Advance Macroeconomic

Please feel free to make use of graphs as you see fit

1.

a. Provide a detailed analysis of the four crucial components of the Classical Model: the labor market, Say’s Law, the loanable funds market and the quantity theory of money.

b. While making use of these four components, provide an explanation of why this model implies that there is no need for any aggregate demand management to maintain full employment. (Please emphasize, in particular, the role played by flexible prices and wages).

2.

a. Provide a detailed analysis of the three crucial components of Keynes’ Model: the consumption function, the determinants of investment demand and the speculative demand for money.

b. Assume that nominal wages are rigid. Use these components to explain why, in this model, the economy can come to rest at an equilibrium with involuntary unemployment.

c. What policy tools can be used to move such an economy to a state of full employment? Provide an analysis of how these tools can achieve this objective.

3.

a. Derive the IS and LM curves. Explain how the IS curve helps address a flaw in the Classical Model. And explain how the LM curve helps address a flaw in Keynes’ Model.

b. Using the IS-LM framework, determine the conditions under which monetary and fiscal policy will be most effective in restoring the economy to a state of full employment.

c. Does the emergence of a state of equilibrium with involuntary unemployment rest on the assumption of rigid nominal wages or does it rest on the existence of speculative demand for money? Use the IS-LM framework to provide an answer to this question.

4.

a. According to the most fundamentalist Keynesians in the 1950s and 1960s, changes in the quantity of money were deemed to have no effect on aggregate nominal income. How did these Keynesians arrive at this conclusion? What does such a view imply regarding the nature of the demand for money?

b. Provide a summary of the main arguments advanced by Friedman “to bring money back,” i.e., in support of the position that changes in the money supply do have a significant impact on aggregate nominal income?

c. According to Friedman money is non-neutral in the short run and neutral in the long run. Explain how he arrives at this conclusion. What are the implications of his argument for the validity of the Phillips Curve?

What are the benefits of foreign investors buying these assets?

United Kingdom and Tanzania

Address the following:

• For investment, either portfolio or foreign direct investment (FDI) in the each country, what index component(s) score or ranking in either of the two indices would
  • most encourage you to do business there?
  • most discourage you from doing business there?
  • Considering the risk and return and the data collected above and in the prior assignments, how likely would you be to invest in both countries? If you would invest, what would be your minimum required return in each country? Explain.
  • Use and cite a minimum of five sources.

This assignment is an individual-specific assessment of the industry in which you currently work or of the industry in which you intend to work after completing your MBA.  This assessment is composed of two parts. The first part of the assignment should discussion the sources of the value created within your particular industry.  Your brief document should address the following issues:

1. Brief description of your current or intended industry
2. Evaluation of the unique value created by your firm (for its customers) relative to all of its competition.  In other words, what makes your firm special for its customers.  The value may be derived from the quality of the product (relative to others on the market), customer service, overall purchase experience, or a combination of these and other factors.
3. Concluding discussion that addresses how the factors that influence value created in this industry may change over the next five years.

You should also be prepared to provide a very brief executive summary of your findings to the class (no slides) at 2:00 PM Eastern on Saturday afternoon.

The second part is the Practical Connection component for this class. You should reflect on how the specific skills or knowledge presented in this class may be applied in your current or intended career. This statement should not simply list the concepts covered to date --- it should focus on specific topics that are directly connected to your career or intended career. This part of the project should be at least 500 words or about 2 double-spaced pages.

Assume you are the manager of Wenstrom Brewing Company (WBC) and you face the following demand for your beer: QWBC = 12 - 3PWBC + 4PPBR. Suppose you sell your beer for $3.00 per bottle and PBR sells for $1.50 per bottle.

a. Is PBR a substitute or a complement? Explain. b. Calculate the cross-price elasticity of demand between WBC and PBR at the given prices. c. If you want to increase the level of beer you sell by 15%, how much should you change the price? Is this a good idea? Explain. d. Does your answer to part c change if the price of WBC were $2.50 per bottle? Explain. e. If advertising was included in the demand equation and the advertising elasticity was calculated to be 2, how much would consumption of your beer change if you increased the level of advertising by 4%?

discuss whether or not you think the ARRA was effective and useful? Were some parts of it more useful than others?

Discuss some of the broad options available for fixing the long-run problems associated with the social security retirement system.

Which options do you believe are socially justifiable? Explain

1. Consider a free market with demand equal to Qd = 900 – 10P and supply equal to Qs = 20P.

   1. What is the value of consumer surplus (CS) when the market is in equilibrium? What is the value of producer surplus (PS) when the market is in equilibrium?

   2. Graph the supply and demand curves and identify the equilibrium price and quantity on your graph. Show CS and PS on your graph of the demand and supply curves.

   3. Now suppose the government imposes a $15 per unit subsidy on the production of the good. What is the consumer surplus now? The producer surplus? Why is there deadweight loss associated with the subsidy, and what is the size of this loss?

   4. Explain in your own words what deadweight loss is and why it is relevant in the study of public sector economics.

GDP measures the:

1) Explain why an economy’s income must equal its expenditure. 2) List the four components of GDP. Give an example of each. 3) Why do economists use real GDP rather than nominal GDP to gauge economic well-being? 4) Explain the GDP deflator, its calculation, and its meaning. 5) Explain the inflation implication when we use GDP deflator to calculate

Suppose there exist 2 countries, Home and Foreign; 2 goods, X and Y; and 2 factors of production, labour (L) and capital (K). Each country can produce both goods. X is labour-intensive and Y is capital-intensive. Home is labour-abundant and Foreign is capital-abundant. Assume that the standard assumptions of the Heckscher-Ohlin model hold. When answering the following question, please support each of your arguments with detailed analysis and draw the relevant diagrams to support your answer.

Consider a move from autarky to free trade between the two countries in both goods. Identify which group of people (labourers or owners of capital) gain and which lose in Home from the move from autarky to free trade. Discuss clearly how the assumptions of the model lead to this result.