Peter has an inheritance that promises to pay him 11 year-end amounts of $5,000 starting exactly 3 years and 3 months from today. If he earns 4.2% p.a., how much is the inheritance worth in present-day dollars?

Select one:

a. $37,910.15

b. $39,502.38

c. $42,258.17

d. $41,154.33

Consider the Cobb-Douglas production function Y = e^b0 K ^b1 L^b2 e^ui where Y, K and L denote real output, real capital input, and real labor input, respectively. The data for estimating the parameters of the production function are given in the Excel data file productionfunction.xls.

1. Perform a logarithmic transformation of the production function to linearity so that it can be estimated by OLS.
2. Compute the correlation coefficient between income lnK and lnL and comment on the potential for multicollinearity.
3. Obtain OLS estimates of the model ln Yi = b0 + b1 ln Ki + ui   i=1,2,...,24 and their t-ratios and comment on the significance of the slope coefficient. Use 5 percent level of significance. Does the estimated slope coefficient make economic sense?
4. Obtain OLS estimates of the model ln Yi = b0 + b1 ln Li + ui i=1,2,...,24 and their t-ratios and comment on the significance of the slope coefficient. Use 5 percent level of significance. Does the slope coefficient make economic sense?
5. Obtain OLS estimates of the model ln Yi = b0 + b1 ln Ki + b2 ln Li + ui i=1,2,...,24 and their t-ratios and comment on the significance of the slope coefficients. Use 5 percent level of significance. Do the slope coefficients make economic sense?
6. By comparing the results in parts (c), (d) and (e), what is the impact of multicollinearity on the signs and significance of the coefficients?

Production Function:

Labor markets are an important concept to understand in terms of how wages are determined. Identify one demand and supply factor that can impact wages in markets. Explain one of the main reasons why the large wage gap exists in the United States and provide one solution of this wage gap.

Why is there a market failure in the 401(k) market? (Hint: read chapter 8 and its description of imperfect information) Write at least 2 paragraphs.

Explain how to determine whether the law of demand holds given an input demand function and whether L and K are complements, substitutes, or unrelated inputs.

Compare and contrast the impact of a change in the price of a good on the utility-maximizing bundle of goods with the impact of a change in the price of input on the output maximizing and cost-minimizing bundles of inputs.

France's hybrid system of government. How does the hybrid system solve some of the problems France experienced with a parliamentary system?  

There are 4 ways of finding out how much people are WTP for improvements in environmental quality. One of them is “Hedonic estimation”. Explain this method by using an example?

The reasons why the housing market is of particular interest to the Reserve Bank , and the steps the Bank can take to mitigate risks that might arise from the housing market. Make sure you discuss the macroprudential policy measures that the Bank has put in place to address concerns arising from the housing market

Why Might Restaurants be Considered Safe During the Current National Pandemic?

Stephan Logan, M. Sc., Indigo Instruments, Modern Resource Management, wrote on March 10, 2000 that:

"There may be a threat to the restaurant industry (during the national pandemic) but in reality, they are the safest places other than your own kitchen."

Based on what was conveyed in the Webinar, would you agree with this statement? Why or Why Not?

Are there any variables that might cause you to disagree? Why?

5. Assume that a country produces an output Q of 50 every year and that r* = 10%. Consumption C is 50 every year, and I = G = 0. Suppose there is a temporary drop in output in year 0, so Q falls to 28. Q returns to 50 in every future year. If the country desires to smooth C, how much should it borrow in period 0? What will the new level of C from then on? (Hint: calculate the new present value of output and then estimate the new constant level of consumption.)

A. The nation borrows 20 in period 0 and the new level of C is 48.

B. The nation borrows 22 in period 0 and the new level of C is 28.

C. The nation borrows 28 in period 0 and the new level of C is 36.

D. The nation borrows 48 in period 0 and the new level of C is 22.

6. If a nation experiences an output shock and wishes to borrow to smooth consumption, how much of consumer spending must it forgo each year to achieve consumption smoothing and maintain the long-run budget constraint?

A. an amount equal to r*/(1 + r*) of the output shock

B. an amount equal to r* as a percent of the former level of GDP

C. an amount equal to 20% of its output shock

D. 95% of the output shock

7. Which expression below represents the change in wealth in period 0? Use the following notation: Δ denotes change, W_t is external wealth at time t, TB_t is the trade balance during time period t, and r* is the constant real interest rate. Assume that net labor income from abroad is zero, there are no capital gains on external wealth, and there are no unilateral transfers.

A. ΔTB₀ = W₀ + r*W_-1.

B. ΔW₀ = TB₀ + r*W_-1.

C. ΔW_-1 = ΔW₀ + TB₀.

D. ΔTB₀ = ΔW_-1 + r*W_-1.

What are the possible consequences for Yemen in terms of it being labeled a failed state?

In the case of Yemen, how does nationalism lead to conflict?