IY1 Economics for Business Individual Course Work - Suggested Structure

1. INTRODUCTION:

Show an understanding of the requirements of the assignment by:

• Define Macroeconomics and identify the key macro-economic policy issues.
• State how government influences these policy issues specifically in the context of the UK economy in 2019

2. The Macro Economy

• Identify the key participants/actors in an economy and their role in the circular flow
• Briefly explain the relevance of the macroeconomic indicators and how the impact on a country’s economy
• Identify the key macroeconomic objectives of governments in general but specifically the macro economic objectives of the UK government in the context of the UK economy in 2019.

3. The Macro Economy and its impact on businesses

• State how these macroeconomic indicators impact on businesses
• Using relevant data give an overview of the UK macro-economic situation in 2019 and its impact on UK businesses

4. Fiscal and Monetary policy

• Explain fiscal and monetary policies and how government uses these policies to influence the macroeconomic indicators
• Discuss how the UK government used fiscal and monetary policies to address some of the issues identified in your overview relating to UK businesses

5. Support your essay with relevant data, diagrams and accurate Harvard Referencing style

Economic Objectives of government include

• Sustainable economic growth
• Low inflation (2% Per Annum)
• High Employment / Full Employment
• Favourable balance of payment/ Current account surplus
• Rising Standard of living / Relative decline in poverty
• Improvement in productivity
• Good government finances- Low or reduced budget deficit
• Reduction in Inequality
• Improved economic well-being
• Sustainable Environment

Answer True, False or Uncertain. Brieáy explain your answer

Please explain

1. A permanent increase in money supply cannot affect any variable in the OLG model of money.

2. In the OLG model of money, Fiat money does not pay interest, so money's rate of return is 1.

3. Suppose that the government finances its expenditure through seigniorage revenue. There exists an upper limit on the amount of the seigniorage revenue that can be generated.

4. The original Phillips curve finds that there is a negative correlation between inflation and output growth.

5. The Lucas critique indicates that the government can use a random monetary policy to stimulate output.

. The following is the annual demand function for good A:

                Q_DA = 400 – 20P_A + 10P_B + 0.01Y

where P_A is the price of good A; P_B is the price of another good, good B; Y is income.

1. Is good A a normal good or an inferior good? Explain.
2. Is good B a complement or a substitute for good A? Explain.

Assume that the current price of good B is £5, income is £50 000, and the annual supply function for good A is:

                Q_SA = 100 + 10P_A

3. Calculate the equilibrium price and quantity.

4. Calculate price elasticity of demand if the price of good A rises by £5 from the equillibrium price and the demand decreases by 7% and what does this show about the product ?

5. Calculate the price elasticity of supply if the amount supplied increases by 26.60 units (from the equillibrium) and this results in a decrease in price of 4%. Suggest what this figure shows             

Why do people of all ages, income levels, and educational backgrounds not participate in political life? Can anything be done to engage these people?

A monopsonist/monopolist is the only buyer/seller of a particular variety of apples. Show graphically: the price paid to farmers (buying price), the selling price, the monopsonist’s profit, the farmers surplus loss (compared to selling in a perfectly competitive market).

14. According to the open-economy macroeconomic model, which of the following statements is (are) correct?
(x) In the open-economy macroeconomic model, if for some reason foreign citizens want to purchase more U.S. goods and services at each exchange rate, then the demand for dollars in the market for foreign-currency exchange shifts right.
(y) If foreign citizens want to buy fewer U.S. bonds, then the demand for U.S. dollars in the market for foreign currency exchange will shift to the right
(z) If the real exchange rate for the dollar is below the equilibrium level, the quantity of dollars supplied in the market for foreign-currency exchange is less than the quantity demanded and the dollar will appreciate.
A. (x), (y) and (z)
B. (x) and (y) only
C. (x) and (z) only
D. (y) and (z) only
E. (x) only
15. which of the following statements is (are) correct?
(x) A trade policy is a government policy that directly influences the quantity of goods and services that a country imports or exports.
(y) An “import quota”.is a limit on the quantity of a good that can be produced abroad and sold domestically.
(z) A tax on imported goods is called a tariff.
A. (x), (y) and (z)
B. (x) and (y) only
C. (x) and (z) only
D. (y) and (z) only
E. (x) only

Which stage of the policy progress is the most important and why?

Three ways in which the Coronavirus Stimulus Package differs from the 2009 Stimulus Package.

Question 2

Suppose there is enough room for a maximum of three (3) cars to park around a fire hydrant. The harm resulting to society rises as additional cars park around the fire hydrant. This is because as more cars park, it becomes more costly for firefighters to navigate their water hoses around the stationary vehicles. The total (not marginal) cost to society as a function of the number of parked cars around a fire hydrant is as follows:

a. If each driver’s gain from parking a car around the fire hydrant is constant at $20, how many cars should park around the fire hydrant from an economic perspective? (Hint: you need to find the marginal cost to society to answer this part.)

b. What is the maximum level of total surplus resulting from parking around the fire hydrant? How many cars should park around the fire hydrant from an economic perspective?

Discuss the meaning of deductible and coinsurance in the context of insurance. What are the similarities and differences between the two? How do deductibles and coinsurance mitigate the losses of insurers?

Madam Yong Hon Heng owns a factory building valued at RM1.8 million, and she insures the property under four insurers at RM300,000 (insurer A), RM400,000 (insurer B), RM500,000 (insurer C) and RM600,000 (insurer D). Assume that each insurer includes a pro-rata liability clause in their policy. In the event that, a RM500,000 loss occurs, how will Madam Yong Hon Heng be able to claim from each insurer?

1. A monopolist produces good y at a cost c(y) = 10y, so that marginal cost is a constant €10 per unit. Two distinct groups of consumers, A and B, have demands for y as follows:

            y_A(p_A) = 120 - p_A

            y_B(p_B) = 200 - p_B

1. First assume that the firm can practice third-degree price discrimination and so can set a different price for each group, p_A and p_B. Write the inverse demand functions for each group of consumers. Find the firm's optimal choice of y_A and y_B, and the associated prices for each group, p_A and p_B.
2. Now assume that the firm is not able to practice price discrimination and must set one price p for the whole market. Write total demand for the market as a whole. Write the inverse demand curve for the market as a whole. Find the firm's optimal choice of y, and the associated price p. Show that the firm does better under price discrimination as in 3.1 than under a single price as in 3.2.