1. Intuitively, do you agree with the idea that technological change and institutions improve the productivity of capital, consquently improving output per worker? Give economic logic (if possible with real life example) behind your agreement or disagreement.
2. How do policies aimed to counteract business cycle movements interact with movements in job flows, labor market matching process, and worker flows?
3. How might different institutions and policies affect employment in a labor market through varying levels of workers’ bargaining power?

how consumer spending impacts economic growth

Assume that GDP (Y) is 7,500, which is also the full employment level of real GDP. Consumption (C) is given by C = 700 + 0.75(Y – T). Investment (I) is given by the equation I = 2000 – 200r, where r is the rate of interest in percent. Taxes (T) are 500 and government spending (G) is 500. The world interest rate (r*) is equal to 4 percent.

Use the data above to calculate:

Consumption =   and National Saving =

Assuming domestic firms can borrow or lend as much as they want at the world rate of interest, Investment =  . Therefore, net foreign investment =  and net exports =   .

Do these numbers imply that this country is a net lender or a net debtor?    

Do these numbers imply that this country has a trade surplus or a trade deficit?  

If government uses an expansionary fiscal policy, will the national saving function shift right or left?

Will the change in national saving resulting from an expansionary fiscal policy cause net exports to increase or decrease?  

Demonstrate with a diagram, how the Monetary Authority of Singapore (MAS), using a managed float exchange rate approach as in between a fixed exchange rate and a free floating exchange rate systems, suits Singapore’s nature as a small and open economy. Note that Singapore has a high marginal propensity to import (mpm) and high marginal propensity to save (mps) to consider its policy for balance of payments.

What measures can a country take to deal with its balance of trade deficit?

1.    

- Summarize Prof. Romerâ??s discussion of the business cycle.

- Where do you think we are in terms of the description of the business cycle?

- Bonus. Has Prof. Romer said or written anything about our current situation?

how does inflation and appreciation effect net exports

Two organic emu ranchers, Bill and Ted, serve a small metropolitan market. Bill and Ted are Cournot competitors, making a conscious decision each year regarding how many emus to breed. The price they can charge depends on how many emus they collectively raise, and demand in this market is given by Q = 150 − P. Bill raises emus at a constant marginal and average total cost of $10; Ted raises emus at a constant marginal and average total cost of $20. (a) Find the Cournot equilibrium price, quantity (total and for each rancher), profits (for both ranchers), and consumer surplus. (b) Suppose that Ted breeds his emus earlier in the year than Bill, and is a first-mover in the market. Find the Stackelberg equilibrium price, quantity (total and for each rancher), and profits (for both ranchers). Does your answer coincide with the first-mover advantage? (c) Suppose that Bill and Ted merge, and become a monopoly provider of emus. Further, suppose that Ted adopts Bill’s production techniques. Find the monopoly price, quantity, total profits, and consumer surplus. (d) Has the combination of the two ranches discussed above been good for society or bad for society? Discuss how the forces of monopoly power and increased efficiency tend to push social well-being in opposite directions.

Please use excel and colored cells for input data and a different colored cell for the answer. No hidden numbers in the formulas! If a number is used, it should be visible if we print out the spreadsheet. Put each answer in a sheet labeled with the problem number, like “Problem 1”

1. Suppose natural gas experiences a 1.8% increase per year in real terms over the foreseeable future. The cost of 1,000 cubic feet of natural gas is now $7.50.
   1. What will be the cost in real terms of 1,000 cubic feet of natural gas in 16 years?
   2. If the general price inflation rate (e.g., the CPI) for the next 16 years is expected to average 3.2% per year, what will a 1,000 cubic feet of natural gas cost in actual dollars 16 years from now?

What are the advantages and disadvantages of using income (GDP) as a way of comparing the economic development of different countries? To what extent does the Human Development Index address the disadvantages?

Show an example of a decreasing cost industry in the long run between a firm and the market. Assume the firm is at zero profit in the initial equilibrium, followed by an increase in market demand. Assume the firm is at zero profit in the initial equilibrium, followed by an increase in market demand.

5. Explain why the infant-industry argument is valid.

6. Explain one reason why the U.S. dollar has higher value than the Indian Ruppies in the international exchange rate marketplace.

7. write out one major difference between a country's balance of trade(BOT) and Balance of Payment (bop).

8. Explain the reason why loans to a country are entered on the Credit Side of that country's Balance of Payment account.
9. Why does the supply of a country's currency increase if/when the country's level of imports increase.explain.

10. Analyze how the exchange rate of the u.s. dollar would be impacted by a fall in U.S. domestic interest rates.