2.

a. Does the US Fed follow inflation targeting?

b. What are the US Fed’s monetary policy objectives?

c. What are the tools of US monetary policy?

d. Explain how those tools impact on interest rates and money supply.

3.

a. What are the tools of Fiscal Policy?

b. Explain how government expenditure crowds out private investment.

c. Explain various components of government expenditure, and challenges the government faces to meet those expenditure each year.

Assume that the consumption function is given by C = 200 + 0, 75(Y − T). Investment is 100; government purchases and taxes are both 100.

(a) This economy has TODAY a GDP of 1700, is this an equilibrium level of GDP? (HINT: Find the AS the AD and compare them).

(b) Will the GDP NEXT WEEK increase or decrease? (HINT: looking to your previous answer see if AS is lower or higher than AD, then think what will happen to production in order to bring the economy back to equilibrium)

(c) What is the equilibrium level of income (GDP)? ii) Describe the process that brings the economy back to equilibrium (using the MAGIC of words)

(d) If government purchases increase to 125, what is the new equilibrium income? (for a fast answer: use the multiplier!). (e) What level of government purchases is needed to achieve an income of 1,600? (again, use the multiplier!)

Find the most recent summary of the survey of economic forecasters in the Wall Street Journal (April 2020). What are the predictions for changes in real GDP and its major components, inflation, and unemployment? Describe the degree of consensus among the various forecasters.

Describe Canada's political climate

Respond to the following prompt: Describe a time at work or school when you have had to interact with a "difficult" person. How did you deal with it?

Rosa, who has a 10% chance of getting sick in the next year. If she gets sick, her medical bills will amount to $1900. She has a wealth of $10,000. Suppose she has the utility function ?(?) = √ ?, where x is her net wealth at the end of the year.

6. Calculate Rosa’s risk premium. (a) $5 (b) $7 (c) $9 (d) $11 (e) None of the above

7. What is the most that Rosa is willing to pay for an insurance policy that fully covers against her loss? (a) $99 (b) $199 (c) $299 (d) $399 (e) None of the above.

8. Some insurance policies have deductibles. A deductible is an amount of a claim not covered by insurance; it’s a fixed portion of the medical bills that the insured person must pay in order to make a claim to their insurer. Suppose Rosa’s insurance company provides two plans. Plan A has zero deductibles (good!) but charges a high premium (bad!). Specifically, Plan A charges $396 for $1900 of coverage. Plan B has a deductible of $392, but charges a premium of just $199. Will Rosa purchase insurance and, if so, which plan? (a) Rosa prefers do not purchase any insurance (b) Rosa prefers to purchase plan A (c) Rosa prefers to purchase plan B (d) Rosa is indifferent between all three options (e) None of the above

Can you explain and answer part e and part f please? I already understand parts c and d

Firm 1 and Firm 2 are functioning in a market as competitors. The inverse market demand for chicken is given by P (Y ) = 100 − 2Y , and the total cost function for any firm in the industry if given by TC(y) = 4y.

(c) Suppose that two Cournot firms operated in the market and the reaction firm for Firm 1 is y1 = 24−y2/2 and Firm 2 is y1 = 24−y1/2. If they are operating at the Cournot equilibrium point, what would be the industry output?

(d) Based on the information in part (c), how much would each firm produce and what would be the market price?

(e) For the Cournot case, draw the two reaction curves and indicate the equilibrium point on the graph. Explain the reaction of each firm.
(f) Suppose one firm acts as a Stackleberg leader and the other firm behaves as a follower, how much would the leader and follower produce?

Brumeister Industries needed steel pipe to build furnaces for a customer. Brumeister sent Greene Steel an order for a certain quantity of “A 106 Grade B” steel. Greene confirmed the order and created a contract by sending an invoice to Brumeister, stating that it would send “A 106 Grade B” steel, as ordered. Greene delivered the steel and Brumeister built the furnaces, but they leaked badly and required rebuilding. Tests demonstrated that the steel was not, in fact, “A 106 Grade B,” but an inferior steel. Brumeister sued. Who wins?

T/F

5. Based on a paper in the American Economic Review (Papers and Proceedings), excluding the Great Depression, most experiences with deflation did not result in depression.

6. Woods argues that increasing consumption does not drive wealth creation.

7. The problem with bankruptcy is that we lose these assets and the production they used to generate.

Give a simple and brief proof that a utility-maximizing consumer would exchange the two commodities up to the point where the relative ratio of marginal utility between the two commodities exactly equals their relative price ratio. What is General Equilibrium? Explain how Walras set up the general equilibrium model. What difficulties did Walras have in order to demonstrate that market forces could automatically correct disequilibrium? (Relate it to Jehovan's demonstration in the History of Economic Though)

Explain the neoclassical theoretical argument that competitive capitalism should automatically self-adjust to achieve full employment equilibrium. During the Great Depression, real wage did not increase. Why was this economic fact in contradiction with the neoclassical (and Keynes’s) theory of employment? How was Keynes’s theory of interest rate and saving different from the neoclassical one? Why did Keynes believe that there were situations where monetary policy would be ineffective to bring the economy out of depression?

Problem 4

Consider the following economy:

(e) Calculate the marginal leakage rate.  (0.5 mark)

(f) Assume that the natural rate of output for this economy is estimated as $1,200,000 million.

(i) Is this economy facing a recessionary or inflationary gap?  (0.5 mark)

(ii) Illustrate the gap you identified in part (i) above using both the AS-AD Model and the Aggregate Expenditure Model.  (1 mark)

(iii) Calculate the output ratio for this economy (0.5 mark)

(iv) If the government wishes to move the economy to its natural rate, will it need to increase or decrease spending? Calculate by how much it will need to change its spending.  (1 mark)

(v) Consider the policy action undertaken in part (iv) above and illustrate the impact on the money market.  (1 mark)

(vi) Given the impact on the money market determined in part (v) above, explain how this could affect the exchange rate market.  (1.5 marks)

(vii) Explain the policy action the government could undertake if it decides that it wants to move the economy to its natural rate but doesn’t want the action to affect its budget position.  

1) What is good about rent control

2) What is bad about Rent Control

3) Who is Richard Thaler

https://youtu.be/bERm-50CApk

https://youtu.be/BWUtLSfb9zs

A proposal is made to ban the use of a particular type of gear by vessels engaged in a certain saltwater fishery. indicate conceptually how costs would be measured in this case. how might the necessary data be obtained?