b) Inflation in the country of Hypothetica is currently 5%, below the target range of its central bank.

(i).What does this tell you regarding Hypothetica’s likely output gap? Illustrate it using an AS-AD diagram, and briefly explain your diagram (draw)?

(ii) In this situation, what is the central bank likely to do with regard to monetary policy? Briefly explain your answer and state also what is likely to occur to the price level and output at the end of this process (draw and explain your diagram)?

(iii) What happens if the central bank does not intervene? Will the economy eventually return to long-run equilibrium (potential GDP)? Briefly explain your answer and state also what is likely to occur to the price level and output at the end of this process (draw a diagram, it helps you explain your answer)

According to Theodore Moran, when do the greatest spillovers on the local economy occur?

Select one:

a. When the state is responsible for regulating productive decisions

b. When there is an appropriate balance between multinational corporations and the state in productive decision-making

c. None of the choices given (above/below)

d. When the multinational corporation is free to make the productive decisions

e. When the UN is responsible for regulating productive decisions.

The five phases of emergency management are prevention, mitigation, preparedness, response, and recovery. Discuss how network technologies can be applied in each phase.

Are all corporations international? Take a stand on yes they are and defend your position

1. In the United States, the degree of labor market protection has decreased significantly since 1970’s. Explain the effects of this trend on economic growth in the medium-run and long-run perspective. What are the implications for income inequality in the United States?

                                                                      State and Local Government Expenditures

The city of San Alameda provides free health care services for the medically indigent (poor and uninsured). Suppose the city has $2 million to spend on these services and private goods. One unit of health care services (e.g. a physician office visit) costs $110. Thus, the budget equation for San Alameda for these two types of goods is:

$2 Million = $P + $110H,

where H is the units of indigent health care services provided, and P is total expenditure on private goods (P is measured in dollars because we assume each unit of P costs $1).

1. If the San Alameda spends equal amounts on indigent health care services and the private good, how many units of health care services are purchased by the city?

2. Suppose the city of San Alameda receives a 40-percent matching grant from the state for spending on indigent health services. Specifically, the state spends $0.40 on indigent health care services for every $1 spent by the city on these services.

2a) If, after receiving the grant, San Alameda spends $1 million on the private good, how many units of indigent health care services are purchased? (Round to nearest whole number)

2b) Under matching grant, how much of total indigent health care expenditures is paid by the state?

2c) What is the effective price of health care services for the city of San Alameda under the matching grant? (Enter a formula to calculate the effective price.. show work)

3. Suppose, instead of a matching grant, the state provided the city of San Alameda a block grant equal to what the state would have spent with the matching grant (2b. above). Suppose, also, San Alameda uses its budget plus the block grant to spend equal amounts on indigent health care services and the private good.

3a) How many units of indigent health care services are purchased by San Alameda?

4. Using relevant economic concepts, explain why a matching grant generally leads to more consumption of a public good than an unrestricted block grant.

QUESTION 14

1. Table 24-1
   
   The table below pertains to Pieway, an economy in which the typical consumer’s basket consists of 10 bushels of peaches and 15 bushels of pecans.
   

   Year	Price of Peaches	Price of Pecans
   2005	$11 per bushel	$6 per bushel
   2006	$9 per bushel	$10 per bushel

   
   
   Refer to Table 24-1. If 2006 is the base year, then the CPI for 2006 was

   	a.	100.
   	b.	83.3.
   	c.	120.
   	d.	240.

QUESTION 15

1. Table 24-1
   
   The table below pertains to Pieway, an economy in which the typical consumer’s basket consists of 10 bushels of peaches and 15 bushels of pecans.
   

   Year	Price of Peaches	Price of Pecans
   2005	$11 per bushel	$6 per bushel
   2006	$9 per bushel	$10 per bushel

   
   
   Refer to Table 24-1. If 2005 is the base year, then the inflation rate in 2006 was

   	a.	16.7 percent.
   	b.	40 percent.
   	c.	20 percent.
   	d.	44.1 percent.

QUESTION 16

1. Table 24-1
   
   The table below pertains to Pieway, an economy in which the typical consumer’s basket consists of 10 bushels of peaches and 15 bushels of pecans.
   

   Year	Price of Peaches	Price of Pecans
   2005	$11 per bushel	$6 per bushel
   2006	$9 per bushel	$10 per bushel

   
   
   Refer to Table 24-1. If 2006 is the base year, then the inflation rate in 2006 was

   	a.	44.1 percent.
   	b.	16.7 percent.
   	c.	40 percent.
   	d.	20 percent

QUESTION 18

1. The substitution bias in the consumer price index refers to the

   	a.	substitution by consumers toward a smaller number of high-quality goods and away from a larger number of low-quality goods.
   	b.	substitution by consumers toward new goods and away from old goods.
   	c.	substitution by consumers toward goods that have become relatively less expensive and away from goods that have become relatively more expensive.
   	d.	substitution of new prices for old prices in the CPI basket of goods and services from one year to the next.

Discuss some specific ways organizations can develop an innovative, entrepreneurial mindset in teams. What is the cost to an organization of implementing these approaches? How long do you think an organization should wait to see innovative results before abandoning these approaches?

What are 2 examples of non-tariff barriers that are considered to be the result of political policy and how can the WTO enforce regulations against non-tariff barriers?

For each condition listed below, indicate whether it will increase or decrease the likely success of a trade embargo. Briefly explain. (2 points each)

i. The group of countries imposing the embargo account for a small share of the targeted country’s trade.

ii. The targeted country is a major importer of goods from the imposing countries.

12. Suppose that a firm’s production function is given by Q = K0.75L0.25, the wage rate is w = $20 per unit of labor and the rental rate is r = $100 per unit of capital.

1. What is the marginal rate of technical substitution between labor and capital, ????'( (where labor is graphed on the x-axis and capital is on the y-axis)?

2. If the firm produces 1000 units of output by using 1000 units of labor and 1000 units of capital, how much is the firm spending in total? Is it minimizing its cost of producing 1000 units? If not, explain in general terms how the firm should adjust.

3. What is the cost-minimizing input combination for the firm to produce 1000 units? What is the cost of this input bundle? (Round your answer to two decimal places.)

4. Suppose the firm wants to produce 1000 units of output, and its capital level is fixed at K = 500 in the short run. How many units of L should the firm use? What is the firm’s total cost of producing the 1000 units of output?

1) The United States economy is growing at a faster rate than its trading partner United Kingdom. As a result, the rate of American inflation is increasing.

1A) Show and explain how the increase in inflation will affect the international value of the United States dollar and the value of the British pound. (Make sure you graph each, using the concepts of supply and demand and the cost of domestic goods in your explanation.)

1B) Explain how the changing value of the dollar will affect the United States' exports and imports. (Make sure you use the concepts of the cost of foreign and domestic goods in your explanation.)

2) The Federal Reserve decreases the money supply in the United States causing interest rates to increase.

2A) Explain how the change in interest rates will affect United States aggregate demand. (Make sure to include the determinant that causes the change in aggregate demand in your explanation.)

2B) Draw a correctly labeled graph of the foreign exchange market for the British pound, showing the effect of the increasing interest rate identified in the scenario on the value of the British pound relative to the U.S. dollar. (Make sure you use the concepts of supply and demand and financial capital in your explanation.)