1. Assuming an economy is operating in a recession, discuss the benefits and costs of fiscal policy, monetary policy, and a do-nothing approach assuming flexible exchange rates and mobile capital.

2. Again, assuming an economy is operating in a recession and the government wants to conduct an expansionary policy, but does not want to change interest rates or incur any more fiscal debt, discuss what policies are available to the government?

Assume that a consumer lives for T periods, and in each future period, one of the s states may be realized. There are complete markets. Let the utility function of the agent be
U = u(c1) +
T X t=2X s∈S
βt−1πt,su(ct,s)
where the notation is the same as that used in class, with pt,s, denoting the price of Arrow-Debreu security paying off at state s on date t.
a. What do complete markets mean in this context? b. Write down the period and intertemporal budget constraints. Explain the saving/borrowing mechanism in this framework. c. Write down the Lagrangian equation and find the first order conditions. d. Write down the price of the Arrow-Debreu security that pays of in date 4, state 7. e. Assume that the agent has linear utility. How would it effect the price of Arrow-Debreu security?

What are the differences between horizontal and vertical acquisition? Between a joint venture and a strategic alliance? Between product development and innovation?

Prior to the 1980 presidential election, Candidate Reagan emphasized a supply-side approach to dealing with the inflationary problem. Using the AD-SRAS-LRAS, show and explain how a supply-side approach to lowering inflation (putting downward pressure on the price level or P) was supposed to operate.

1. Why do you think Edward Snowden made the decision to come forward? What was his motivation? Was he compelled to blow the whistle on the surveillance program or should he have looked the other way? How would you have reacted if you had discovered the extent of the Prism surveillance program?

What is the difference between primary markets and secondary markets?Explain

What is the difference between money markets and capital markets?Explain

What are three (3) of the seven (7) types of financial institutions? Include a description of the main services offered by each. Explain

Why would the U.S. government, local governments, and corporations issue bonds? Explain

Provide the definitions of a discount bond and a premium bond. Give examples.

As owners, what rights and advantages do shareholders obtain? Explain

Why might the Standard & Poor's 500 Index be a better measure of stock market performance than the Dow Jones Industrial Average?Why is the DJIA more popular than the S&P 500? Explain

What are the differences between common stock and preferred stock? Explain

Pandemic is an outbreak of a disease prevalent over a country or the world. If left unchecked, the number of infected population C is growing at an exponential rate and can be modeled as a function of time T as C=2?, where T is measured in days. 1) What is the infected population after ten days if the pandemic is left unchecked? After 20 days? 2) If left uncheck, how many days will it take for the pandemic to infect the whole world 7 billion? 3) Refer to the websites and compare the model forecast with real world data. Does this model predict well the trend of infected population (confirmed cases) during the COVID-19 outbreak? 4） Based on this exponential growth model, what factors are missing in predicting the trends in different countries or regions? Do all countries follow the same trend? Explain. 5) According the official data, both total COVID-19 confirmed cases and total deaths double every seven days. What is the average daily growth rate and death rate of the pandemic in the world? 6) To slow down the pandemic, the most effective way in the short run is to quarantine and testing, which must be enforced by the public policy. What are the economic benefits and costs of these measures to individual and to other social members? How to measure these benefits and costs? 7) To eradicate the most lethal virus in human history, the most effective way in the long run is to vaccine. What are the economic benefits and costs of vaccination to individual and to other social members? Will you expect a worldwide COVID vaccination? Explain.

____   73.   If a nation imposes a tariff on imports,

____   74.   Exchange rates determined by the forces of demand and supply are called

____   75.   Who among the following is most likely to favor an appreciation of the U.S. dollar?

____   76.   If the United States experiences an economic boom, compared to other countries, how will this affect the value of the U.S. dollar?

____   77.   If a country is in a strong upward phase of the business cycle, one can expect that its currency will

____   78.   The exchange rate of Country X is set by government decisions and maintained by government actions. Country X follows a

____   79.   An important effect of foreign currency speculators is that

____   80.   For a major country with extensive capital flows, what is the effect of an increase in interest rates?

Consider a community with ten persons.

a. Plot the Lorenz curve for the income distribution (2,2,4,6,8,20,30,40,60,100)

b. Consider an income redistribution that takes 20% of income from each of the three richest individuals and distribute equally to individuals that have an income below the poverty line(9). Plot the Lorenz curve again to demonstrate that inequality has decreased.

c) Show on the same diagram the Lorenz curve for the income distribution (8,18,20,22,26,28,30,32,40,48)

Two laser machines (A & B) used in eye’s surgeries are being compared to choose one of them for a medical center specialized in eye’s treatments. The price of machine A is 1,200,000 Dhs and requires an annual maintenance of 100,000 Dhs, while the price of machine B is 1,000,000 Dhs and requires an annual maintenance of 120,000 Dhs. The expected life time for both machines is 8 years after which the two machines salvage values will be 150,000 Dhs for machine A and 125,000 Dhs for machine B. The MARR decided by the medical center administration is 9% per year.

Perform a future worth analysis to decide which machine is better to be bought by the medical center.

The UAE government is going to build a bridge between two of its islands in the Arabian Gulf Sea to allow the residences of these two islands to communicate with each other’s and with the rest of the country. The government will sign a long time contract with the biggest international company in this field to be responsible for this project.

The government will pay an initial cost of 100,000,000 Dhs, a major re-design to fix any bugs in the initial design after 10 years of 35,000,000 Dhs, a major maintenance every 15 years of 15,000,000 Dhs, an annual maintenance of 6,000,000 Dhs for the first 6 years, and then an annual maintenance of 11,000,000 Dhs after that. The annual interest rate for this project is 8%.

1. Draw an LCM cash flow diagram for the first two cycles of the project from the government’s point of view.

2. If this project lasts for indefinite time then find the approximate equivalent value now.