Imagine the following hypothetical situation. Two firms, Super Chic Farm and Fortune Poultry, have become the only suppliers of fresh chicken meat in Singapore. Both firms are seeking to increase their profits and are considering entering into illicit price collusion by agreeing to charge artificially high prices. Such a practice is illegal and risks heavy fines. Analyse the interaction between the two firms using game theory. Present a payoff matrix to model the situation and analyse it for Nash equilibrium. Which is the best outcome for each firm? Which is the best outcome for society as a whole? What can be done by the firms or government to make society’s best outcome more likely?

Employers often select applicants based on whether they hold an academic degree. In most countries, universities need to be granted charters from government to be able to award academic degrees to their students. In return, universities must abide by comprehensive and detailed government regulations upholding appropriate standards for teaching, examination and lecturers. Use the theories of market failure and government intervention to explain the reasons for government intervention into the market for higher education. Critically discuss potential problems with these interventions.

Right now many economies in the world are experiencing a downturn due to the Corona Virus.

a) What kind of fiscal policy can governments use to address the decline?

b) What actions will be taken by the government in implementing the fiscal policy that you described in part a?

c) What will be the effect on Aggregate Demand (if any) as a result of the actions taken in part b?

d) What will be the effect on Aggregate Supply (if any) as a result of the actions taken in part b?

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1. Consider an economy described by the following equations:

1. Real Sector                                      b. Monetary Sector

Y=C + I +G                            Demand for Money; r = 100 - M

C = 100 + 0.8 (Y –T)                    Supply of Money : M* = 90

I = 400 – 20 r

G =120

T = 100

Where Y is GDP, C is consumption, I is investment, G is government purchases, T is taxes, and r is the interest rate (%). And M is the stock of money. If the economy were at full employment (that is at its natural rate), GDP would be 2,000.

1. Assuming no change in monetary policy, what change in government purchases would restore full employment?                           

ΔG =_______________

2. Assuming no change in fiscal policy, what change in interest rate (Δ r) would restore full employment?                                        

Δ r =________________

3. In case of (5), assume that the inrease in government purchases raises the demand for money in (b) monetary sector from r= 100 - M to r = 110 – M. This causes the equilibrium interest rate to rise to a new level (r**) and the investment to be reduced to a new level (I**).                  

Find out r** __________ and I**___________

4. Continuing from (7), the increase in interest rate implies the cost of borrowing will increase and therefore, it will reduce investment which is defined as________________
5. Draw two diagrams (a) The Money Market and (b) The Aggregate Demand Curve below to explain (7) and (8):

1.                                   (b)

Assume the Australian economy is originally at the long-run equilibrium.

An abrupt house price crash sends shockwaves throughout the economy.

In response to such a shock, households bring their spending on durable goods to the bare minimum, while firms cancel all future upgrade or expansion projects.

Required:

(a) Explain how the long-run aggregate supply (LRAS), the short-run aggregate supply (SRAS) and the aggregate demand (AD) will be affected by the above shock. Clearly explain why such change(s) would occur. (1 + 1 = 2 marks)

(b) Clearly explain how the above shock would affect the key macroeconomic variables (real GDP, unemployment rate and price level) in the short run. (1 mark).

(c) In order to counteract the above shock, do you recommend the government to implement expansionary fiscal policy or contractionary fiscal policy? Clearly explain why. (1 mark)

(d) Clearly explain what actions the government can undertake in order to implement the fiscal policy stance recommended in (c). (1 mark)

During the novel coronavirus (COVID-19) pandemic, the Singapore government introduced lockdown measures and travel restrictions that severely reduced the trade of many small businesses. Singapore government is concerned about business closures, loss of income and unemployment in the markets concerned and is considering further interventions especially as the danger from the virus is beginning to subside. Using the demand-supply model, explain these phenomena in one or two markets of your choice. Advise which market interventions, if any, government should conduct in these markets and why.

Assets- reserves: 75000 loans : 430000

liabilities : deposites : 500000 net worth : 5000

a) Suppose that a bank has the following balance sheet and you deposit $5000 in currency into your cheque account at such bank. Use a T-account to show the initial impact of this transaction on the bank’s balance sheet. What is the impact of this transaction on M1?

(b) If the bank holds a reserve ratio of 0.1, what is the maximum amount the bank can loan out. Suppose that the bank intends to loan out the maximum amount it can. Show the impact of the loan on the balance sheet.

to maintain price floors on milk, the u.s. government has at times bought out and destroyed entire dairy herds from dairy farmers. whats the economic logic of these actions?

The following example illustrates how inflation raises the tax burden on saving:

Economy A                    Economy B

        Nominal Interest Rate             5%                             10 %

        Inflation Rate                     3%                             (b)

        Real interest rate                 (a)                              4 %

        Reduced interest due to 20% tax

            (0.2 x nominal interest rate)    1%                            2 %

        After-tax nominal interest rate

           (0.8 x nominal interest rate)     4 %                            8%

        After tax real interest rate          (c)                             (d)

        Fill in with appropriate numbers: (a)___________ (b)___________ (c)__________ (d)____________

1. Explain airasia internal environment macro environment and micro environment

200-500 words

1. Why are some countries richer than others according to Adan Smith (1776)

2) Loanable Funds Market

2.1 Graph Supply Curve

  Explain in detail.

2.2) Graph Demand Curve

Explain in detail

2.3) Graph Supply and Demand in interaction

Explain Price equilibrium - Interest rate

2.4) Graph Supply and Demand when there is a Saving Incentive.

2.5) Graph Supply and Demand when there is a Tax Incentive.

Business cycles are pervasive in all macroeconomics variables. Does the relative duration of expansions and recessions help explain the fact that long term economic growth has been positive.

Identify the two major ways economic growth is measured.