International trade theory implies that international trade benefits all trading countries. However, empirical observation confirms widespread restrictions to international trade flows imposed officially by countries. How might these two facts be reconciled? Discuss.

With the onset of the coronavirus pandemic, Jerome Powell, the head of the U.S. Fed, decided to step up the Fed’s purchases of bonds to unprecedented levels.

a. Using wealth portfolios, symbols, and diagrams (that are neither especially Keynesian or Classical) illustrate the effect of the Fed’s purchase of short-term bonds would have on the money market, the bonds market, the level of investment, and the levels of real output in the U.S. economy.

b. But many financial observers worry about the effect of a flight to cash even from holders of relatively liquid assets such as money market mutual funds and the anxiety that banks and corporations feel about an increasingly uncertain economic future will have on the effectiveness of the fed’s policy.

Using a money market diagram, an investment schedule, and an IS/LM diagram illustrate and explain the likely effect of those conditions on the effectiveness of the Fed buying bonds.

a) Assume that yesterday (April 22, 2020) the interest rate on dollar deposits in the U.S. was 0.02 (2%) per year and the interest rate on euro deposits was 0.02 (2%) per year. Investors yesterday expected that the exchange rate in one year (April 22, 2021) will be 2.02 dollars for one euro.

What was the current exchange rate in terms of dollars per euro yesterday (April 22, 2020)?

Illustrate your answer, using a graph with the rates of return (in dollars terms) on the horizontal axis, and the exchange rate on the vertical axis.

b) Now, assume that today (April 23, 2020) the Federal Reserve lowers the interest rate on dollar deposits to 0.01 (1%), and the European Central Bank lowers the interest rate on euro deposits to zero (0%). There is no change in the expected exchange rate a year from now - that is, on April 23, 2020 investors expect that the exchange rate on April 23, 2021 will be 2.02 dollars for a euro.

What is the current exchange rate today (April 23, 2020), right after the reductions in the interest rates? Has the dollar depreciated or appreciated between April 22 and April 23? Why? Is your answer consistent with the textbook’s claim that a reduction in the interest rate on dollar deposits should cause a depreciation of the dollar?

Illustrate your answer, using a new graph with the rates of return (in dollars terms) on the horizontal axis, and the exchange rate on the vertical axis.

c) What is the effect of the change in the exchange rate above (from April 22 to April 23, 2020) on exports of American goods to Europe? And on exports of European goods to the United States? Explain. (You don’t need to provide numbers, only the general direction of the changes: going up or going down). Who will benefit and who will lose from these changes in the United States?

d) Now, assume American exporters successfully lobby the Federal Reserve, and convince it to adopt a new monetary policy that will boost American exports. Thus, on April 24 the Federal Reserve decides to change the interest rate on dollar deposit once again, with the objective to cause a 1% depreciation of the dollar with respect to the euro (that is, a 1% increase in the amount of dollars required to buy a euro). Assume that the European Central Bank does not react to the new actions by the Federal Reserve, and that investors’ expectations about the future value of the euro remain unchanged (that is, they expect that the exchange rate on April 24, 2021 will be 2.02 dollars for a euro). What interest rate should the Federal Reserve select in order to achieve its objective? Explain.

Illustrate your answer, using a new graph with the rates of return (in dollars terms as usual) on the horizontal axis, and the exchange rate on the vertical axis.

e) Now assume that, unlike in part d), investors, when they hear that the Federal Reserve intends to devaluate the dollar today, also adjust their expectations about the future: now, they expect that the exchange rate on April 24, 2021 will be 2.0402 rather than 2.02. What interest rate should the Federal Reserve select now, on April 24, 2020, in order to achieve its goal of depreciating the dollar by 1% from April 23 to April 24? Explain (no need to illustrate this answer graphically, just give the answer in words).

Maurice has the following utility function: u (X, Y) = 50X + 60Y - 5X² - 2Y², where X is his consumption of CDs with price of $ 5 and Y is his consumption of movie videos, with a rental price of $ 6. He have plans to spend $ 460 on both forms of entertainment. Determine the number of CDs and video rentals that will maximize Maurice's utility. What is Maurice's maximum utility equal to? (Hint 1: MU, = 50 - 10X, MU, = 60 - 4Y) (Hint 2: MU, / P, = MU, / P;)

1. Suppose that the U.S. International Trade Commission (USITC) is considering using trade policies to protect U.S. wheat farmers/producers. The USITC plans to use the following trade policies: (i) an export subsidy (ii) a production subsidy; (iii) an export tariff; and (iv) an export quota. Assume that the U.S is a small Home country in the world market for wheat.

a. As an international trade lobbyist for U.S consumers and taxpayers, which two of the four forms of trade policies would you strongly support and why? [20%] [ Approximately 200- 400 words]

b. From the remaining two forms of trade restrictions, which one would you oppose strongly and why? [10%] [ Approximately 100- 200 words]

Draw the graphs to explain the changes in consumer surplus, changes in producer surplus, changes in government revenue and the net welfare loss due to each of the trade policies that you have selected. Be sure to discuss other important differences among the trade policies for the organization that hired you as a lobbyist.

Please use the following table, which represents the costs and benefits of a new bridge.

Now consider the following interest rates 0%, 10% and 50%. Calculate

A the net benefits with all interest rates

B the benefit-cost ratio with all interest rates     

a) Obtain the value of nominal GDP and real GDP in 2018 and 2019 for this economy.

b) Explain why looking just at the evolution of nominal GDP would make an analyst erroneously conclude that this economy has gone through a severe crisis/recession in 2015

Income Gap Growing In 2009, people in the highest quintile had 24.6 times as much market income as those in the lowest quintile, but after taxes and transfers the people in the highest quintile had 9.1 times as much income as those in the lowest quintile. In 1989, the people in the highest quintile had 7.2 times more income after taxes and transfers than those in the lowest quintile. In 1990, 82.9 percent of the unemployed received unemployment benefits. In 2009, 47.8 percent of the unemployed received unemployment benefits. Source: Conference Board of Canada, July 13, 2011

How have changes in employment insurance changed the income gap between the richest and the poorest Canadians?

1. What is supply?

2. What is demand?

3. How does the price system address the problem of alternative uses of time and labor?

The state of Georgia is considering the construction of a high-speed rail system to alleviate traffic congestion, especially across the Atlanta Metropolis at a cost of $45 billion. Some of the funding will come from the Deutsche Bank financial institution, while most of it will be through the issuance of state bonds, with the rest financed by private investors who will own shares in the rail system. Explain how financial intermediation is necessary to make this project a reality. Why couldn’t the state use the tax revenues it collects during the current year to pay for it?

With the demographic consistently changing, large advances have occurred with regard to structuring campus life in ways that are welcoming and inclusive of LGBTQ students. True or False

The election of the nation’s first Black (or biracial) president meant that race became irrelevant. True or False

White people immerse themselves in antiracist thinking and practices as a way to hold themselves and their own culture accountable for racial problems.

Give an example of each a commonly owned substitute and commonly owned complement (please note the spelling of complement, different from a compliment you give someone, a complement goes with something else, in geometry complementary angles sum together to equal ninety degrees). You must list the company owning (not a retailer selling two different products as the retailer only owns the inventory and not the brand) each product. For example, both Tide and Cheer laundry detergents are manufactured by Procter & Gamble and are substitutes for one another. You probably use one but not the other at any one time. Procter & Gamble also makes Downy Fabric Softener, a complement to one of the detergents. You use fabric softener in conjunction with the laundry detergent. Why are the products substitutes and complements? Do you believe the companies engage in optimal pricing (this may be an educated guess).  Note that Procter and Gamble might offer a coupon for $3 off when you buy both Tide and Downy. That would encourage buying the two products together.

Please do not use stores carrying products as an example. Any hardware store is going to carry numerous substitute products as well as complementary products.

I need a clear example of how fair trade has allowed richer countries to exploit less economically developed countries for their natural resources and payed them alot less

Egypt is the second largest sugar producer in Africa. The Egyptian government encourages the production of beet sugar especially in the northern part of the country because it is less water intensive than sugarcane. In 2007/2008 sugar production was about 1.67 million tons. In 2008/2009 Sugar production was about 1.7 million tons, only 1.4 percent more than in 2007/08, because attractive cereal prices, especially for wheat, have contained the expansion in beet areas. In 2009/2010 Sugar production in Egypt reached 1.8 million tons, 100,000 tons more than in 2008/09, in response to increases in beet area driven by remunerative beet returns. In 2010/2011 sugar production in Egypt, remain about the same as last year.

The consumption in sugar in Egypt surpasses its domestic sugar production, a situation that can be attributed to growth rate in population. Sweets are very popular in Egypt, and it is estimated that Egyptians’ consumption will increase more and more per year, with much of this met through imports. The confectionery subsector accounts for the lion’s share of sugar demand, while the soft drinks sector is also increasingly contributing to this demand growth. Consumption rose along with the growing population and rising disposable incomes. Such higher per capita sugar consumption in Egypt is due to the fact that sugar is considered a complementary good for tea. And it is natural product which is better than the artificial sugar.

The Egyptian government has dedicated areas to the farming of sugar cane reasonably constantly, so as not to limit employment in this economically vital industry. However, sugar cane production growth is hampered by the scarcity of domestic water resources and land; this means that the main factor underpinning future output growth is likely to be higher yielding crops. Sugar beet is therefore seen as a worthy and lucrative crop with the potential to significantly reduce the sugar import burden in future. Whilst cane production is predominantly state-owned, due to the costliness of maintaining the required water resources, beet cultivation is almost entirely in private hands.

The government plays a major role in providing people with good quality products. In Egypt, Delta sugar production is the highest quality of sugar beets which ensure its customers receive the best quality of granulated sugar. Sugar is a fundamental human food product. Besides its direct consumption, there are all the industrial applications in which sugar becomes one of the components of the final product. Delta Sugar is the leading producer of sugar beet in Egypt providing more than 25% of the country’s sugar requirements. The sugar industry in Egypt is regulated by several entities including, the Ministries of Agriculture, Investment, Trade and Industry. The former sets the national crop plan and minimum procurement prices, whereas the latter ministries govern the establishment of factories/refineries and trade of sugar, both domestically and internationally.

The government has had a monopoly on sugar processing since 1963. The existing eight sugar mills, as well as the one sugar refinery and distillery at Hawamdia, are under the Sugar Integrated Industries Company (STIC). During 2009/2010, the market is composed of 63% subsidized sugar packs supplied through card holders. (Tamween Sugar), 37% commercially packed sugar by public/private companies from imported and local sugar origins. At present, the market consists of five public and four private companies with a combined production that is divided between cane and beet companies with the former holding a share of 61% and the latter a share of 39%. There is only a sole sugar cane producer in the local market namely, Sugar Integrated Industries Company (SIIC) which controls 62.83% of total sugar capacity, 61% through its sugar cane facility and 1.83% through its sugar beet facility. The remaining four companies in the market use beet in producing sugar and hold a combined share of 37.2% of total sugar capacities.

One problem the country faces is volatility in the price of international sugar: although world sugar prices fell between February and May 2010 from a 29-year high in January, sugar prices have moved steadily upwards again. In December 2009, the Egyptian government decided to extend the exemption of duties on raw and white sugar imports until the end of June 2010. After experiencing a very strong growth of 20.8% between 2004 and 2009, sugar production in Egypt is forecast to experience a slight slowdown, expanding by 18.9% during 2014.

On the demand side; domestic sugar demand is unlikely to experience any sharp decline, even in the face of an economic downturn. This is because the bulk of demand comes not from the high-end confectionery industry, but, rather, for domestic use and from the mass market soft drinks and confectionery industries; these sectors tend to be more resilient in the face of an economic downturn. However, if food price inflation were to continue to remain high, this would eventually have an impact on even these mass market industries. The sugar quantity consumed is influenced by the number of population, the price of sugar, real individual income, and the production and imports of sugar.

In order to ensure that the supply of sugar continues to grow in accordance with rising demand, the Egyptian government has announced substantial investments in the sector; the government has also sought to encourage private-sector foreign investment. The investments will also be used to boost beet sugar production at several factories, including a new plant for Delta Sugar Company second production lines at Dakahlia Sugar Company and Nubariya Sugar. Meanwhile, in recent months a number of multinational firms have begun to target Egypt's sugar refinery industry.

The consumer price is affected by the changes in sugar price that is affected by the changes in consumption. The price elasticity of demand estimated at 0.115 and the income elasticity of demand estimated at 0.088 reveal that sugar is a necessary commodity with low income elasticity of demand. Supply elasticity in 2010 is 0.03 (inelastic supply). Quantity supplied does not respond strongly to changes in price, as supply price elasticity is less than one. This inelasticity is related to the unavailability of producing more sugar in this short run period because increasing the production would need two things in the same time and the time required to activate a new production line takes time between 2 and 3 years.

Give examples from the case to explain concept of scarcity, trade off, opportunity cost.

List the factors affecting demand and supply from the case

Determine the reason behind shortages in the sugar market.

Give example for sugar complements and substitutes

Explain the role of the government to improve market outcome