In the augmented Solow model, which of the following shocks generate jump (contemporaneous change) in the evolution of any per-efficiency unit variable k,y,c,i:

The Canadian government intervenes in agriculture markets in multiple ways under a system called “supply management” (see more details if you are interested at: https://www.cbc.ca/news/politics/canada-supply-management-explainer-1.4708341). One of the ways is to impose a price floor for milk. Discuss arguments for and against Canada’s price floor for milk. Explain why the actual loss caused by the price floor may be even larger than the deadweight loss.

Please give a concise 150-200 word response. Your grade will be determined by (1) the clarity of your response, (2) the organization/grammar, and (3) the strength of arguments. To fully satisfy the third criteria, students must apply the relevant course material to the problem.

This Problem is about Finance in the IS/LM Curve, please use formulas to support the answer.

1. Suppose the probability of borrower default increases, driving up the market interest rate. Show the effect of this shock in the IS/LM graph and briefly explain the changes to the macroeconomics, indicators on the graph.
2. Suppose the real market interest rate is 6%. The risk premium is 7.5%. The inflation rate is 3%. Find the nominal policy rate (FFR) and decide if the money market is at the zero lower bond.

In a hypothetical world, between last year and this year, the CPI in Mexico rose from 100 to 115 and the CPI in Russia rose from 85 to 100. Mexico's currency unit, the Peso(MXN), was worth 8.81(MXN) per Canadian dollar last year and is worth 8.73(MXN) per Canadian dollar this year. Russia's currency unit, the Ruble(RUB), was worth 23.28(RUB) per Canadian dollar last year and is worth 23.14(RUB) per Canadian dollar this year.

a) Find the percentage change from last year to this year in Mexico's nominal exchange rate with Russia (measured as # of Pesos/1 Russia Ruble).
NOTE: Please keep as much precision as possible throughout your calculations and round off your final answer to two decimal places.

Percentage change = 0%

b) Find the percentage change from last year to this year in Mexico's real exchange rate with Russia. Again, assume that we are measuring the nominal exchange rate portion as the # of Pesos/1 Russia Ruble.
NOTE: Please keep as much precision as possible throughout your calculations and round off your final answer to two decimal places.

Percentage change = 0%

1. v) Why efficiency is a commonly used as an objective for public policy (more than equity). (Hint: think about which type of policies will be easier to pass in the congress?) vi) One hundred people are distributed in two beaches. In Beach A, there are 98 people (A = 98), while in Beach B only 2 (B = 2). Is this allocation efficient? Is equalitarian? (assume that people are more happy if the beach is less crowded). vii) Answer to the same questions with (A = 100, B = 0) and with (A = 50, B = 50). viii) Find an allocation that is NOT Pareto efficient an NOT equalitarian (Hint: you might need more than one beach).

Consider two economies: A and B. Both have identical parameters a =1/3, s =0.2, d = 0.05, L =30, and A =1. However, Economy A starts with K₀ = 100, while Economy B starts with K₀ = 300.

1. Which economy is richer in year 0 (calculate GDP per capita for each country)?

2. Which economy has higher consumption per person in year 0 (calculate C per capita)?

3. After 50 years, which economy is richer in year 0 (calculate GDP per capita for each country)?

4. After 250 years, which economy is richer in year 0 (calculate GDP per capita for each country)?

5. In light of your findings, does it matter – in the long run – where an economy starts (i.e. whether it starts rich or poor). What kind of experiments with the model would you conduct to make sure you can be confident about your conclusion?

Suppose there are two paper mills on an island. Both mills produce air pollution that is non-rival and non-excludable. All of the island’s citizens are negatively affected by the air pollution, but Children and Adults are affected differently. Specifically, the marginal benefits of pollution abatement (A) to the Child population is given by MBChild = 162 − 3A and the marginal benefits of pollution abatement to the Adult population is given by MBAdult = 108−2A. Not surprisingly, pollution abatement is costly for both paper mills. For Mill 1, marginal abatement costs are given by MAC1 = 12A and for Mill 2, MAC2 = 6A. Suppose there are no enforcement costs associated with ensuring that polluters comply with any abatement regulations. Using this information, answer the following questions.

Part (a) Aggregating benefits for Children and Adults, what is the marginal social benefit(MSB) function for pollution abatement? Graphically illustrate marginal benefits for Children (labeling it MBC), Adults (labeling it MBA), and the two combined (labeling it MSB). Make sure to also label all intercepts.

Part (b) Aggregating costs for Mill 1 and Mill 2, what is the marginal social cost (MSC) function for pollution abatement? Graphically illustrate marginal costs for Mill 1 (labeling it MAC1), Mill 2 (labeling it MAC2), and the two combined (labeling it MSC). Make sure to also label all intercepts.

Part (c) In the absence of regulation and bargaining, how much pollution will each Mill choose to abate?

Part (d) What is the socially optimal level of pollution abatement? Show this graphically, making sure to label the MSB and MSC curves as well as all intercepts and the equilibrium.

Part (e) Suppose the government chooses to achieve the abatement goal you found in Part (d) using a flat-rate emissions tax. What emissions tax would induce an overall abatement level that would achieve this goal? Under this tax, how many units of pollution would Mill 1 choose to abate? How many units of pollution would Mill 2 choose to abate?

Part (f) Suppose instead that the government chooses to achieve the abatement goal you found in Part (d) using a flat-rate emissions subsidy. What emissions subsidy would induce an overall abatement level that would achieve this goal? Under this subsidy, how many units of pollution would Mill 1 choose to abate? How many units of pollution would Mill 2 choose to abate?

Part (g) Without doing the calculation, can you tell whether total market abatement costs under the tax will be lower than, equal to, or greater than total market abatement costs under the subsidy? Briefly explain your answer

Part (h) Suppose it is discovered that pollution abatement is actually much more beneficial to children than we originally thought above. Suppose also that there are actually positive and sizable costs to enforcing pollution abatement regulations. Applying this new information, what can you say about the new socially optimal level of pollution relative to the level you found in Part(d)?

1. Consider a working mother with one child in New Zealand. Her wage rate is $30 per hour, and the maximum hours she can work is 80 hours per week. a) Draw her budget line. What is the slope of the budget line? b) In New Zealand, the Family Tax credit (FTC) gives a working mother with one child $113 if her weekly earnings are between $0 to $820. For each additional dollar earned above $820, the tax credit decreases by 25 cents. Draw the budget line under the FTC. What are the slopes of the new budget line? c) Where does the new budget line intersects with the initial budget line in (a)? What are her income and hours of work at the intersection? d) Suppose the working mother works 25 hours per week under the original budget constraint in (a). What is the income effect from the FTC? What is the substitution effect from the FTC? Will she work more, less, or ambiguous after the introduction of the FTC?

Please explain the pros and cons of fiat currencies

Principles of Macroeconomics

Assignment (2)

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Given the following equations (all numbers are in million $)

C = 100 + 0.60Y_d

I_P = 80

G = 70

T = 30 + 0.10Y

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1. Find the equilibrium output (Income)?
2. Find the consumption and saving at equilibrium?
3. Show that leakages (S+T) = Injections (I+G)
4. What is the government’s budget deficit (or surplus)?
5. What happens to equilibrium output if:

1. I_P decreases to 50
2. G increases by 30
3. T₀ increases by 10

real estate investment trust (REIT) competitive interaction

1. In which situation does investment spending decrease?

A.when the price level rises, causing interest rates to fall

B.when the price level falls, causing interest rates to fall

C.when the price level rises, causing interest rates to rise

D.when the price level falls, causing interest rates to rise

2. If a central bank targets the interest rate, what does this imply?

A. The central bank must decrease the money supply if the interest rate is above its target.

B. The central bank can then set the money supply at whatever value it wants.

C. The central bank must increase the money supply if the interest rate is above its target.

D. The central bank must not change the money supply.

3. If households view a tax cut as being temporary, how does the tax cut affect aggregate demand?

A. It has the same effect on aggregate demand than if households view the cut as permanent.

B. It has no effect on aggregate demand.

C. It has a stronger effect on aggregate demand than if households view the cut as permanent.

D. It has a weaker effect on aggregate demand than if households view the cut as permanent.

4. What is the most important automatic stabilizer?

A. government spending

B. welfare benefits

C. the tax system

D. unemployment compensation

Discuss what is meant by the “Economic Problem.” Explain the different economic systems and their characteristics that have been developed to deal with this problem.

Use a partial equilibrium model to illustrate the gains and losses associated with a preferential trade agreement. Identify areas of welfare gains and losses, and describe the conditions under which a country can suffer a net welfare loss as a result of a preferential trade agreement.

1. Find and describe an example of Monopoly in economy.

In your answer you shall mention:

1. Definition of Monopoly and its main characteristics and conditions.
2. Name the industry where the monopoly exists.
3. Provide proofs that named industry has monopoly with reference to characteristics and conditions stated in (a).