If the economy starts at the natural rate of output, then in the short run a decrease in aggregate demand moves the economy to a lower level of output and, according to the Phillips curve, a higher level of unemployment as the inflation rate falls.

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True

False

In the long run, unemployment depends upon factors such as the nature of the job search process, the amount and duration of unemployment benefits and the power of unions and minimum wage laws that alter the amount of structural unemployment.

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True

False

According to the natural rate hypothesis (Friedman and Phelps), in the short run the economy will move to a point on the Phillips curve where the unemployment rate is lower if the inflation rate rises.

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True

False

Milton Friedman argued that the Fed's control over the money supply could be used to peg the level or growth rate of a real variable, but not the level or growth rate of a nominal variable.

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True

False

In the United States, the inflation rate has been consistently above 4 percent during the period from 2000 to 2015.

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True

False

To move to a point on the Phillips curve where inflation is lower, unemployment must rise and the unemployment rise could have been caused by the Fed decreasing the money supply.

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True

False

According to the natural rate hypothesis (Friedman and Phelps), policymakers face a long-run Philips curve that is vertical because the natural unemployment rate is independent of the inflation rate.

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True

False

The federal government could increase spending and decrease taxes to move to a point on the short-run Phillips curve where inflation is lower, but unemployment would rise.

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True

False

The short-run Phillips curve shows the combinations of unemployment and inflation that arise in the short run as short-run aggregate supply shifts the economy along the aggregate demand curve.

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True

False

In the mid and late 1990s, aggregate supply shifted to the right and the Phillips curve shifted to the left as inflation expectations changed to a lower rate.

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True

False

Chinese consumers are increasingly being influenced by video bloggers, columnists, and photobloggers on social media platforms including Instagram, WeChat and Weibo. Becky Li, with more than 7.5 million combined followers on WeChat and Weibo, is one of China’s top fashion bloggers in China. She is regarded as one of China’s influencers in the fashion world and offers good content of shopping and experience advice. Another well-respected Chinese fashion blogger Zhang Dayi has her own clothing and beauty brand which she sells on the Alibaba Group’s Taobao e-commerce platform. Zhang Dayi allows customers to post reviews of the fashion items it sells and customers can add each other as friends, share wish list items, and recommend products to each other. In this situation, consumers form a structured set of relationships involving a particular brand online – for Zhang Dayi’s online brand. These fashion influencers have become very successful because they help Chinese consumers to choose style for self-expression Adapted from source: https://www.scmp.com

Questions: a) Name and explain the source of social influence used to describe Becky Li and Zhang Dayi. Describe the characteristics of your identified source of social influence.

b) Give TWO reasons why the source of social influence identified in (a) can bring influences on consumers. Illustrate EACH reason with ONE supporting reference from the case.

c) Name the source of social influence used in the above case of which “consumers form a structured set of relationships involving a particular brand online – for Zhang Dayi’s online brand”. Discuss the characteristics of your identified source of social influence.

Suppose the Phillips curve is correct. If the government increases taxes, then aggregate demand decreases and unemployment falls in the short run

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True

False

According to the long-run Phillips curve, in the long run, unemployment depends upon factors such as fiscal and monetary policies that are designed to reduce cyclical unemployment.

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True

False

Proponents of rational expectations argued that if people expected a decrease in the money supply growth rate and inflation, then the decrease in the money growth would have little or no affect on output in the short-run.

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True

False

The long-run and short-run Phillips curves intersect where expected inflation intersects actual inflation.

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True

False

The short-run relationship between inflation and unemployment is often called the Phillips curve and it reflects a negative relationship between the two economic variables.

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True

False

If the Phillips curve is usually correct, then an increase in output and a corresponding decrease in unemployment would be unusual.

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True

False

The correlation between unemployment and inflation can be explained by upward pressure on wages and prices when unemployment is low.

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True

False

According to the natural rate hypothesis (Friedman and Phelps), in the long run, monetary growth did not influence those factors that determine the economy’s unemployment rate.

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True

False

A fiscal policy that reduces the amount of cyclical unemployment would affect the long run Phillips curve but not the short-run Phillips curve.

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True

False

Many economists during the 1960s believed the implications of the Phillips curve, which offered policymakers a menu of possible economic outcomes from which to choose and the choice for expansionary policy would lead to inflationary pressure but reduced unemployment.

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True

False

How can the government affect productivity?

Argue AND Defend

Censorship restrictions in other countries on such information technology as Google and other Web sites is justifiable; U.S. and other western nations should not try to impose their values and norms on censoring practices. Why or why not.

11)Answer based on the following: Interest rate on U.S. assets = 5%, interest rate on European assets = 12%, the spot rate of exchange = 0.90 Euros/$, the one year forward rate of exchange = 0.95 EUROS/$. The European citizen should hold which asset?

12)If real interest rates in Canada are above those in the Euro area,

13)If there is more demand for U.S. stocks relative to stocks issued elsewhere,

14)Horizontal FDI involves

15)Based on the offshoring articles that you read for this class

Graphically explained equilibrium unemployment and disequilibrium unemployment

- The write up shouldn't be more than two pages

f you were summarizing the history of the 18th century Atlantic world (i.e.: the century from 1700-1800) to a friend or family member, what would you highlight as being the 3 most critical events or developments of this era? As always, defend your choices with as much specific historical knowledge and analysis as possible.

The inverse market demand curve is P = 170 – 4Q. Two firms in this market are evenly splitting the output. Each firm produces the product at a constant marginal cost of $10. Which of the following statements is TRUE? I. If one firm produces 2 more units of output, its profits will rise to $864. II. If neither firm cheats, each firm will earn a profit of $800. III. If one firm produces 3 more units of output, the other firm's profits will fall to $680.

Exercise 1. Firm Supply in the Short Run

Consider a firm with the following production function: y=L^½K^½. The cost function is C=w∙L+r∙K.

1. In the short-run the input K is given at K=100. What is the short-run production function y(L)?

2. Let w=0.1 and r=1. What is the cost function C(y)? Using the expression y(L) you found in part a, transform it into L(y) and plug it into the cost function C(L) to get C(y). Was a minimization necessary? Why or why not?

3. Given C(y) you find in part b, find AC(y) and MC(y). What is the firm’s short-run supply function S(p)?

4. At what level of y is the average cost minimized?

5. When the market price is p=0.2, how much does the firm supply? Find S(0.2). What is the firm’s profit? What is the firm’s producer surplus? How many workers does the firm employ? Find L.

6. When the market price is p=0.1, how much does the firm supply? Find S(0.1). What is the firm’s profit? What is the firm’s producer surplus? How many workers does the firm emply? Find L.

7. When the market price is p=0.3, how much does the firm supply? Find S(0.1). What is the firm’s profit? What is the firm’s producer surplus? How many workers does the firm emply? Find L.