You are informed that there is empirical evidence that developed countries have much higher rates of COVID-19 infection than developing countries. A researcher informs you that this is a very strong and significant evidence on the negative causal relationship between economic development and infection rates. a- Do you agree that this reflects a negative relation between economic development and infection rates? Explain. (hint: negative is referring to the direction of the relation or the slope if you were to graph it). [2.5 marks]

b- Do you agree that this evidence is significant? Explain [2.5 marks]

c- Do you agree that this is a causal relation? Support your answer by providing a reason

Explain

a) how unions can work to widen wage gaps for workers and to reduce overall employment in an economy.

b) how unions reduce efficiency and produce deadweight loss in an economy

How did Iran become a nuclear power- how did they get this technology - fission technology and missile technology?

Suppose the government is concerned with its large trade deficit. Politician A proposes to encourage consumers to buy more domestically produced goods by running "Buy American" marketing campaigns. Politician B proposes to reduce government spending in order to tackle government debt.

A.) How does Politician A's plan affect the trade deficit and why?

B.) How does Politician B's plan affect the trade deficit and why?

C.) Which of these two policy choices, if any, will be effective in reducing the trade deficit in the long run?

Why are banks holding so many excess reserves and why is the money multiplier less than one? (500 - 650 word explanation please!)

As of March 2020, the average unemployment rate in Europe (6.6%) is higher than in the U.S. (3.5%).

A. Explain one difference between the European and U.S. economies that is consistent with more structural unemployment in Europe.

B. Explain one difference between the European and U.S. economies that is consistent with more frictional unemployment in Europe.

Briefly explain the economic philosophy behind the New Deal and give an example.

1. Consider the Solow growth model with population growth and growth in the efficiency of labor. Suppose that 2 countries A and B have the same production function given by Yt = Ktα(LtEt)1−α, the same rate of growth of E (g), the same depreciation rate of physical capital (δ) and the same saving rate s. The initial level of E, E0, is lower in country A than in country B.

   1. (a) Compare the steady-state levels of output per effective worker of these two coun- tries.

   2. (b) Assume now that at time 0 both countries are above the steady state and that k0A = k0B (i.e., the level of capital per effective worker at time 0 is the same in both countries) and continue to assume that the initial level of E is higher in country B than in country A. Draw log of output per capita for these two countries as a function of time (have time on the x-axis) starting in period 0 and show how they both converge to their respective balanced growth paths.

   3. (c) Do these countries converge to each other in output per capita? Defend your answer.

What is reciprocal arbitrage?

1. Discuss the differences calculating GDP using the expenditure approach and income approach. Be specific, do not just write the formula.

Q.2 AD-AS model analysis for an increase in oil price

• Start with an initial AD-AS model with full employment equilibrium. Please label all the axes and the curves. Label the equilibrium as “1”.

• Let’s say that there is an oil shock (the price of oil has increased). What happens to which curve? Make sure to show the changes in the above AD-AS model. Therefore, what happens to the equilibrium and the economic condition? Explain all the changes in writing as well.

• What do we call this economic status? Explain how this economic situation is not the same as the recession in general.

Suppose the country is currently experiencing a recession. What type of fiscal policy can the government use to fight off recession?