1. Suppose a new contracting environment with an economic environment that looks more uncertain is considered. This new contract will result in:

   		an increase in the marginal cost and a longer optimal contract.
   		an increase in the marginal cost and a shorter optimal contract.
   		a decrease in the marginal cost and a longer optimal contract.
   		a decrease in the marginal cost and a shorter optimal contract.

2. An increase in the marginal cost arising from a more complex specialized investment environment will cause the optimal contract length to:

   		increase.
   		decrease.
   		remain constant.
   		either increase or decrease.

3. Long-term contracts become shorter:

   		when specialized investment becomes less important.
   		when the exchange environment is less complex.
   		when spot markets work poorly.
   		when marginal costs are increasing.

4. A decrease in the marginal cost arising from a less complex specialized investment environment will cause the optimal contract length to:

   		increase.
   		decrease.
   		remain constant.
   		either increase or decrease.

5. The activity known as shirking is LEAST likely to occur when:

   		workers are not monitored.
   		the earnings of a worker are closely tied to the worker's output.
   		all workers are paid the same wage rate.
   		firm ownership is separated from the managerial control.

Graphically illustrate (using the Wage setting and Price setting relations) and explain the effects of an increase in the minimum wage on the equilibrium real wage, the natural rate of unemployment, the natural level of employment, and the natural level of output.

. Based on your understanding of the labor market model presented by Blanchard (i.e., the WS and PS relations), explain what types of policies could be implemented to cause a reduction in the natural rate of unemployment.   

Suppose that the economy is initially in long-run equilibrium as depicted in the AD-AS model. Suppose politicians believe that the current level of output is too low and encourage the central bank to engage in expansionary monetary policy.

a. (4 points) Discuss two ways in which the Central Bank can try to increase the money supply. Be explicit.

b. (6 points) What are the effects of the expansionary policy in the short run? Show in the appropriate graph(s).

c. (5 points) Which two factors determine the magnitude of the effects in the short-run?

d. (6 points) What are the effects in the long-run, assuming no further shocks to the economy? Show in the appropriate graphs.

e. (4 points) How does this example illustrate monetary neutrality? Explain your answer.

4. The CPI in year 1 = 120, the CPI in Year 2 = 144. Calculate the amount of inflation or deflation. Why is this important?

Assume now that the world consists of only two countries: Brandtlandia and Hollandia. Every year many tourists visit each other’s countries. The only other good Brandtlandia imports is tulip bulbs. Brandtlandia uses the Thaler as currency, and Hollandia the Florin.

The policy options in Brandtlandia are copied here for your convenience.

Policy 1: Open the economy to trade with no trade protection.

Policy 2: Open the economy to trade but impose a tariff on the import of tulip bulbs that would set the price of tulip bulbs to 40 Thaler per tulip bulb.

Policy 3: Open the economy to trade but limit imports to a quota of 15 tulip bulbs.

Brandtlandia currently uses policy option 1, the equilibrium exchange rate (e) is 0.50 Florin for 1 Thaler (and this is the exchange rate notation you need to use for this question).

a. (4 points) If Brandtlandia implements policy option 2, what will be the initial effect on the exchange rate if the exchange rate is flexible? Explain your answer.

b. (5 points) Suppose that the central bank of Hollandia wants to offset the effect of policy option 2 on the exchange rate. How would it do so? What might be the reasons for doing so?

c. (6 points) Assume that the exchange rate is flexible and Brandtlandia chooses policy option 1. The price of a tulip bulb in Hollandia is 7.50 Florin, and 10 Thaler in Brandtlandia. Also assume that all prices (including the exchange rate) are fixed in the short-run. Is there purchasing power parity here? Explain your answer. Is the Florin overvalued or undervalued? What will happen in the long run to the exchange rate? Explain your answer.

Consider two economies. In economy A: autonomous consumption equals 700, the marginal propensity to consume equals 0.80, taxes are fixed at 50, investment is 100, government spending is 100, and net exports are 40.

In economy B: autonomous consumption equals 1000, the marginal propensity to consume equals 0.8, taxes are proportional to income such that consumers pay 25% of their income as taxes, investment is 250, government purchases are 150, and net exports are 400.

(i) What is the planned aggregate expenditure (PAE) in each economy?

(ii) What is the short-run equilibrium output in each economy?

(iii) In which economy is the spending multiplier higher?

(iv) Suppose autonomous consumption fall by 500 in each economy. Which economy will see a higher drop in GDP? Compute the equilibrium output in each economy.

how does having a flexible exchange rate affect a country's gdp as opposed to having a fixed exchange rate?

How will you make customers read your corporate blog?

As an example, I have about 50 tabs (more, 30 in the phone only) with stuff I wanted to read but never got to it.

Our natural resources are valuable and important to sustain so that we have continued access to these resources in the future. Please answer the following: What is a company’s obligation to contribute to the natural resource’s sustainability? If so, what does that obligation look like? Is this limited to local resources or globally as well

Consider the economic impact of immigration on individual welfare for the different subpopulations

that comprise the U.S. labor market. Has immigration impacted them all uniformly or did it have

heterogeneous effects across different groups? If so, please briefly explain how the effects of

immigration may differ across different subpopulations of the U.S. labor market.