3. Discuss international capital movements. In particular:

1. State the difference between portfolio investments and direct investments.
2. List the main determinants of both types of capital movements.
3. Argue about the role of risk diversification in explaining “two-way” capital flows.

1. Suppose that Nation 1 can import good X from Nation 2 at a price P₁=1.20 or from Nation 3 at a price P₂=1.50. If the domestic demand and supply curves are given by the following equations:

Demand: P=80-2Q            Supply: P=5+3Q

1. Under free trade, how many units of good X are consumed? How many units of good X are produced domestically? How many units of good X are imported? From which Nation?
2. If a 30% import tariff is imposed, how many units of good X are consumed? How many units of good X are produced domestically? How many units of good X are imported? From which Nation?

Now, suppose that Nation 1 agrees about a custom union with Nation 3 only (that is, trade is free between Nation 1 and Nation 3, while a 30% import tariff is still in place between Nation 1 and Nation 2).

3. How many units of good X are consumed? How many units of good X are produced domestically? How many units of good X are imported? From which Nation?
4. What is the welfare change due to the custom union?

We discussed four types of market failures in class. List two types of market failures, give an example of market or type of product for which this failure is likely to exist, give an example of a solution, and state whether it is an incentive compatible approach or a command-and-control approach.

What strategies should social media companies (Twitter, Instagram,facebook) take when approaching sport and sport marketing? What will drive users, ad sales, and revenue? Why?

(a) If your utility is represented by u(x; y) = min(x+2y; 2x+y);what
do your indi¤erence curves look like?
(b) Given your answer in (a), obtain the MRS (marginal rates of sub-
stitution).
(c) Suppose the prices of x and y are px = $3 and px = $1 and you
have 100 dollars. What would you choose?
(d) If px decreases to $1; what would you choose?
(e) Use the Slutsky decomposition to decompose the total price e¤ect
into the substitution e¤ect and income e¤ect when px decreases
from $3 to $1:

To test the effectiveness of a job training program on the subsequent wages of workers, suppose
we estimate the following model using individual level data:

log(wage_i) =b₀ + b₁train_i+ b₂ educ_i + b₃ exper_i + b₄ part-time_i + u_i (3)
where train=1 if a worker participated in the program and =0 otherwise, educ=the years of
education a worker has, exper=the number of years of work experience the worker has, and parttime=
1 if the worker held a part-time job(<30hrs/week) and zero otherwise. The error term, u,
contains unobserved worker ability (or motivation or enthusiasm).

a) If less able workers have a greater chance of being selected for (and participate in) the program,
and you use an OLS analysis, what can you say about the likely bias in the OLS estimator of b₁?
Explain/show how you arrived at this expectation of the bias. [3]

How long do you think it will take for U.S. gasoline demand to shed the influence of COVID-19? Explain.

Suppose the U.S. is considering raising the tariff on Chinese steel. The steel industry is the primary employer in the state of New Colombia. If a Senator from New Colombia votes to impose the tariff, does public interest theory or public choice theory better explain this behavior?

1. How many total local governments does Texas have: A. 254 B. 900 C. 1200 D. 5,147

2. In the American federal system, states possess police powers, the authority to regulate: A. International trade B. Currency C. Immigration D. Health, safety, and morals

3. Constitutionally, municipalities and local governments are: A. creatures of the nation B. Creatures of the state C. Independently sovereign entities D. Confederal

4. Which of the following words describes the relationship between state and local governments? A. Unitary B. Federal C. Dual D. Independent

5. The HCC system is an example of a: A. Multi purpose governing unit B. Independently sovereign entity C. Limited purpose governing district D. General law municipality

6. Which of the following does your textbook argues is the most visible example of a general purpose government? A. Cities B. Independent school districts C. Emergency services districts

D. The port of Houston authority

7. The process for establishing a city is called: A. establishment B. Ordination C. Incorporation D. Settlement

8. The purpose behind having a city manager is to ____ the running of city government. A. Politicize B. Bureaucratize C. Professionalize D. Stabilize

9. What powers does a strong mayor have that a weak mayor lack? A. Can appoint an remove heads of departments B. Has control over budget formation and execution C. Can veto actions of the city council D. All of the above

10. Why are turnout races in local elections so low? A. They tend to be held in odd numbered years B. They are often held in May C. They are often uncontested D. All of the above

11. All but Which of the following is a service provided by local governments. A. Water supply B. Sewage disposal C. Highway construction D. Building code enforcement

12. What percentage of Texans live in the 10 largest counties? A. 15% B. 27% C. 43% D. 59%

13. What percentage of Americans contribute to a political candidate or party? A. 16% B. 26% C. 36% D. 46%

14. According to your textbook, which of the following is the most common type of activist? A. Campaigners B. Complete activists C. Inactives D. Communalists

15. Which of the following criteria does the US Constitution does prohibit states from using in denying the right to vote? A. Failure to pay a poll tax B. Failure to register to vote C. Race D.gender

16. Texans must register to vote: A. At least 30 days prior to an election B. At least 15 days prior to an election C. The same day as the election D. Texas does not have voter registration requirements

17. Which of the following is not a reason why someone can be denied the right to vote in an election in Texas? A. They are not U.S citizens B. They have committed a felony C. They do not live in Texas D. They have been declared mentally incapacitated

18. Approximately what percentage of Texans vote in presidential elections? A. 30% B. 40% C. 50% D. 60%

19. Approximately what percentage of Texans vote in mid term elections? A. 30% B. 40% C. 50% D. 60%

20. Where does Texas rank in terms of voter turnout? A. At the top B. Above average C. Average D. Near, or at the bottom

21. The poll tax in Texas originally targeted A. Pollsters B. The wealthy C. Low income white farmers D. Women

22. Since 1972, Texas has had _____ registration A. Annual B. Bi annual C. Permanent D. No

23. The laws that regulate elections in Texas are contained in the A. United States Constitution B. United States Elections Code C. City Charters D. Texas election code

24. Which two parties have qualified as minor parties in recent elections? A. The Green and Libertarian Parties B. The Democratic and Republican Parties C. The Socialist and Communist Parties D. Trick question: there are no minor parties in Texas

25. A major party in Texas must select its nominees in a A. Party caucus B. Primary election C. Party convention D. Party lottery

26. The courts have ruled that parties are not _____ and their actions are subject to control by state law. A. Public organizations B. Private organizations C. Limited liability corporations D. Non-profits organizations

27. Who ultimately makes the decision to run for public office? A. Party leaders B. The governor C. The candidate D. The president

28. Primary elections are administered by A. The national party B. The local party C. The county government D. The municipality

29. By Texas law, special elections can be held in A. January B. May C. August D. All three months

30. What is the final process in amending the Texas Constitution? A. The signature of the governor B. The approval of the president C. A Majority of the Texas electorate D. Trick question: the Texas Constitution cannot be amended

31. Your textbook argues that 30 and 40 years ago, ______ were rarely a facet of state and national politics. A. Social issues. B. Economic issues C. Tariffs D. Foreign affairs

32. Texas campaigns until the 1920s focused on A. The Civil War B. International commerce C. Local affairs D. Relations with Mexico

33. Which of the following is a key factor in the increased costs of campaigns? A. Media advertisement B. Professional consultants C. Full time paid staff D. All of the above

34. Most of the money spent in political campaigns come from A. The national government B. Business PACs C. Small donations of less than $250 D. Labor unions

35. What is the limit on PAC contributions in statewide races in Texas? A. $500 B. $500 per candidate C. $5,000 per candidate, but they must be in the same party D. No limit

36. According to your textbook, a political party is an organization that acts as _____ between the people and government. A. An Intermediary B. A facilitator C. A filter D. An umpire

37. The principle goal of a political party is to A. Serve then interests of all the people B. Expand the electorate C. Make it easier for people to vote D. Have it’s members elected to office

38. What factors, according to your textbook, have been central in the development of political parties in this country. A. They are expedient and useful B. They are mandated in the US and Texas Constitutions C. They are the only political organizations allowed by law D. Membership in political parties is a requirement in order to vote in elections

39. The divisions between the first two major parties in the US centered on all but which of the following issues? A. Slavery B. The proper role of the federal government with the states C. Financial policy D. Foreign affairs

40. According to your textbook, parties in the United States consist of coalitions of A. State parties B. Business groups C. Local party machines D. Elites

41.Most candidates within parties _____ to run for office A. Are recruited B. Self select C. Are required D. Re chosen by a lottery

42. Politics was primarily _____ from the 1790s to the 1970s. A. Capital intensive B. Ideological C. Labor intensive D. Media driven

43. In party machines, candidates for office were selected by A. The governor B. The president C. Candidates themselves D. Party leaders

44. Which of the following people, according to your textbook, was a “kingmaker” in Texas politics from the 1890s until the early 20th Century? A. Colonel Edward House B. Sam Houston C. Jesse Jones D. Lyndon Johnson

45. During the 19th Century, when Local and state parties were powerful, their power rested at least partially on A. Their control over campaign funding B. Their control over the distribution of government jobs and contracts C. Their ability to print ballots D. All of the above

46. Among the factors that have weakened parties in the 20th century are A. Candidates selecting themselves to run for office B. Candidates running their own campaigns C. The rise of PACs D. All of the above

47. All but which of the following is an example of capital intensive politics. A. Online advertising B. Polling and survey research C. Television advertising D. Political rallies

48. All but which of the following weakened the power of parties during the progressive era. A. The use of the anonymous ballot B. The rise of the civil service system C. The use of the primary election to determine party candidates D. The creation of cities

49. Your textbook suggests that the United States has a A. 2 party national system B. 50 state party system C. 2 party state system D. 1 party national system

50. In Texas, the _____ dominated state politics for roughly 100 years following Reconstruction. A. Populist Party B. Republican Party C. Democratic Party D. Peoples’ Party