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)

-------------------------------------------------------------------------------------------------------

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

C = 100 + 0.60Y_d

I_P = 80

G = 70

T = 30 + 0.10Y

-------------------------------------------------------------------------------------------------------

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).                                                        

Look through Borgen Project website and answer questions. Keep answers short (ideally no more than a paragraph) and in your own words (no copy/pasting from the website).

1. How does addressing global poverty improve national security?

2. What are some strategies being used on the ground to improve living conditions for people living in extreme poverty?

3. What is your favorite video on The Borgen Project website and why?

4. The Borgen Project… (Highlight which is most accurate)
   1. Sends teams of volunteers to build water wells in Africa.
   2. Focuses on advocacy and influencing members of Congress to better fund poverty-reduction programs.
   3. All of the above.
   4. None of the above
5. Why does The Borgen Project want people calling and emailing their congressional leaders in support of poverty-reduction bills?

12. Suppose a monopoly firm faces the market demand Q = 500 – p and has cost function C = 100 + Q2 . Find the firm’s profit, CS, PS, and DWL for the following scenarios:

a. The monopoly firm charges a single price

b. The monopoly firm perfectly price discriminate

c. The monopoly firm adopts a block-pricing schedule with 2 quantity blocks

a) Two techniques to estimate firm's economic of scales.
b) Elaborate two factors that change the industry's degree of concentration.
c) How the degree of concentration influences the market performances of the industry?

Look through Borgen Project website and answer questions. Keep answers short (ideally no more than a paragraph) and in your own words (no copy/pasting from the website). Good luck!

1. What is The Borgen Project?
2. What is the story behind The Borgen Project?
3. When it comes to helping the world’s poor, is the United States (Congress and the White House) doing enough? How does the U.S. compare to other wealthy nations?
4. How does addressing global poverty improve the economy and create jobs in the United States?

Assume that the economy is at long run equilibrium,with unemplyment at 5% and inflation at 2%pa.

Suppose a shock causes a very large increase in the cost of crude oil and gas. Assume that Ireland does not produce any oil or gas, and imports large amounts of oil and gas. The shock causes unemployment to rise to 9%, and inflation to rise to 4%pa.

(a) Using a large AD/AS diagram and a large Phillips curve diagram, illustrate the short-run effects of this shock on the Irish economy.

[assume that the oil cost shock causes v= 4%, that the price level is not sticky, and that beta symbol= 0.5 in the Phillips curve equation]

(b) Describe and illustrate a policy response that might help return the economy to its long-run equilibrium.

A monopoly firm sells its product to two countries: A and B. Demand in the two countries are QA = 100 – 2p and QB = 80 – p. Firm’s cost function is C = 100 + 10Q. Find the firm’s total profit and the prices it charges in the two countries.

Your textbook (Microeconomics 9th Edition) gives 3 “motives” for holding money. Please list one of these motives and give an example, not the definition, of why you might hold money using the rationale of motive that you have selected.