This question is based on the current Covid-19 Pandemic.What type of unemployment is likely to increase in the next few weeks/months? Suppose the pandemic is particularly persistent and activities that involve a large amount of physical contact cannot be done anymore. What type of unemployment would emerge in this case? What’s a way to deal with this, if any?

economic concepts and how they apply to the world around us

Question 1: The boiler in the heating plant at arctic College is designed to burn either fuel oil or coal. Suppose that one ton of coal, C, produces as many BTUs as 100 gallons of fuel oil, F. (a) Draw a typical isoquant for BTU production. (b) What is the elasticity of substitution between fuel oil and coal? (c) Suppose that fuel oil is $1.00 per gallon and coal is $80 per ton. Draw the output expansion path on the diagram and describe the marginal and average cost curves. (d) Repeat (c). assuming that the price of coal has increased to $120 per ton.

Is it trade deficit or trade surplus that contributes more to economic growth? Why?

What are the factors that increase and decrease the demand for a foreign currency?

What are the impacts of currency devaluation and revaluation on international trade?

What is currency war? How does it affect trade between countries?

Discuss the following statement from Principles of Economics: “Because the environment is fragile and natural resources are finite, ultimately economic growth must come to an end.”

Explain why, in any period, a country’s net capital inflows equal its trade deficit? Include examples.

2) The demand function for a good is ?? = ?(?, ?, ?) = ? − ?? and its supply function is ?? = ?(?, ?, ?) = ? + ??, where a, b, c, and e are positive constants. (Keep in mind that sometimes we call a, 2 b, c, and e “parameters” and that they are “exogenous” variables. In contrast, p and Q are “endogenous” variables.) a) Solve for the equilibrium price ? ∗ = ? ∗ (?, ?, ?, ?) and quantity ? ∗ = ? ∗ (?, ?, ?, ?). b) Using calculus, compute the effect of an increase in parameter a on ? ∗ and ? ∗ . Draw ?? and ?? and illustrate the just noted effects graphically.

I was able to solve part A. I got: P* = [(a-c)/(b+e)] and Q* = a - b[(a-c)/(b+e)]. I am just unsure about part B.

Thank you,

Construct a neat production possibilities model of civilian and military goods, and use it to explain and illustrate the concepts of scarcity, choice and opportunity cost.  Note: You need to add the graph.

(b) Explain under what circumstances would a country operate inside its PPF

An increase in labour hours will lead to Question 1 options:

a) neither a movement along nor a shift of the aggregate production function.

b) a movement along the aggregate production function.

c) a downward shift of the aggregate production function.

d) both a movement along and an upward shift of the aggregate production function. e) an upward shift of the aggregate production function.

Question 2:-

An increase in labour productivity ________ the real wage rate and an increase in population ________ the real wage rate.

Question 2 options:

Question 3:- Labour productivity rises when

Question 3 options:

Question 4:- Capital increases when

Question 4 options:

Question 5:- Which of the following is false?

Question 5 options:

Question 6:- All of the following are sources of loanable funds EXCEPT

Question 6 options:

1.      What could cause a previously upward-sloping yield curve to flatten out and eventually become downward sloping?

2.      “An increase in government spending financed by borrowing from the public will increase the supply of money.” Comment on this statement.

3.      Assume the government finances a spending increase by issuing new securities. Does this create a burden on future generations? Why or why not? Would it make a difference whether the spending increase was used to finance the building of a new highway or to send troops abroad to fight a war in another country?

4.      Explain how the sharp decline in housing values contributed to the financial crisis that started in 2008.

5.      In the early 1930s, interest rates were extremely low and money supply fell sharply. Does this indicate that the Fed used expansionary or restrictive monetary policy? Explain your answer.

6.      Do you think the Keynsian or the monetarist view provides a better explanation of the causes of the Great Depression? Why?

7.      Comment on the following statement:

         “A balance of payments surplus may lead to inflation, while a balance of payments deficit may lead to unemployment.”

8.      Comment on the following statement:

         “A trade imbalance can persist as long as the central bank wants it to.”

9.      In the early 1980s, the U.S. trade deficit increased sharply, yet at the same time the value of the U.S. dollar increased steadily. How can this be explained?

10.    Comment on the following statement:

         “If a central bank used expansionary monetary policy to lower the value of the domestic currency, the country’s trade imbalance would immediately improve.”

11.    Assume interest rates in the U.S. are currently 5% and you expect the Japanese yen to appreciate by 2%. How much interest would the Japanese government have to pay on its government bonds for Americans to buy them?

12.    “Either expansionary fiscal policy or a currency depreciation will increase domestic national income by decreasing the level of foreign output demanded.” Comment on this statement.

13.    “A perfect-foresight model predicts that expansionary monetary policy has no effect on the level of output.” Comment on this statement with the help of an AD-AS diagram.

14.    When the federal government runs a budget surplus rather than a deficit, how will the public’s bond holdings and the supply of money be affected?

15.    “The central bank can lower the budget deficit through open market purchases.” Comment on this statement. In your answer discuss whether money financing or debt financing is more inflationary.

PART 6: True or false and multiple-choice questions

Question 16: True or false, firms in situation of monopolistic competition have deadweight losses associated with monopoly because of barriers to entry.

Question 17: Which of the two demands functions below is most elastic

A) Qa=100-2p

B) Qb=120-p

Question 18: If a buyer values an object for $4 and a seller’s cost is $1, which of the statements below is false!

1. If a transaction takes place, total surplus will be equal to $3
2. For the exchange to occur, the price has to be equal to $2.50, no other prices will allow an exchange to occur.
3. Whenever an exchange takes place, the allocation is efficient.
4. The buyer is ready to pay up to $4 for the object

Question 19: True or false, price discrimination is inefficient.

Question 20: Which of these goods’ demand is likely to be most inelastic

1. An inhaler for asthmatic people
2. A generic soft drink brand
3. Cellphones
4. Airline tickets

Case Monopoly power and competition policy We have seen that a monopoly creates a social loss compared to a perfectly competitive market. If it is possible to increase the level of competition in a monopolized market, then society is better off since social surplus increases. Competition policy (also known as antitrust policy) deals with markets where competition can arise; however, given the behaviour of some firms in those markets, competition is restricted. There are markets in which increasing the level of competition is not feasible, so competition policy does not apply. This is the case of a natural monopoly, which will be discussed at the end of this chapter. Broadly speaking, competition policy can be divided into policies to deal with monopoly power that already exists, and policies to deal with mergers that may increase monopoly power. While mergers will be discussed in the next chapter, here we discuss policies to address existing monopoly power. Since the UK belongs to the European Union, EU competition law takes precedence where it is relevant, essentially in the case of larger businesses with significant European or global activities. The original Common Market was created by the 1956 Treaty of Rome. The modern and enlarged EU is largely underpinned by the 1999 Treaty of Amsterdam. Article 81 of this treaty prohibits anti-competitive agreements (called cartels) that have an appreciable effect on trade between EU member states and which prevent or distort competition within the EU. Article 82 prohibits the abuse of any existing dominant position. A firm has a dominant position in a given market if it has a large market share in that market. For example, Microsoft has a dominant position in the market for operating systems (OS) for PCs, with a market share of around 90 per cent. Article 82 prohibits the abuse of a dominant position not the dominant position itself. A firm can become a dominant firm simply because it is more productive than the others and this is fine for competition policy. What is not fi ne is a firm that uses its dominant position to restrict competition in the market. Responsibility for enforcement of these articles lies with the European Commission. Although global businesses are increasingly subject to transnational competition law, many businesses still operate primarily within one country; national decisions are then appropriate. Within the UK, these are governed by the Competition Act 1998 and the Enterprise Act 2002. The latter made it a criminal offence, punishable by a jail sentence, to engage in a dishonest cartel. Two key institutions addressing UK competition policy are the Office of Fair Trading (OFT) and the Competition Commission. In particular, the OFT has the power to refer cases in which existing monopoly power may be leading to a ‘substantial lessening of competition’ to the Competition Commission for detailed investigation. Prior to the Enterprise Act 2002, the Competition Commission was asked instead to evaluate whether or not a monopoly was acting ‘in the public interest’, without any presumption that monopoly was bad, and many previous judgements of the Commission concluded that companies were acting in the public interest, for example because they had an excellent record of innovation, despite having a monopoly position.

Questions on case study:

1. Explain the ways in which a monopolist can abuse its power when compared to a perfect competitor.

2. In light of your answer to question 1, explain why it is important for monopolists to be regulated to protect the interests of consumers, as done by the OFT and the Competition Commission.

3. Discuss how monopolists can be beneficial to the economy and consumers.

What are the advantages and disadvantages of permitting patients to buy out of the price-controlled medical system

in 300 to 400 words, . Why is Germany so successful at international trade?
What has happened economically in China during the past twenty-five years?