Bond dealers buy and sell bonds at very low spreads (A spread is the difference between the price someone is willing to pay for a good and the price they are willing to sell the good). Used car dealers buy and sell cars at very wide spreads. Recall that the strong form implies prices incorporate private information. What are the potential sources of private information in the bond market versus the used car market? How can these differences explain the differences in the width of the spreads in the two markets?

Suppose Amjad’s preferences for pants and shirts are represented by: U(x1,x2 )=x1^2 x2^3, and he faces a linear

budget constraint, 2x1+ x2=50. Given that the price of good 1 increases to 4, what are (1) the compensating and (2)

equivalent variations? You must set up the Lagrangian and derive the demand functions for this question. Be sure

to clearly identify which prices, old or new, are used to derive the values for EV vs. CV, and which utility, old or new,

is used to derive EV vs. CV.

Think about these three major ideas of the Enlightenment: 1) Political - Locke and Rousseau -Government by contract between the people and the rulers and popular sovereignty – i.e. inviolable constitutions are contracts and 2) Economic - Adam Smith – freedom to pursue individual economic self-interests benefits all of society – i.e. free-market capitalism.  3) Social - Jefferson - All people created equal and freedom is a natural right. Remember that these ideas (three key premises of 19^th century liberalism dating to the Enlightenment) share the stage with nationalism, imperialism, and industrialization.

Remember that LIBERALISM is the most direct descendant of the ideas of the Enlightenment.

Answer the following questions for the 1800s: (If you have examined and completed the notes, you will not have a problem answering these questions.)

Generally, considering the liberal reform efforts of 1) western Europe, 2) the US, 3) Canada, 4) Latin America, 5) the Ottoman Empire, 6) Russia, 7) China, 8) Japan, and 9) Africa, think about which nations/regions were able to implement real and long-lasting political, social, and economic reform during the1800s based on the ideas of Locke, Rousseau, and Smith as described above?

Answer the following:

1) Name one country/region (from the list above) that successfully established REAL and LASTING liberal reforms (not just on paper). ______________________ (Think results) 10pts.

2) In one sentence, provide one example OF THIS SUCCESS to justify your answer. Be specific. (They did good things for the people is not a specific answer..... Who did? What people? What good did they do politically, socially, or economically...?) 40pts.

3) Name one country/region (from the list above) that failed to implement REAL and LASTING liberal reforms. _______________________ (Think results) 10pts.

4) In one sentence, provide one example to justify your answer. Be specific. (It caused an economic or political crisis is not a specific answer..... What or who caused? What happen to the economy? What happened politically? Who suffered? ) 40pts.

Describe Keynes's policies to promote full employment and stability.

You have been asked to perform a stock valuation prior to the annual shareholders meeting next week. The two models you have selected to value the firm are the dividend discount model and the discounted cash flow model. Explain why the estimates from the two valuation methods differ. Address the assumptions implicit in the models themselves as well as those you made during the valuation process.

Modifying a product to increase its “value added” benefits customers and can also enhance supplier profits. For example, suppose an improved version of a product increases customer value added by $25 per unit. (In effect, the demand curve undergoes a parallel upward shift of $25.)a. If the redesign is expected to increase the item’s marginal cost by $30, should the company undertake it? b. Suppose instead that the redesign increases marginal cost by $15. Should the firm undertake it, and (if so) how should it vary its original output and price?

Suppose that you want to buy a bond with a face value of $10,000. The bond has annual coupon payments at a 20% interest on its face value each year. If you want a yield to maturity of 16%, what will be the maximum price of the bond? (Select the closest answer) (The bond matures in 10 years and the first payment will be received in one year.)

• A. $23589.1
• B. $11933.3
• C. $10946.7
• D. $12369.8

Share your thoughts and conclusions about entrepreneurs, profits, and the price system.

A television station is considering the sale of promotional DVDs. I can have the DVDs produced by one of two suppliers. Supplier A will charge the station a set-up fee of $1,200.00 plus $2.00 for each DVDs; supplier B has no set-up fee and will charge $4.00 per DVD. The station estimates its demand for the DVDs to be given by Q=1,600-20P, where P is the price in dollars and Q is the number of DVDs. (price equation is P=8-Q/200.)

a. Suppose the station plans to give away the video. How many DVDs should it order? From which supplier?

b. Suppose instead that the station seeks to maximize its profit from sales of the DVDs. What price should it charge? How many DVDs should it order from which supplier? (hint: Solve two separate problems, one with supplier A and one with supplier B, and then compare profits. In each case, apply the MR=MC rule.)

In Frederick Douglass's view, how were slaves, in their desires for freedom, closer to the founding ideals than the whites who celebrated the Fourth of July but preserved slavery?

1) Mundell – Fleming model and theory of optimum common currencies:
a) Assuming perfect capital mobility and flexible exchange rates, explain the impact on the Irish economy of a decrease in interest rates in the U.S. In your answer, clearly indicate the effect on income, rate of interest, balance of payments. (Show your answer with the help of an IS-LM-BP diagram and explain the mechanisms. Consider Ireland a small open economy with flexible exchange rates.
b) Are Monetary and Fiscal policies effective in the case of question (a)? Explain with graphs.
c) Discuss the notion of unholy trinity.

3) ________ is a particular problem in ________ , which contain a disproportionately large share of the world's wild species, but which are also under great pressure to pursue modern economic development. A. Habitat destruction; developed countries B. Habitat destruction; developing countries C. Biological uniformity; developed countries D. Biological uniformity; developing countries

1. A rise in the real rate of interest ________ the opportunity cost of holding an inventory of a given size, and therefore ________ desired investment expenditure.

Select one:

a. decreases; decreases

b. decreases; leaves unaffected

c. increases; decreases

d. decreases; increases

e. increases; increases

2. If nominal national income increased by 20% over a certain period of time while real national income increased by 10%, then

Select one:

a. everybody in the economy became worse off.

b. inflation has decreased during this time period.

c. the price level has increased by approximately 10%.

d. the price level has declined by about 10%.

e. the labour force increased by 10%.

3. Suppose drought destroys many millions of acres of valuable Canadian farmland. The effect on the Canadian economy would be

Select one:

a. no change in Canada's production possibilities boundary.

b. to move its production possibilities boundary outward.

c. to move it along its production possibilities boundary.

d. to move its production possibilities boundary inward.

e. to move it beyond its production possibilities boundary.

4. Consider a simple macro-model with demand-determined output. An exogenous increase in the domestic price level will ________ the real value of the private sector's wealth, which leads to ________ in autonomous consumption and thus ________ shift in the AE function.

Select one:

a. increase; an increase; an upward

b. increase; a decrease; a downward

c. increase; an increase; a downward

d. reduce; a decrease; a downward

e. reduce; an increase; an upward

5. A farmer raises free-range chickens, which he sells to a company for $1000. That company sells the processed chickens to a grocery store for $1600, which in turn produces roasted chickens which are sold to the public for $2400. Based on this information, the value of total output is equal to

Select one:

a. $4000

b. $2400

c. $1600

d. $5000

e. $1400

i need a 7 min persuasive speech about the effects of pollution today

In focus on interest rate risk, can you explain why banks offer higher interest rates on longer term CD's than they do on short term CD's?