The market for kerosene in the U.S. and Europe began to weaken, beginning around 1900, primarily because of a prolonged economic depression.

In a paper appearing in the National Tax Journal, titled “The cost of complexity in federal student aid: Lessons from optimal tax theory and behavioral economics”, Susan Dynarski and Judith Scott-Clayton examine the current federal methodology for determining eligibility for financial aid. At the time they wrote, it was true that “The FAFSA, at five pages and 128 questions, is lengthier than Form 1040EZ and Form 1040A. It is comparable to Form 1040 (two pages, with 118 questions).” Why might the complexity of the FAFSA reduce efficiency in the distribution of financial AID?  

In the real business cycle model, suppose that firms become infected with pessimism (for example, due to COVID-19 outbreak) and they expect that total factor productivity will be much lower in the future.

a. Determine the equilibrium effects of this.
b. If waves of optimism and pessimism of this sort cause GDP to fluctuate, does the model explain the key business cycle facts?
c. Suppose that the monetary authority wants to stabilize the price level in the face of a wave of pessimism. Determine what it should do, and explain.

(History of Economic Thought) Question.

Even though he considered the analyses of some classical economists to be vulgar, Marx valued highly the contributions of economists like Smith and Ricardo, and considered them to be true scientists. In what sense did Marx consider their efforts in economics to be ‘scientific’?

Questions ( 1 ) To use Aggregate Supplier & Aggregate Demand framework in order to explain how an expansionary monetary policy and expansionary fiscal policy can increase the national income (fight recession)?

Subject ::COVID-19 counter: UAE businesses are out to save their cash

By allowing businesses to save on costs, the UAE government has managed to ease short-term concerns. But businesses will need all they cash they can save or loan to get through the difficult months.

Dubai: Preserve cash at all costs – that’s the only priority for UAE businesses as they wait for commercial activity to resume. Even sending their staff on paid annual leaves is a way of cost saving for them.

“More businesses are “forcing” their staff to use up all their accumulated leave rather than allow any encashment,” said an HR consultant advising two of the leading corporate houses in Dubai. “So far, few businesses have taken the real hard decisions of massive layoffs or asking them to go in for extended pay cuts.

“But that will come... soon.”

On Monday, the corporate sector was shaken up by a memo reportedly signed by Emaar’s Mohammed Alabbar that talked about voluntary pay cuts for everyone from the chairman – Alabbar – right down to the support staff. The cuts were 100 per cent for Alabbar and up to 30 per cent for Grade 3 staffers. The cuts came into effect from April 1.

Emaar has so far not officially confirmed whether the circulated memo states the actual case, and if yes, how long the cuts will be in effect. “It’s likely that the cuts will only be for a set period of two to three months,” said a consultant.

Suppose a company invests in technological innovation and, therefore, has lower capital
stocks in the current period. What are the effects on current aggregate output, consumption, investment, employment, real wage, real interest rate, nominal interest rate, and price level? Explain your results and show the graph.

(History of Economic Thought) Question.

Why is division of labor so important for Adam Smith? Make sure that you also observe the connections Smith made between the ‘division of labor’ and the ‘market size’ on one hand, and the effects of this division on the ‘health of the worker’ on the other.

Explain the meaning of monetary neutrality and illustrate graphically that there is monetary neutrality in the long run in the aggregate demand–aggregate supply model. Be sure to label:

i. the axes

ii. the curves

iii. the initial equilibrium values

iv. the direction to which the curves shift

v. the short-run equilibrium values

vi. the long-run equilibrium values.

Explain in words what your graph illustrates.

A consulting engineering firm’s CFO wants to purchase either Ford Explorers or Toyota 4Runners for company principals. The two models under consideration cost $30,900 for the Ford and $36,400 for the Toyota. When considering life-cycle costs, the AOC of the Explorer is expected to be $600 per year more than that of the 4Runner. The trade-in values after 3 years are estimated to be 50% of the first cost for the Explorer and 60% for the 4Runner. (a) What is the incremental ROR between the two vehicles? (b) Provided the firm’s MARR is 18% per year, which vehicle should it buy? using spreadsheet

Consider the industry in which you are working. (If you are not currently working consider the industry where you worked before returning to school, instead. Or if you never worked before, pick an industry of interest to you.) What were the key forces shaping the nature of competition and the opportunities for making profit in that industry? What, if anything, did firms do to insulate themselves from these forces?

Continuing with the industry you picked above, what were substitutes and complements? How did they impact profits?

Continuing with the industry you picked above, how did supplier power impact profits? What did firms do to insulate from the supplier power, if any?

Q- Grexit or Not?

When the euro was introduced in 1999, Greece was conspicuously absent from the list of the EU member countries adopting the common currency. The country was not ready. In a few short years, however, European leaders, probably motivated by their political agenda, allowed Greece to join the euro club in 2001 although it was not entirely clear if the country satisfied the entry conditions. In any case, joining the euro club allowed the Greek government, households, and firms to gain easy access to plentiful funds at historically low interest rates, ushering in a period of robust credit growth. For a while, Greeks enjoyed what seemed to be the fruits of becoming a full-fledged member of Europe. In December 2009, however, the new Greek government revealed that the government budget deficit would be 12.7 percent for 2009, not 3.7 percent as previously announced by the outgoing government, far exceeding the EU’s convergence guideline of keeping the budget deficit below 3.0 percent of the GDP. As the true picture of the government finance became known, the prices of Greek government bonds began to fall sharply, prompting panic selling among international investors, threatening the sovereign defaults.

Several years into the crisis, the Greek government debt stands at around 180 percent of GDP and the jobless rate among youth is above 50 percent. The country’s GDP declined by about 25 percent. Severe austerity measures, such as sharply raised taxes and much reduced pension benefits, were imposed on Greece as conditions for the bail- outs arranged by the EU, IMF, and the European Central Bank. In addition, people were allowed to have only restricted access to their bank deposits, to prevent bank runs. Opinion polls indicate that the majority of people in Germany, the main creditor nation for Greece, prefer the Greek exit from the euro zone, popularly called Grexit, while some people in Greece are demanding Grexit themselves and restoration of the national currency, the drachma.

Discuss the following points: COULD YOU EXPLAIN IT

Comment

1. What were the socioeconomic issues that caused the economic crisis in Greece in 2010?
2. Through the 2010 crisis, what do you think were the costs and benefits of staying in the euro zone for Greece?
3. What would be the measures that need to be taken to keep Greece in the euro zone in the long run?
4. Would you advise Grexit or not? Why or why not?

The marginal value and average expenditure curves for a market are given by: MV = 90 - 1.5Q AE = .75Q a) Find the equilibrium price and quantity if the market is perfectly competitive. b) Find the equilibrium price and quantity if the market has a Monopsony. c) Find the difference in total surplus between the perfect competition case and the Monopsony case. d) Suppose that the monopsony was publically owned and returns all profits to the public, is the market still inefficient?