Suppose that the treasurer of IBM has chance to borrow of $10,000,000 (or its equivalent in other currency) and to invest for three months. Monthly interest rate in the USA - 1.3% per month, in Germany - 0.6% per month, in London - 0.9% per month. The treasurer of IBM does not wish to bear any exchange risk.

Current spot exchange rate: 0.8045 €/$ and 1.8095 $/£

Three-month forward exchange rate: 0.8098 €/$ and 1.8028 $/£

a. Determine whether the interest rate parity (IRP) is currently holding.

b. If the IRP is not holding, how would you carry out covered interest arbitrage? Show all the steps and determine the arbitrage profit.

c. Explain how the IRP will be restored as a result of covered arbitrage activities.

Fiscal policy: If the concern is increasing GDP, why wouldn't a government want to pursue the policy of just increasing spending indefinitely to avoid ever having decreases in GDP?

Consider the effect on interest rates and investment, also consider the worthiness of pursing increased GDP as a singular goal.

1. Assume that the US was at full employment prior to the coronavirus pandemic. Illustrate graphically, using the Aggregate Supply/Aggregate Demand (AS/AD) framework, the full employment equilibrium price level and GDP. Label the price level P0 and the full employment GDP as Q0 in your diagram. You will need three curves: an aggregate demand curve, a short-run aggregate supply curve, and a long-run aggregate supply curve.

2. Given your answer to part (1), illustrate in the same diagram what effect the coronavirus pandemic is likely to have on the economy, given the article you read. Identify the new equilibrium price and GDP level and label them P1 and Q1 respectively.

3. Explain the rationale behind your answer in part 2.

4. What types of fiscal policy responses would make sense at this time, given your answers to parts (2) and (3)? How would they affect the diagram you have drawn?

please draw/show your work. and ill give you thumbs up

Macroeconomic variables are indicators or main signposts signalling the current trends in the economy”, keeping in view this statement what is your understanding of the below key variables of Macro-Economy.                                                                                                       

• Unemployment rates
• Inflation
• Budget deficit

Discuss the various types of frictions and distortions in labor and product markets that make the adjustments of wages and prices slow, according to New Keynesian macroeconomists.

In the New Keynesian Macroeconomics business cycles are driven by demand shocks, while in the New Classical Macroeconomics they are driven by supply shocks. Explain this statement using your knowledge of the AD-AS model.

You should be able to answer each of the following questions in a just a few sentences. Graphs or figures might be good to include if they help you to make a better argument or to explain your answer more clearly.

3. Grandma promises to sneak you some bourbon while your parents are cleaning up the Thanksgiving dishes, but only if you can impress her with something you learned in your economics class. Carefully explain to Grandma why the short run average total cost curve is U-shaped so that the two of you can sip a little Maker’s together.

4. In order to improve your chances of matching with someone, you decide to update your online dating profile. Specifically, you decide that to impress potential partners you will show off what you know about monopolies and marginal revenue. Draft out an explanation as to what marginal revenue is for the monopolist so that you can have them all wanting to swipe right!

In the New Keynesian Macroeconomics business cycles are driven by demand shocks, while in the New Classical Macroeconomics they are driven by supply shocks. Explain this statement using your knowledge of the AD-AS model.

Jessica derives utility from her consumption of two goods, video game plays on an X-Box (call it good X) and high energy yogurt (call it good Y). Her utility function is U(X,Y) = XY. The price per play of games is $2.00 and the price of yogurt is $10 per container and Jessica's income is $50 per week. She is presently consuming a bundle of game plays and yogurt such that her marginal rate of substitution is 1 (or -1, if you wish). Use this information to answer the following questions.

(4)a. Is Jessica currently consuming the bundle of game plays and yogurts such that her utility is maximized? Explain.

(4)b. If she isn’t choosing her utility maximizing bundle, what adjustment should she make to her consumption bundle?

A firm with market power faces an inverse demand curve of P = 100 – 10Q. Assume that the firm faces a marginal cost curve of MC = 10 + 10Q.

(4)a. If the firm cannot price discriminate, what are the profit maximizing levels of output and price?

(4)b. Given you answers in part “a,” what are the values of consumer surplus, producer surplus and deadweight welfare loss?

(4)c. If the firm is able to practice first degree (perfect) price discrimination, what is the firm’s output level?

(4)d. If the firm is able to practice first degree price discrimination, what are the levels of consumer and producer surplus and deadweight welfare loss?

Identify and discribe the Rogers’ five factors that influence diffusion process of innovation. Using an innovative product example, analyze the product using the five factors, and suggest your ideas to improve two of the areas among the five factors.