SOCIAL SECURITY OLD AGE INSURANCE IS THE TOPIC

These are the topics to include:

• Part 1: Use positive economics* to analyze the current situation.

• Part 2: Use normative economics** to analyze the current situation. Do you believe the current situation comes down too much on the side of equity or efficiency? Explain.

• Part 3: Come up with a plan for how you believe the situation could be improved. In this section, you will need to come up with at least one (1) specific policy that the government could implement and how you believe this policy will change the situation both domestically and potentially globally.
  *Positive economics is an analysis of facts; what is.

**Normative economics uses economics to make value judgments about the situation.

If you were the Economic Advisor to the President what would be your recommendation on nation's both domestic and international economic policy. Make sure you make economic nor emotional arguments regarding economic policy.

• You have to read and gather information concerning economic developments and economic trends, both current and prospective. Then analyze and interpret current economic developments, review programs and activities of the Government.
• You can provide recommendations for national economic policy to promote employment, production, and purchasing power under free competitive enterprise.
• Discuss if such developments and trends are good for economy or not and how can country achieve better if you suggest any new policy.
• Discuss if national economic policies to foster and promote free competitive enterprise, avoid economic fluctuations, increase employment, production, and purchasing power;
• Discuss how to develop the US economy. You can discuss on the following points but not limited to- Booming Stock market, corporate investments and wealth creation; Job or employment opportunities for better futures; Needed tax cuts and reforms; Stronger businesses in different industry, startups, small business, Education

1A.

The IS curve is downward sloping for which of the following reasons?

1B. In Keynes' liquidity theory of the interest rate wealth is considered fixed and individuals choose a portfolio of which of the following two assets

1C. For Keynes swings in investor expectations could be wild, erratic and characterized by herd behavior. Keynes called these investor sentiments?

1D.

The figure depicts the effect of a decline in the real interest rate on investment. What could move the market to a point located at r1 and I0 ?

1. A liquidity trap occurs at a very flat section of the LM curve. This can be cause by an extreme interest elasticity of money. Which of the following are associated with a liquidity trap?

1B. Which of following are determinants of money demand for the Keynesian model? (select all that apply)

1C. Keynes believed that the slope of the LM curve was rather     and that the slope of the IS was rather      . Thus fiscal policy would be an effective remedy for economic downturns.

According to the quantity theory of money, an increase in the money supply only raises the
price level in the long run. This is because

A. the long-run aggregate supply is unaffected by the money supply, while the aggregate
demand increases when the money supply increases.

B. the long-run aggregate supply is lower when the money supply increases, while the aggregate demand is unaffected by the money supply.

C. the short-run aggregate supply and the aggregate demand both increase.

D. the effects of an increase in the money supply on the long-run aggregate supply and on
the aggregate demand cancel out.

On April 9, Statistics Canada published Labour Force Statistics for March 2020. Between February and March, 2020, employment fell by 5.3% nationwide. Last year, instead, the change in employment between February and March 2019 was 0%.

Using the model discussed in the lecture notes on chapter 6, discuss the impacts that this change in employment will have on GDP, consumption, national saving, the trade balance and the real exchange rate.

Remember that Canada is a small open economy currently running a small trade deficit.

There is no need to upload graphs in this question, simply discuss the impacts in words.

Do you agree that the changes in the economy will have a long-term effect after the covid 19 pandemic?

What do you think life will look like in the Greater US in 2021 after COVID 19?

Discuss why it might be a good or bad idea for banks to hold 100% of their deposits? Also discuss what role is there for banks in a future world of cryptocurrencies like bitcoins.

How would each of the following impact the real wages and the number of unskilled workers on an automobile plant assembly line?

1. New technology increases worker productivity

2.Demand for the type of car made by the plant decrease

3. The eligibility age for social security falls (think about how this would affect the supply of labor)

How has your life been reshaped by the pandemic and will this change your behavior in the future?

QUESTION 35

1. Ceteris paribus, a rise in the number of unskilled and relatively poor immigrants tends to

   		have no effect on income inequality.
   		reduce income inequality.
   		increase income inequality.
   		initially reduce income inequality, but then increase it because immigrants steal jobs from citizens.

2 points   

QUESTION 36

1. Which one of the following is not an accurate description of the activities in which labor unions engage?

   		Control competition among workers for jobs.
   		Encourage consumers to purchase union-made products exclusively.
   		Enforce seniority criteria when employers are contemplating layoffs.
   		Help workers compete against corporate employers.

2 points   

QUESTION 37

1. Consider the following simplified sequences of four exchanges in a production process for a bookcase. A logger sells a tree to a sawmill owner. The sawmill mills it and sells the boards to a woodworker. The woodworker makes a bookcase out of the boards, and sells it to a retailer. The retailer then sells you the bookcase. Do supply and demand dynamics play out that result in the price at which each of those transactions takes place?

   		No; subjective value only comes into play for the final good.
   		No; the objective costs of each of each step of the process are simply passed along to the next producer until theyâ re fully accounted for in the sale of the final good.
   		Yes; all costs are subjective, so each stage of the production process involves haggling and negotiation between buyers and sellers.
   		Yes; the sellers have all of the bargaining power at each stage of the production process, which is how all supply and demand dynamics play out in all markets.

2 points   

QUESTION 38

1. The 2011 Tuscaloosa-Birmingham tornado caused $2.4 billion-worth of damage. Suppose it produced exactly that amount of new expenditures on new construction and health care services for the victims in its aftermath. How would those new expenditures be counted in GDP figures?

   		They would be subtracted from the gross domestic product account.
   		They would be added to the gross domestic product account.
   		They would be added to the gross domestic product account and subtracted from the national income account.
   		They would impact GDP in none of the above ways.

2 points   

QUESTION 39

1. The systemic costs and burdens that inflation imposes upon a society are almost entirely the result of

   		government price controls.
   		inability to predict its rate and timing.
   		the fact that no one can ultimately gain from higher prices because everyone is a consumer.
   		the lag between the rise of prices and the subsequent rise of wages.

2 points   

QUESTION 40

1. When determining value added, national income accounting systematically ignores

   		accounting profits.
   		accounting losses.
   		the expected market value of unsold inventory.
   		economic profits.

2 points   

QUESTION 41

1. The defining characteristic of money is to

   		provide a store of value
   		serve as a unit of account
   		enable people to measure their own personal net worth
   		serve as a commonly accepted medium of exchange

2 points   

QUESTION 42

1. Money exists to solve what central economic problem?

   		High transaction costs associated with barter
   		You want what I have, but I don't want what you have
   		Lack of double coincidence/mutual reciprocity of wants
   		All of the above

2 points   

QUESTION 43

1. Goldsmiths issued paper receipts for customer deposits of metallic coins. These receipts were probably one of the earliest forms of

   		Federal Reserve notes.
   		seigniorage.
   		paper money.
   		traveler's checks.

What effect does deficit borrowing have on long term growth?

If the tax rate is 40 percent, compute the before-tax real interest rate and the after-tax real interest rate.

(answer in percentages. If whole percentages, do not need decimals. If have decimals, round to nearest hundredth of percent)

Show all steps clearly

assume multiplying percentages by $100

before-tax real interest rate = nominal interest rate - inflation rate

reduction in nominal interest = nominal interest rate multiplied by tax rate

after-tax nominal interest rate = nominal interest rate - reduction in nominal interest

after-tax real interest rate = after-tax nominal - inflation rate

a. The nominal interest rate is 10 percent and the inflation rate is five percent.

Find:

nominal interest rate

before-tax real interest rate

reduction in nominal interest rate

after-tax nominal interest rate

after-tax real interest rate

b. The nominal interest rate is six percent and the inflation rate is two percent.

Find:

nominal interest rate

before-tax real interest rate

reduction in nominal interest rate

after-tax nominal interest rate

after-tax real interest rate

c. The nominal interest rate is four percent and the inflation rate is one percent.

Find:

nominal interest rate

before-tax real interest rate

reduction in nominal interest rate

after-tax nominal interest rate

after-tax real interest rate

Suppose that two firms form an oligopoly in a market with the demand function P = 200 − 2Q, where the market output (Q) is the sum of the outputs of the two firms: Q = q₁ + q₂. Firm 1 has total fixed cost of TFC1 = 50 and total variable cost of TVC1 = 20q₁. Similarly, firm 1 has total fixed cost of TFC2 = 50 and total variable cost of TVC₂ = 20q₂. Assume that the features of the Cournot duopoly model (simultaneous move) apply.

Answer the following questions, and write your answers in the Answer Sheet.

• What is the profit function for each firm (Π1 and Π2, each should be a function of q1 and/or q2)?

• What is the profit-maximizing output of each firm (q1 and q2)?

• What is the resulting market output (Q)?

• What is the price (P) associated with that output?

• What is the profit of each firm (Π1 and Π2), based on their profit-maximizing choices?

• Note: the profit functions should be equations, but the other answers should be numbers.