3. Assume the following information for the United States and Mexico. The United States can produce a maximum of 600 bushels of barley or a maximum of 600 bushels of corn. Mexico can produce a maximum of 200 bushels of barley or 400 bushels of corn. Which country has a comparative advantage in the production of barley? Which country has a comparative advantage in the production of Corn? Show your work for the calculation of opportunity cost. (4 Points)

4.According to the open economy macroeconomic model, which of the following statements is (are) correct?

(x)Capital flight requires the cooperation of the country’s airlines to move precious metals to safe areas.

(y)A large and sudden movement of funds out of a country is called capital flight

(z)Capital flight is frequently caused by an increase in political or economic instability

.A.(x), (y) and (z)

B. (x) and (y) only

C.(x) and (z) only

D.(y) and (z) only

E.(x) only

5.According to the textbook, which of the following statements is (are) correct?

(x)When a country suffers from capital flight, the exchange rate depreciates because supply in the market for foreign-currency exchange shifts right.

(y)When a country experiences capital flight its net capital outflow increases and its real exchange rate falls.

(z)When a country experiences capital flight its real interest rate increases as the country’s demand for loanable funds shifts to the left.

A.(x), (y) and (z)

B. (x) and (y) only

C.(x) and (z) only

D.(y) and (z) only

E.(z) only

6.According to the open economy macroeconomic model, which of the following statements is (are) correct?

(x)The usual effects of capital flight include a rightward shift of demand in the loanable funds marketand a rightward shift of the NCO curve,

(y)Capital flight typically causes a decrease in the domestic interest rate and an increase in NCO.

(z)Capital flight typically causes the real exchange rate of the domestic currency to depreciate because capital flight causes an increase in the supply of the currency in foreign currency exchange markets.

A.(x), (y) and (z)

B. (x) and (y) only

C.(x) and (z) only

D.(y) and (z) only

E.(x)only

. Consider a simultaneous move game between a teachers’ union and a university. Each agent can bargain hard (H) or accommodate (A). If both the parties bargain hard (H,H), each would gain nothing. If only one party bargains hard the accommodating party gets a benefit of $1 million while the bargaining party gets a $5 million, while if they both accommodate (A,A), they each get $3 million in benefit.

a. Draw the bargaining game in normal form (a matrix).

b. Does either player have a strictly dominated strategy? b. Find each party’s best response and the Nash equilibrium in pure strategies.

c. Is this Nash equilibrium Pareto efficient? Why or why not?

d. Describe a scenario in which the union might threaten an action that might ensure they get the outcome they would prefer.

Q.3    

Population growth in a country has increased. The higher population growth will lead to higher living standards. Comment on this statement with the help of a graph derived from the neoclassical growth model.                        

Assuming that the current crisis causes a decrease in the savings rate permanently.

In a neoclassical growth model, does this affects the growth rate of real output? Why or why not?                                

Q.4

As a response to current crisis, the US federal reserve has cut the interest rates. Now what will happen to the level of domestic output as foreign interest rates fallen. Assume that the home country has the flexible exchange rate system and perfect capital mobility? Explain your answer with the help of an IS-LM diagram.

Comment: Fiscal policy is more effective in increasing output, when prices and wages are variable as compared to when (i) Prices and wages are fixed, (ii) Prices are variable but wages are fixed. (Show using the diagram)

The domestic country is US in fact.

Analyzing competition is considered as a major part of the external environment analysis. Apply the different level of competitive environment analysis on a company of your choice within the following industries (Dairy, Telecommunication, or Fashion.)

Using the New York Times article, "Defiant, Generic Drug Maker Continues to Raise Prices,"Discuss the social and financial implications of generic drug pricing decisions for various groups of stakeholders. What would be the socially optimum pricing strategy for the United States? What would be the socially optimum pricing strategy globally? please type not write

Suppose you have to pay $200 for a ticket to enter a competition. The prize is $1800 and the probability that you win is 1/3. Your current wealth is $1000.

(a) Are you going to enter this competition? Justify your decision, that is, choose a utility function that best describes your attitude toward risk, compute your expected utilities from entering the competition or staying away from it, and compare them to justify your decision. How does this change if you have to pay $2 for a ticket to enter a competition. The prize is $18 and the probability that you win is 1/3. Your current wealth is $10. comment on your degree of risk aversion

More of History question

What was the significance of the Cold War for European Integration? What about the Economic Crisis of the 1970s?

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.