1. A low value of opportunity cost of a resource reflects its scarcity.

1. True
2. False

2. Which of the following is an example of a macroeconomic question?

1. How will a consumer react if their income decreases?
2. What would be the likely impact of an increase in business taxes on the overall level of inflation in the country?
3. How many smartphones should Samsung produce this quarter?
4. Who are the winners and losers from the imposition of a tax on cigarettes?
5. What is the optimal number of workers for an ice cream shop to employ during the summer months?

3. Which of the following best describes the idea of the fundamental economic problem?

1. Lack of demand for limited resources
2. Unlimited resources and unlimited wants
3. Infinite resources and limited wants
4. Limited resources and unlimited wants
5. Limited wants and limited resources

4. Two countries with identical resources can each make the same two goods: cars and computers. Which of the following best describes the idea of absolute advantage for these two countries?

1. One country has higher opportunity costs of one good, and the other country has higher opportunity costs of the other good.
2. One country is able to produce more of a good or service than another country given the same resources.
3. Both countries have identical opportunity costs.
4. One country has a lower opportunity cost of one good, and another country has a lower opportunity cost of a different good.
5. One country is able to produce less of a good or service than another country.

5. Assume that the typical household in Country X will spend 80% of any additional increase in income. How much will real GDP change as a result of a $4 billion increase in investment in this country?

1. Real GDP decreases by $4 billion
2. Real GDP increases by $20 billion
3. Real GDP increases by $4 billion
4. Real GDP increases by $5 billion
5. Real GDP decreases by $16 billion

6. Which of the following best describes why we cannot always compare living standards between countries using real GDP per capita?

1. It might not represent living conditions of the typical household
2. It doesn't consider that there might be population differences between countries
3. It might overstate living standards if there are a lot of non-market transactions
4. It doesn't include government spending on social programs
5. It includes externalities like pollution

7. According to the circular flow model, how is the GDP of a nation determined?

1. By adding the total income of households to the total expenditures by households and the total revenues of firms
2. By adding the total income of households to the total revenues of firms
3. By adding the total expenditures of households to the total income of households
4. By determining either total household income, total household expenditures, or the total revenues of all the firms in the nation
5. By adding the total revenues of firms to the total expenditures of households

8. Which of the following best describes a market in equilibrium?

1. At the current price, quantity supplied is less than quantity demanded.
2. At the current quantity, the price sellers charge is more than what buyers are willing to pay.
3. At the current price, quantity supplied is greater than quantity demanded.
4. At the current price, quantity supplied equals quantity demanded.
5. At the current quantity, buyers are willing to pay more than sellers receive.

9. Which of the following best describes what happens in the long run when a firm anticipates that the price of their good will always be less than average total cost (ATC)?

1. The firm will shut down.
2. The firm will produce as long as price is greater than average variable cost.
3. The firm will exit the industry.
4. The firm will enter the industry.
5. The firm will produce as long as price is less than average variable cost.

10. The Alibaba Company produces widgets. Its average variable cost at its current output level is $35 per unit. Its current average total cost per unit is $60. If the market price is $30:

1. it should focus to minimize marginal cost
2. it should stay in business in the short-run
3. it should shut-down immediately
4. none is correct
5. it should stay in business in the long-run

QUESTION THREE [15]

3.1 Questions 3.1 to 3.2 is based on the excerpt below. Shine is one of many firms in the market for toothpaste which is in short-run equilibrium. It engages in advertising to create the perception of a unique product. Discuss the long-run aggregate supply curve.

3.1.1 Draw a diagram illustrating Shine’s demand curve, marginal revenue curve, average total cost curve and marginal cost curve, clearly labeling the company’s profit maximizing output, price and equilibrium position. Include in your answer how the profit position is determined. (10)

3.1.2 Determine why Shine is able to establish this profit position in the short-run, using the characteristics of the market structure this firm falls within as the basis for your answer.

QUESTION FOUR [20]

4.1 Examine which phase of the business cycle is linked to a contraction in gross domestic product. Use a diagram to motivate your answer. (9)

4.2 Three consecutive contractions in gross domestic product implies the onset of recession for an economy. Compile a fiscal policy to take an economy out of this undesirable situation. (11)

please answer the following:

14- An infinite life project with initial cost of $35,250 and a maintenance cost of $12,260 starting at year x and repeating every x years. If interest rate = 6% and x=6, find the capitalized cost CC.

15-Find the future worth FW of an annual amount of $3,226 increasing every year by $660 for 10 years, interest rate = 11%.

16-Starting at year 1, an amount of $4,026 is deposited in an account of 3% interest every year for 7 years. Find the value of the present worth PW at year 0.

17- A deposit of $9,750 is made at year 4, find the value of the future worth FW at year 10 , interest=7%.

In your own words, explain via the use of examples, the following commercial bank risks as well as their impact on commercial banking activities:

i. Reputational risk

ii. Country (i.e., Sovereign) risk

(400 words)

Ahmed and Mohammed want to start their own business. They are thinking to establish a factory to manufacture
sunglass in Oman. The factory needs an investment of OMR 600,000. Mohamed having OMR 150,000 and
Ahmed having OMR 250,000. They have a shortage of OMR 200,000. Ahmed suggests to take loan from Bank
but Mohammed suggests to sell shares to manage the investment shortage. They are confusing regarding the suitable source of finance to manage the investment shortage. This will affect the legal entity of their
organization. There are many forms of organization, but they are confusing between LLC and SAOG.

Furthermore, Ahmed suggest to hire the following employees:
 The Managing Director has the major responsibility for running of the company, including setting
company targets and keeping an eye on all departments.  The Distribution Manager is responsible for controlling the movement of goods in and out of the
warehouse, supervising drivers and overseeing the transport of goods to and from the firm.  The Production Manager is responsible for keeping a continuous supply of work flowing to all production
staff and also for organizing manpower to meet the customers' orders.  The Sales Manager is responsible for making contact with customers and obtaining orders from those
contacts.  The Finance Manager controls all the financial dealings of the company and is responsible for producing
management accounts and financial reports.  The Public Relation Manager is responsible for external communications, media, social media and
complains  The Human Resource Manager is responsible to handle all staff affairs, HRP, recruitment and selection,
etc.  The IT Manager is responsible for maintain the organization ERP and any technology within the
organization  Maintenance manager is responsible to maintain the production line and company assets.   
Also, they are planning to hire 5 distribution officers, 5 accountants, 5 HR officers, 3 Public relation officers, 10 Trade promotors, 5 Mechanical Engineering for production, 5 Mechanical Engineering for maintenance 100 production labours and 10 Labour supervisors.

Explain the main functional areas of a business organization that you have identified from the case study? Support your answer by identifying the responsible manager of each functions

1. In your own words, explain the entire process of the transmission mechanism in an expansionary monetary policy. (300-400 words)

2. In your own words explain what is meant by the following statement: ‘Commercial banks are continually faced with the dilemma between profitability and safety’. (250-300 words)

Suppose that a food processing plant and a chemical factory are located close to each other on the banks of a river. The chemical factory uses the river to discharge its emissions. The food processing plant (located somewhere downstream) suffers damages from the emissions as it requires clean water for its operations. Assuming MAC = 240-2E and MD = 3E, answer the following questions. Draw this diagram before answering the questions below. You will be asked to upload the diagram at the end of this assignment.

(iv) If the chemical factory has the right to use the river ( or has the property right), what is the net gain to the food processing plant in the bargaining equilibrium ( i.e from bargaining compared to the situation where they do not bargain)? Remember net gain/benefit means total benefits - total costs.

Explain moral hazard and give at least two examples. Discuss its implications as an informational asymmetry problem for financial crises.

Explain why quantitative easing to stabilize the US economy was considered a moral hazard (i.e., why will QE paid in 2008 will cause future banks to behave badly).

Explain the so-called impossible trinity (also known as open economy trilemma). Using the diagram, discuss the policy alternatives of the monetary authority under different scenarios.

Select TWO companies from the same industry. Select a country (other than the companies’ home country) that is a market for the companies. Discuss the demographic, cultural and economic characteristics, including how the local demographics and economics affect the value proposition of the product or service offered by the companies. What is each company’s value proposition? Include how each company adjusted its value proposition for the selected country. Research the demographic and cultural characteristics of the middle class in the country or countries you are evaluating?

Explain moral hazard and give at least two examples. Discuss its implications as an informational asymmetry problem for financial crises.