of the Peso? What would happen to the world interest rate (r*) as a result of this policy choice? Explain carefully.
b. Would the change in r* create a net capital inflow (NCI) or a net capital outflow (NCO) for Mexico? Explain using the equation below.
CF = (Amount Mexico lends to U.S.) – (Amount U.S. lends to Mexico)
(Mexico’s holdings of U.S. assets) – (U.S.’s holdings of Mexican assets)
CF = [A] - [B]
c. Would the NCI or NCO appreciate or depreciate the Mexican US$/Peso flexible exchange rate ( e)? Explain by determining the changes in the demand and the supply of pesos on the foreign exchange market. No graph is needed.
2. Would a protectionist trade policy be effective at increasing income under a fixed exchange rate system? Explain and illustrate your answer with an IS*- LM* graph. Make sure to explain the interaction that takes place between the arbitrageurs and the central bank.
In: Economics
An online shopping website considers offering its customers a mail-in rebate program. By this way, it aims to differentiate between different groups of customers. After the completion of the purchase of a wireless router, consumers can mail a rebate form to receive $ back. In other words, the net price after the rebate is p*-a for those who are interested in the mail-in-rebate. The shopping website is a monopoly with no fixed cost. Its marginal cost is $30.
The Market consists of two different consumer groups whose demand functions are as follows:
The demand of the two groups are as follows;
P1=150-2q1
P2=100-5q2
Assuming that the consumers of group 1 are not interested in rebate forms,
a. What is the optimal rebate amount, which differentiates between different consumer groups?
b. Assume that the firm has enough information about its consumers to implement a perfect price discrimination strategy. Calculate the equilibrium price and quantities and the profit if the firm uses perfect price discrimination. (Do not derive the kinked market demand curve. Simple assume that the market demand is Q=95-07P)
In: Economics
A company is considering the purchase of an industrial laser for $150,000. The device has a useful life of five years and a salvage (market) value of $30,000 at the end of those five years. The before-tax cash flow is estimated to be $45,000 per year. The laser would be depreciated using MACRS with a recovery period of three years. If the effective income tax is 25% and the after-tax MARR is 15%, use the PW method on an after-tax basis to determine the profitability of the laser and make a recommendation.
In: Economics
5. Use the federal funds market to graph each of the following scenarios (each on a separate graph) and described what is happening.
a. Suppose that the Federal Reserve decides to increase its target for the Federal Funds rate from 2% to 2.25% while also increasing the discount rate from 2.5% to 2.75%. Show how the Federal Reserve can use open market operations to do this (state what they will do with open market operations).
b. Suppose that banks increase their demand for reserves. Show how the Fed can offset this change through open market operations in order to keep the federal funds rate at the target rate. Describe the open market operations used.
c. Suppose that the Federal Reserve decides to decrease the required reserve ratio but does not want the increase to impact the target for the federal funds rate. Show how the Federal Reserve can use open market operations to accomplish this policy. Describe the open market operation being used
In: Economics
Suppose the demand for burrito in a small isolated town is p = 8 - 2Q. There are only two firms, A and B, and each has a marginal cost of 2. Determine the Cournot equilibrium. (hint: using the rule that Marginal Revenue’s slope is always twice as much as the slope of the residual demand curve as long as the residual demand is linear in output)
Can you please write the answer on paper so it's clearer for me reading it. The -2Q part is throwing me off.
In: Economics
In: Economics
The past few weeks have seen unprecedented action in terms of both fiscal policy initiatives and monetary policy initiatives. In terms of size, timing, and coordination this is the fastest and strongest both entities have acted to 'alter' the economy. Please take some time to read 3 or 4 articles if you are not familiar with these actions. Briefly summarize 5 fiscal policy initiatives put in place recently, and what the Fed did in terms of Monetary Policy. This week you only need to be brief in your summary, next week we're going to look at these in more detail.
In: Economics
Title: Explain how neoclassical economist extended the economic analysis by discussing on “imperfect competition” (John Gustav Knut Wicksell & Irving Fisher)
In: Economics
In this assignment please relate one of the following economic concepts we have discussed to a personal experience you have had since the COVID-19 pandemic began.
Chapter 1: marginal analysis
Chapter 2: trade off
Chapter 3: a shift in supply and demand
(book: Hubbard and O'Brien 3rd edition Macroeconomics)
Your assignment should explain the concept you chose and how it relates to a personal experience over the past couple weeks. I would recommend your response contain 2-5 paragraphs in to accomplish explaining the concept and your experience.
In: Economics
1-general information about the important of tourism sector to Oman economy.
2-tracing changes over the past years of tourism sector to Oman economy.
3-suggesting future development.
In: Economics
In: Economics
Raffi Balin's coffee importing company employs 120 people. Each week, the staff meet for breakfast, and discuss possible improvements. Each employee is encouraged to share, and is rewarded for good ideas. For example, one of the coffee roasters suggested that the firm import tea as well, because new health and lifestyle concerns are causing many consumers to reduce coffee consumption in favour of tea. A tea division was formed, and became successful (after a few false starts that helped everyone learn). The coffee roaster was put in charge of the new division and, as a result, saw her annual salary triple. Is Raffi's business an innovative organization? Explain?
In: Economics
Robert has been asked by friends to join them at a protest rally against the World Trade Organization (WTO). Because he is taking International Business, he wants to use the facts he is learning to help make a decision. Three topics that especially concern Robert are poverty, human rights, and the environment. For each of these topies, prepare at least one argument for each side, that is, one pro and one con. In conclusion, give your own view of whether Robert should participate
In: Economics
In: Economics
In "Biographies of Hegemony" by Karen Ho and "The Mega-Marketing of Depression in Japan" by Ethan Watters, How and in what ways do cultures form and effect out behavior at local, national, and/or global levels?
This is a prompt for my expository writing class. We'd usually brainstorm ideas in class, but online learning has brought that to a halt and I just cannot find ideas to answer this prompt.
In: Economics