Suppose the Fed decided to sell $350 billion worth of government securities in the open market (assume all payments are are directly deposited into or withdrawn from the banking system). What impact would this action have on the economy? Specifically, answer the following questions:

Instructions: Enter your responses as a whole number. If the lending capacity or aggregate demand falls be sure to include a negative sign (-) with your answer.

a. How will M1 be affected initially?

• increase by $350 billion

• no initial change to M1

• not enough information to answer

• decrease by $350 billion

b. By how much will the banking system’s lending capacity change if the reserve requirement is 10 percent?

     $  billion

c. How must interest rates change to induce investors to utilize this change in lending capacity?

     Interest rates must  (Click to select)  fall  rise  .

d. By how much will aggregate demand initially change if investors change their behavior because of this change in available credit?

     $  billion

e. Under what circumstances would the Fed be pursuing such an open market policy?

• expansion

• recession

f. To attain those same objectives, what should the Fed do with the

     (i) Discount rate?

• increase

• decrease

     (ii) Reserve requirement?

• increase

• decrease

1. In 1978, sellers of a good Ford Pinto valued them at $1,111 and valued a lemon at $765, while buyers valued good ones at $1,331, and lemons at $780. If an uninformed buyer figured 50% are each type, then the maximum price the buyer would pay for a Pinto would be _____.  

A. $1,035.55

B. $1,055.50

C. $1,065.55

D. $1,095.50

2. Consider the Pinto market again, but this time assume that uninformed buyers figured that fraction 0.45 are good ones, and the rest are bad. In this case, the price the buyer is willing to pay is _____ and this will _____ an adverse selection problem.

A.$1,033.44; avoid

B. $1,033.44; generate

C. $1,027.95; avoid

D. $1,027.95; generate

3. Consider the used Pinto market one last time. Under imperfect information, to avoid adverse selection, the minimum percentage of good types necessary to avoid adverse selection is?

A.51.25%

B.55.5%

C.57.6%

D.60.1%

A project firm is considering for implementation has these estimated cost and reveneus: an investment cost of $50,008, mantainance cost starts at $5,000 at the end of year(FOY) one and increase by $1,000 for the next four years, and then remains constant for the following five years: savings of $24,105 per year(EOY 1-10) and finally a resale value of $27,215 at EOY 10. If the project has a 10 year life and the firm's MARR is 10% per year, What is the present worth of the project?

what is the effect of education center in corona virus

In your own words (250 words) explain or discuss global trade and trade policy.

what are the actions would you suggest restoring our economy from the slump caused by the ongoing pandemic?

what is the effect of eductation center in corona virus

. What are the limitations of the mainstream model of consumer behavior?

Do you think there should be unemployment compensation? (Another form of income distribution)

Why or why not?

Tokyo 2020 Olympics officially postponed until 2021

1. Do you think the Olympics made the right choice in postponing the games?
2. If you were an athlete who was performing, how would you feel?
3. Do you believe there will be a chance that the Olympics could be held earlier than the postponed date?
4. How does the postponement affect ticket holders? Should tickets be considered valid?
5. Do you think this pandemic will be contained before the games?

Use the following information to answer the next two questions:

Suppose society consists of two individuals, A and B, who must split a fixed income of $100. Individual A’s marginal utility of income is given by MU_A=400-8I_A and individual B’s marginal utility of income is given by MU_B=800-4I_B.

17. If the social welfare function is given by W=U_A+U_B, then at the optimal distribution of           income, social welfare (W) is _______________.

18. Suppose instead that the social welfare function is given by W=U_A, then at the optimal distribution of income, social welfare (W) is ______________.

Use the following information to answer the next three questions:

Consider an altruistic individual whose utility function is given by U=f(I_self,I_charity). Their marginal benefit of donating to charity (i.e. those in need) is given by MPB=200-I_charity and their marginal cost of donating to charity is given by MPC=4I_charity. This individual’s donations also result in marginal external benefits to third parties (those who benefit from knowing that donations are being made to those in need), given by MEC=5. Using a graph with dollars on the vertical axis and I_charity on the horizontal axis, answer the following questions.

19. This individual will voluntarily donate $ ______________to charity.

20. The deadweight loss associated with this individual voluntarily donating to charity is

      $_____________.

21. To encourage this individual to voluntarily donate the socially efficient amount to charity government would need to offer this individual a tax credit in the amount of $_____________.

Suppose that a hypothetical economy is characterized by the following equations:

C = 200 + 0.75(Y-T)

I = 200 – 25r

G = 100

T = 100

MS = 1,000

P = 2

(M/P)^d = Y – 100r

1. Use the above information to obtain an expression for the IS curve (write Y as a function of the interest rate).
   1. mathematical procedure

2. Explanation

2. Assuming that P is fixed at 2, obtain an expression for the LM curve (again, write Y as a function of r).
   1. mathematical procedure

2. explanation

3. Find the equilibrium level of Y and r.
   1. mathematical Procedure

2. explanation

4. Suppose that the government increases G to 150. By how much the IS curve will shift? What are the new levels of Y and r?
   1. mathematical procedure

2. explanation

5. Suppose that after the increase in G, the Belize Central Bank raises the money supply to 1,200. What are the new equilibrium values of r and Y?
   1. Mathematical Procedure

2. explanation

What is the significance of loanable funds to both national and local enconmies?

The firm, competing in a very highly competitive market, is manufacturing and selling headphones. The firm’s total revenue and cost functions are:

Rq=q3+14q2+35q+40

Cq=13q3+20q2+19q+15

1. How many headphones must the firm manufacture and sell to maximize profits?
2. What will be the price the firm must charge to its customers to maximize profits?
3. What will be the average revenue generated for each unit sold and what will be the average cost of producing a headphone?

q = K^1/2 L^1/2 p=$20, v=$8, w=$4

a) suppose k= 16, find short-run total and marginal costs, and also firm supply function. Find the price that the firm shuts down its production.

b) find firm profit maximization demand function and short-run supply function