1. What function is a horizontal line when Aggregate Expenditure = C + I + G + (X – M)?

Imports

Government spending

Consumption

2. The goal of the government of Swansia last year was to increase the level of aggregate demand by reducing tax rates. What fiscal policy type did Swansia use?

discretionary and expansionary

contractionary and automatic

automatic and expansionary

3. If Congress passed a new budget that increased taxes it would?

reduce the gross domestic product to a new equilibrium as it rises and the aggregate demand shifts to the right.

increase the gross domestic product to a new equilibrium as aggregate demand shifted to the left

reduce the gross domestic product to a new equilibrium as aggregate demand shifted to the left.

4. Corporate stock ________.

is considered to be a loan from a bank.

represents debt in a firm.

represents ownership in a firm.

Given

Choosing between two proposed traffic safety project intersection of a high crash rate intersection. Two solutions are proposed.

Project A: build a 5.57 million dollars overpass to separate the two roadways. The estimated value of the crash avoided will be 513000 per year over the next 20 years.

Project B: improve the geometry and signal timing at the intersection at a cost of 418000 dollars. The estimated value of the crash avoided will be 61800 dollars per year over the next 20 years.

Required:

A- What is the percent worth benefits and costs (PWB and PWC) for each project? Show cash flow diagrams and calculations. The current interest rate is 5.4% per year.

B- Using Net Present Worth NPW which project is better?

C-Using the benefit cost ratio BCR which project is better?  

Discuss and illustrate graphically the difference between a change in quantity supplied and a change in supply.

8.         List and discuss the factors that shift supply. Illustrate graphically.

9.         Define, discuss and illustrate graphically equilibrium in the olive market. Define and illustrate graphically excess demand and excess supply.

1. Consider the following game. Player 1’s payoffs are listed first:

1. Imagine that player 1 makes a decision first and Player 2 makes a decision after observing player 1’s choice. What is the subgame-perfect equilibrium of this game?

2. Imagine that player 2 makes a decision first and Player 1 makes a decision after observing player 2’s choice. What is the subgame-perfect equilibrium of this game?

3. Are your answers to (a) and (b) above the same or different? Explain.

1. Two friends are deciding where to go for dinner. There are three choices, which we label A, B, and C. Max prefers A to B to C. Sally prefers B to A to C. To decide which restaurant to go to, the friends adopt the following procedure:

                                First, Max eliminates one of three choices.

Then, Sally decides among the two remaining choices.

Thus, Max has three strategies (eliminate A, eliminate B, and eliminate C). For each of those strategies, Sally has two choices (choose among the two remaining).

1. Write down the extensive form (game tree) to represent this game.

2. If Max acts non-strategically, and makes a decision in the first period to eliminate his least desirable choice, what will the final decision be?

There is much discussion about the likely structure and direction of international trade once the Covid-19 crisis is over. One view is that demand for Chinese products, and thus exports of China to the world will decline. Explain the impact of this decline on welfare (please specify whose welfare) in the context of (i.e. using the assumptions and predictions of) (a) the standard model and (b) a model where there are external economies of scale in the production of products that China exports.  

In your own words (you cannot paraphrase), explain the adverse selection problem that car insurance companies face and how they deal with it. Finally, in few words explain whether insurance companies should only insure safe drivers.

Provide an example of positive externality and an example of negative externality that would justify protectionism. Discuss how protectionism can help reach that goal. If you can think of a better policy to reach the goal desired through protectionism, please explain that policy and why it would be preferable

Explain in your own words why banks exist (again you cannot paraphrase). Be as specific as you can. Think about what problems they solve.

In the United States some critics of the World Trade Organization say that it has failed to protect US interests. Others disagree. Given that high technology products and agricultural products are important export items for the US, which WTO agreements could have been used to protect US interests in these areas, and in what way?

The flow of globalization changed backward to old days ; how ?