When the FED buys 10-year treasury notes and mortgages + student loan backed securities, inflation in the short run will

1. Drop to 0%

2. Remain the same

3. Increase

When the FED buys 10-year treasury notes and mortgages + student loan backed securities, inflation in the long run will

1. Drop to 0%

2. Remain the same

3. Increase

When the FED buys 10-year treasury notes and mortgages + student loan backed securities, consumption and investments will

1. Drop to 0%

2. Remain the same

3. Increase

How will open market purchases affect the economy short run GDP

1. Go up

2. Not change

3. Not enough info to answer

Explain the concept of economic rent and how it differs from economic profit?

A heat exchanger purchased by Hot Spot Manufacturing cost $24,000. The exchanger will save $4,500 in each of the next 10 years. Hot Spot will use SOYD depreciation over a six-year depreciable life. The declared salvage value is $3,000. It is expected the exchanger will be sold for the declared value. Hot Spot pays taxes at a combined rate of 42% and has a MARR of 8%. Was the purchased justified?

discuss how market supply is determined, he most important description of a firm is its short run cost structure. Discuss the components that make up that structure and the relationships between them?

Discuss why normal profits are the status quo in a competitive market in the long run; use the competitive market response to changes in demand for a commodity to illustrate aspects of your discussion.

1a.

A change in aggregate supply would be caused by a change in:

Multiple Choice

• the quantity output supplied.

• input prices.

• aggregate demand.

• the price level.

1b.

Which would most likely shift the aggregate supply curve? A change in:

Multiple Choice

• consumer expectations.

• excess capacity of capital.

• government spending.

• prices of imported resources.

1c.

During a period of demand pull inflation Congress passes legislation to raise taxes, this would be an example of a(n):

• political business cycle.

• contractionary fiscal policy.

• expansionary fiscal policy.

• nondiscretionary fiscal policy.

Question#1: Based on the aggregate production function: GDP = F_T (L, K, H)

a. Imagine that the amount of capital K increases by 10% (from 50 to 55 units) while labour and technology stay the same. How much does total GDP and GDP per worker change by? (A specific percentage is not needed, just ‘more than’ / ‘less than’ 10%.)

b. Imagine that capital increases by 5 units again, from 55 to 60. How big is the resulting change in GDP and GDP per worker compared to the change that occurred in part a?

c. What is the term (hint: law) used to describe the relationship between K and GDP in parts a and b?

d. Based on your answers to parts a through c, is it possible to have sustained economic growth due to capital increases alone?

e. Now imagine that the amount of labour L and capital K both increase by 10%. By how much do total GDP and GDP per worker change by?

f. What is the term used to describe this relationship?

g. What is required to have sustained increases in per-worker GDP (which, in turn, results in improving living standards)?

Question#2:

a. In 2017, the unemployment rate was 61.45% and 2014 unemployment rate was 63.21%, Did employment go up or down during this period?

b. Based on your answer to question a, can the unemployment rate always provide an accurate sense of how the labour market is performing? Explain.

Show the classical/standard view of minimum wage graphically. Please explain what the graph is showing.

Graph the exploitation (i.e. new; monopsonistic) view of minimum wage and explain what graph means and shows.

Discuss the types of harmful impact that marketing practices can have on competition.

The Coase Theorem argues that:

15. Consider an orange island economy that consists of only two companies: an orange company that produces oranges and an orange juice company that purchases oranges from the orange company to produce orange juice. Their income statements in 2015 are as follows:

Orange Company:

   Wages paid to employees                           $15,000

   Taxes paid to government                          $ 5,000

Sales revenue:

             Oranges sold to public                        $10,000

             Oranges sold to Juice Corp.                $25,000

Orange Juice Company:

   Wages paid to employees                           $10,000

   Taxes paid to government                          $ 2,000

   Juice boxes imported from China               $ 1,000

   Oranges purchased from orange corp.        $25,000

   Sales revenue                                              $40,000

1. Please calculate the 2015 GDP of this economy using Product approach, income approach and expenditure approach.
2. Suppose that, in addition to above transactions, the juice company imported juice boxes from China for $1000. Again, calculate the 2015 GDP of this economy using Product approach, income approach and expenditure approach.

Consider an industry with inverse demand P = 32 − 4Q. The industry has an incumbent firm (i) and a potential entrant (e). Each firm has a marginal cost of 0. The entrant pays a fixed cost of 9 only if it enters the industry. Assume it enters the industry only if its profits are greater than 0.

(a) What is the incumbent’s output as a monopoly without threat of entry?

(b) What is the incumbent’s output and profit with competition from the entrant assuming the incumbent moves first and the firms compete a la Stackelberg?

(c) What quantity must the incumbent produce to deter entry? (Hint: you must find the entrant’s profit for any value of qi .) Does the incumbent accommodate, deter, or blockade entry? Show your work and explain briefly.

If someone argues that a strong dollar is "good for UAE" because UAE residents are able to exchange some of their GDP for greater amount of foreign GDP, is it true that a strong dollar is good for every UAE resident? why? (answer in terms of importer and exporter perspective).