5. Problems and Applications Q6

Consider the three theories of the upward slope of the short-run aggregate-supply curve.

According to the sticky-wage theory, the economy is in a recession because the price level has declined so that labor demand is too .

True or False: According to the sticky-price theory, the economy is in a recession because not all prices adjust quickly.

True

False

According to the misperceptions theory, the economy is in a recession when suppliers mistakenly believe that the relative price of their goods has .

1. Suppose that for consumers A and B trading goods 1 and 2 in a general equilibrium framework

uaxa,1,xa,2=xa,1∙xa,2     and   ubxb,1,xb,2=xb,1+2xb,2

The initial endowments are given by ωa=(2,2) and ωb=(3,2) . Depict graphically the Edgeworth box including

1. Its dimensions
2. The location of the initial endowment
3. Each consumer’s indifference curves.

Note that in part (c), I just looking for you to depict the general shape of these indifference curves; you do not have to plot them out using the mathematical functions.

how has a bill of exchange evolved into a check, a promissory note, and a bill of lading?

International Trade Practice exam
Explain key terms:
1) counter sample
2)FCL
3)FPA
4)INCOTERMS
5)Standby L/C

10. You have monthly data on gasoline prices in two cities—Vancouver and Toronto, for the years 2006–2010. In each month of each year, you observe the average price of gasoline in each city. Prices in Vancouver are usually higher than in Toronto, but the cities follow similar price trends, as prices rise in the summer months and respond similarly to demand and cost shocks. However, there are month-to-month fluctuations for various reasons.

    Starting from January 1, 2008, Vancouver imposed a carbon tax which was expected to be reflected in higher gasoline prices. Explain how you would use a difference-in- differences framework to estimate the effect of the carbon tax. Carefully define any new variables you need based on the data provided. Then, write down a line of R code which will run the regression you need. Make sure you point out which regression coeffcient is the desired estimate.

what is title of a bill of lading? State the difference among bills of lading with different title.

Suppose that you are an entrepreneur. Pick a specific industry (in which there is a dominant firm that is profitable) into which you would like to enter. What entry-barriers do you see? What post-entry response do you anticipate, if you nevertheless decide to enter the industry?

why is conditioned weight applied in calculating weight of goods?

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)?