Question 1

Which of the following functions is unaffected by the price level?

1. Aggregate Demand
2. Short-Run Aggregate Supply
3. Long-Run Aggregate Supply
4. None of the above

Question 2

Below is a list of various changes in the economy. All else held constant, please match each change with the corresponding effect in the Aggregate Demand/Supply framework.

i. A decline in the Short-run aggregate supply        a. An increase in the quantity of economic resources.

ii. A rise in the Long-run Aggregate Supply            b. A rise in consumer confidence.

iii. A decline in the Aggregate Demand                   c. A rise in the input costs.

iv. A rise in the Aggregate Demand                        d. An economic recession in the economies of our trading partner nations

Question 3

A demand driven recession causes the price level to decrease.

1. True
2. False

Question 4

Which of the following will cause the AD to decrease?

1. A rise in consumer confidence
2. A rise in business confidence
3. A decline in government spending
4. An increase in exports

Question 5

If we assume that the supply of oil gets interrupted and as a result the price of oil doubles, what would that do in the short-run?

1. The short-run aggregate supply function will decrease, causing the economy to experience a reduction in the level of output and a rise in the price level.
2. The aggregate demand will decrease, causing the economy to experience a rise in the price level and a decline in the level of output.
3. The long-run aggregate supply will increase, causing the price level to decrease and the output level to increase.
4. The aggregate demand will increase, causing the price level to increase and the output level to decrease.

What determines the current demand for labour?

Why s Northern Europe is more developed than Southern Europe? What impact does this economic disparity have on the Euro, government debts, trade, and labor markets today in the EU?

Question 4

Which of the following will cause the AD to decrease?

1. A rise in consumer confidence
2. A rise in business confidence
3. A decline in government spending
4. An increase in exports

Question 5

If we assume that the supply of oil gets interrupted and as a result the price of oil doubles, what would that do in the short-run?

1. The short-run aggregate supply function will decrease, causing the economy to experience a reduction in the level of output and a rise in the price level.
2. The aggregate demand will decrease, causing the economy to experience a rise in the price level and a decline in the level of output.
3. The long-run aggregate supply will increase, causing the price level to decrease and the output level to increase.
4. The aggregate demand will increase, causing the price level to increase and the output level to decrease.

Question 6

An appreciation of the US dollar would make US exports more expensive overseas and foreign goods cheaper in the US, resulting in a decline in the US aggregate demand.

1. True
2. False

Question 7

Long-run aggregate supply function assumes that all prices are fully flexible.

1. True
2. False

Question 8

Short-run aggregate supply assumes that all prices are fully flexible.

1. True
2. False

What factors are important to a consumer in making his or her consumption–savings decision?

with the aid of a diagram briefly explain the features of oligopoly.

Which of the following is not a disadvantage of trade conferences and exhibitions?

A. Generating massive actual and potential customers

B. cost
C. time and effort
D. rivals in the same hallway

1. Many people associate high budget deficit with high interest rates and rising prices. Taxes are primarily linked to income. Throughout this problem, assume that T=tY, where t is the net tax rate.

1. USE IS-LM and AD-AS frameworks to explain whether this association (that is, high budget deficits with high real interest rates and rising prices) is true in the short run, if the deficits are primarily due to expansionary fiscal policy (like increases in government purchases).
2. Use IS-LM and AD-AS frameworks to explain whether this association is true in the short run, if there is a sudden decline in consumer or business confidence.

Assume the government sets the price for a good below market equilibrium. Briefly explain what will happen to demand and supply and what kind of factors will determine the discrepancy between them. How will it affect the prices of substitutes? () *Use diagrams where relevant

Read the following article and answer the questions.

Discussion 1

California Approves Statewide Rent Control to Ease Housing Crisis - The New York Times.

Read below article attached on California rent controls and respond to the following questions.

1. Explain the purpose of rent control and the intended effect on California consumer and suppliers of rental property. Does rent control achieve its purpose?
2. How do rent control policies alter incentives for consumers and producers in the market for rental property?

California Approves Statewide Rent Control to Ease Housing Crisis

San Francisco has had rent control for decades, but it has not been spared from a housing squeeze and rising homelessness. A state law approved Wednesday aims to strengthen tenant protections. Credit...Jim Wilson/The New York Times

By Conor Dougherty and Luis Ferré-Sadurní

• Published Sept. 11, 2019Updated Nov. 4, 2019

California lawmakers approved a statewide rent cap on Wednesday covering millions of tenants, the biggest step yet in a surge of initiatives to address an affordable-housing crunch nationwide.

The bill limits annual rent increases to 5 percent after inflation and offers new barriers to eviction, providing a bit of housing security in a state with the nation’s highest housing prices and a swelling homeless population.

Gov. Gavin Newsom, a Democrat who has made tenant protection a priority in his first year in office, led negotiations to strengthen the legislation. He has said he would sign the bill, approved as part of a flurry of activity in the final week of the legislative session.

The measure, affecting an estimated eight million residents of rental homes and apartments, was heavily pushed by tenants’ groups. In an indication of how dire housing problems have become, it also garnered the support of the California Business Roundtable, representing leading employers, and was unopposed by the state’s biggest landlords’ group.

That dynamic reflected a momentous political swing. For a quarter-century, California law has sharply curbed the ability of localities to impose rent control. Now, the state itself has taken that step.

“The housing crisis is reaching every corner of America, where you’re seeing high home prices, high rents, evictions and homelessness that we’re all struggling to grapple with,” said Assemblyman David Chiu, a San Francisco Democrat who was the bill’s author. “Protecting tenants is a critical and obvious component of any strategy to address this.”

A greater share of households nationwide are renting than at any point in a half-century. But only four states — California, Maryland, New Jersey and New York — have localities with some type of rent control, along with the District of Columbia. A coalition of tenants’ organizations, propelled by rising housing costs and fears of displacement, is trying to change that.

In February, Oregon lawmakers became the first to pass statewide rent control, limiting increases to 7 percent annually plus inflation. New York, with Democrats newly in control of the State Legislature, strengthened rent regulations governing almost one million apartments in New York City.

Moves to expand rent control through ballot initiatives or legislation have arisen since 2017 in about a dozen states, including Washington, Colorado and Nevada, according to the National Multifamily Housing Council, an apartment-industry trade group.

Measures were recently introduced in Massachusetts and Florida to allow rent regulation in cities with a housing crunch — like Boston, Miami and Orlando.

Nationally, about a quarter of tenants pay more than half their income in rent, according to the Joint Center for Housing Studies at Harvard University. And California’s challenges are particularly acute. After an adjustment for housing costs, it has the highest state poverty rate, 18.2 percent, about five percentage points above the national average, according to a Census Bureau report published Tuesday.

Homelessness has come to dominate the state’s political conversation and prompted voters to approve several multibillion-dollar programs to build shelters and subsidized housing with services for people coming off the streets.

Despite those efforts, San Francisco’s homeless population has grown by 17 percent since 2017, while the count in Los Angeles has increased by 16 percent since 2018. Over all, the state accounts for about half of the country’s unsheltered homeless population of roughly 200,000.

That bleak picture — combined with three-hour commutes, cries for teacher housing and the sight of police officers sleeping in cars — is prompting legislators and organizers to propose ever more far-reaching steps.

State Senator Scott Wiener, a San Francisco Democrat, offered a bill that would essentially override local zoning to allow multiple-unit housing around transit stops and in suburbs where single-family homes are considered sacrosanct. The bill was shelved in its final committee hearing this year, but Mr. Wiener has vowed to keep pushing the idea.

Economists from both the left and the right have a well-established aversion to rent control, arguing that such policies ignore the message of rising prices, which is to build more housing. Studies in San Francisco and elsewhere show that price caps often prompt landlords to abandon the rental business by converting their units to owner-occupied homes. And since rent controls typically have no income threshold, they have been faulted for benefiting high-income tenants.

“Rent control is definitely having a moment across the country,” said Jim Lapides, a vice president at the National Multifamily Housing Council, which opposes such restrictions. “But we’re seeing folks turn to really shortsighted policy that will end up making the very problem worse.”

But many of the same studies show that rent-control policies have been effective at shielding tenants from evictions and sudden rent increases, particularly the lower-income and older tenants who are at a high risk of becoming homeless. Also, many of the newer policies — which supporters prefer to call rent caps — are considerably less stringent than those in effect in places like New York and San Francisco for decades.

“Caps on rent increases, like the one proposed in California or the one recently passed in Oregon, are part of a new generation of rent-regulation policies that are trying to thread the needle by offering some form of protection against egregious rent hikes for vulnerable renters without stymieing much-needed new housing construction,” said Elizabeth Kneebone, research director at the Terner Center for Housing Innovation at the University of California.

Mr. Chiu’s bill is technically an anti-gouging provision, with a 10-year limit, modeled on the typically short-term price caps instituted after disasters like floods and fires. It exempts dwellings less than 15 years old, to avoid discouraging construction, as well as most single-family homes. But it covers tenants of corporations like Invitation Homes, which built nationwide rental portfolios encompassing tens of thousands of properties that had been lost to foreclosure after the housing bust a decade ago.

According to the online real-estate marketplace Zillow, only about 7 percent of the California properties listed last year saw rent increases larger than allowed under the bill. But there could be a big effect in rapidly gentrifying neighborhoods like Boyle Heights in Los Angeles, where typical rents on apartments not covered by the city’s rent regulations have jumped more than 40 percent since 2016.

By limiting the steepest and most abrupt rent increases, the bill is also likely to reduce the incentive for hedge funds and other investors to buy buildings where they see a prospective payoff in replacing working-class occupants with tenants paying higher rents.

Sandra Zamora, a 27-year-old preschool teacher, lives in a one-bedroom apartment in Menlo Park, Calif., a short drive from Facebook’s expanding headquarters. A year ago, Ms. Zamora’s building got a new owner, and the rent jumped to $1,900 from $1,100, a rise of over 70 percent. Most of her neighbors left. Ms. Zamora stayed, adding a roommate to the 600-square-foot space and taking a weekend job as a barista.

“Having an $800 increase at once was really shocking,” she said. “It just keeps me thinking every month: ‘O.K., when is it going to happen? How much am I going to get increased the next month?’ It’s just a constant worry.”

Even as more states begin to experiment with rent control, it has long existed in places like New York City, which intervened to address a housing shortage post-World War II, and San Francisco, where it was adopted in 1979.

Today it is common in many towns across New Jersey and in several cities in California, including Berkeley and Oakland, although the form differs by jurisdiction. Regulated apartments in New York City are mostly subject to rent caps even after a change in tenants, for example, while rent control in the Bay Area has no such provision.

In New York City, where almost half of the rental stock is regulated, a board determines the maximum rent increases each year; this year it approved a 1.5 percent cap on one-year leases, considerably lower than the limits passed in Oregon and California

What was the main legal impediment to the lending by the Federal Reserve to Lehman Brothers during 2008? What were consequences to Lehman, and global markets?

Define, diagram and then explain the three stages of a banking crises.

How does asymmetric information and moral hazard play a role?