1. How does a decrease in expected profit affect the demand for loanable funds (investment demand)? Which way does the curve shift?

2. Explain how a government budget deficit might crowd out private investment.

3. What is the effect on real GDP per person if labor productivity increases? If the population increases? What is the effect on the nation's standard of living in each case?

4. What does the new growth theory predict about future economic growth? Why?

1. We discussed in the lecture that the coronavirus is both an AS and AD shock. Based on the lecture, draw a graph showing both of the movements. You need a properly drawn graph as you did for homework 4.

Update for clarity: For this question, we’re only capturing the effect of the virus itself. Don’t assume there are any particular policies associated with these shocks. It’s probably easiest to think of the AS shock as the reduced labor force as people get sick, and the AD shock as a reduction in consumption.

2. Draw a graph of the AS/AD model if the government becomes concerned about the deficit and decides to cut government spending. You need a properly drawn graph as you did for homework 4.

Congress decides to increase government spending and taxes by equal amounts. Use the IS-LM AD-SRAS-LRAS model to illustrate graphically the short run impact of the increase in government spending and taxes on output and interest rates, prices, consumption, unemployment rate and investment in short run. Explain clearly which curve would shift and why. What will be the long run impact of this increase in government spending and taxes on output and interest rates, prices, consumption, unemployment rate and investment. Show the appropriate movement of curves both for the short run and the long run. Be sure to label: i. the axes; ii. the curves; iii. The initial equilibrium values; iv. The direction the curves shift; and v. the short run equilibrium values and vi. The long run equilibrium values.

If the controlling majority of a corporation's stockholders vote to re-invest profits in a way that benefits employees or society, rather than disbursing that money to the shareholders, should that action be allowed? If the majority stockholders are not benefiting in an unfair manner by this decision, why should the minority have the ability to overturn the majority vote?

Should corporate income be double-taxed? Why or why not?

Should corporations enjoy the same freedom of speech rights that natural persons enjoy? Why or why not?

Discuss in depth the wider possibilities for deposit-refund policies to mitigate industrial emissions.

Discuss in depth the challenges to preserving either individual species or genetic diversity contained in related species.

What are your thoughts on the Green Paradox?

if this analysis is correct,namely that a reduction in wages will reduce the aggregate demand for goods, what assumption must we make about the relative proportions of wages and profits that are spent( given that a reduction in real wage rates will lead to a corresponding increase in rates of profit)? Is this a realistic assumption?

Q2. The new global economy has its supporters, but also its detractors.

a. Explain the most important benefits and pitfalls.

b. Analyze the government regulations for trade liberalization of international trade.

Q1. Some analysts believe globalization will put an end to longstanding national economic, political and cultural differences. Others disagree. Which side, if any.

Discuss if do you think is right, and why?

Assume the market for cigarettes is perfectly competitive. The demand and supply for cigarettes in Oakland is given by the following equations:

Where P represents the price of a carton of cigarettes and Q denotes the quantity of cartons of cigarettes. Use the above information to answer the following questions. Show your work for full credit.

a. Draw a graph of the market in equilibrium and solve for the equilibrium quantity and price. Identify on your graph and calculate the values of consumer, producer, and total surplus. Be sure to label your graph.

P* = _________ Q* = _________ CS = ___________ PS = ___________ TS = ___________

b. Suppose a panel of public health scientists from the Food and Drug Administration (FDA) determine that half a unit of air pollution is emitted for every carton of cigarettes that is smoked and that the external cost (that is the cost that people outside of the market bear) of one unit of pollution is $100. What is total external cost of the air pollution given the market equilibrium quantity of cigarettes exchanged in the unregulated market from part (a)? How does this alter your calculation of total surplus once the external cost is taken into account?

Total External Cost = ___________ TS given External Cost = ___________

c. Now consider a potential FDA regulation to address this air pollution that bans the production and sale of cigarettes. What is total surplus if this policy is imposed? Are the consumers or producers of cigarettes hurt the most by the ban? Support your answer with at most two sentences.

Total Surplus with the ban = ___________ Who is hurt most from the ban? ___________

d. Another potential FDA policy would be to place a lump sum tax the sale of cartons of cigarettes rather than ban cigarette sales as in part (c). The following equation gives the demand curve including the impact of the tax:

Draw a new graph that illustrates the impact of the tax and find the after-tax quantity and the prices paid by buyers and sellers. What is consumer surplus, producer surplus, tax revenue, DWL, and the external cost after the tax is imposed. From your analysis, can you determine who pays the tax directly to the government?

Pbuyer = _________ Pseller = _________ Qtax = _________ CS = _________ PS = _________ Tax Revenue = _________ DWL = _________ External Cost = _________ Who pays the tax to the government? _____________________________

e. Imagine you were the head of the FDA and you must decide whether the FDA should intervene in this market and, if so, in which way to intervene. Would you intervene and, if so, which of the above policies would you choose (the ban or the tax)? Support your answer with no more than two sentences.

8. Chapter 8) Suppose country A pegs its currency to country B (i.e., country B is the center country). Suppose country A is in recession. To help country A, what does the country B’s Central Bank can do? As a result, what happens to IS and LM curves in both countries? (Use graphs to explain)

(a) Consider a one input production technology utilizing labor that is represented by the function, x = Aln(L) with A>0. Is

the producer’s choice set convex? Show your working.

(b) Find the total cost function associated with this production technology.

Note: Show all necessary working and steps so that understanding the solution is easy.