The United States economy is currently operating above the full employment level of GDP.

1. Draw a correctly labeled AD/AS graph for this economy showing equilibrium output and price level.
2. Identify an open market operation that the Federal Reserve could enact that will solve the problem.
3. Show and Explain how the policy you identified in (B) will affect each of the following in the short-run.
   1. output and employment
   2. price level
   3. nominal interest rates
4. If the interest rates you identified in (C) continued, explain what will happen to the following:
   1. U.S. financial assets
   2. International value of the dollar

This is our last discussion of the quarter, it's about the Currency Exchange and its effects on the macroeconomics:

1) Compared to Three (3) other currencies such as Canadian, Euro, China, and Japan (or other currencies you have interest in), please find out if the US Dollar currency has appreciated or depreciated since one year ago?

2) What are the effects of the appreciated/depreciated US dollar to the economy of the United States? State two positive effects and two negative effects.

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?

1. Explain what the gravity model of trade predict are the major predictors of trade flows between countries. Discuss how this model helps to explain trade flows using three of its leading trade partners as examples.

Consider the predictions of the HO model and the Ricardian model of trade with regard to overall gains from trade, specialization, and distribution of income generated.

1. Explain the Leontief paradox. Make sure to explain why it is a paradox. Provide at least

   three explanations for this paradox.

Based on your research, why did the colonists end up declaring their independence from Britain? Trace the series of events, from the French and Indian War to the Battles of Lexington and Concord. Include details of at least four events in a paragraph of five to seven sentences.

The table below shows the demand and supply of coats in Small Town.

a. What is the equilibrium price of coats?

b. Will a shortage or surplus occur?

c. At what price will the most coats sold be sold?

d. The mayor of SmallTown in order to "help the poor by making coats cheaper", imposes a price ceiling of $40. How many coats will be bought and sold? Will a surplus or shortage of coats occur?

e. The mayor of Small Town, in order to "help protect our coat industry," imposes a price floor of $80 instead. How many coats will be bought and sold? Will a shortage of coats or surplus occur?

To answer all the questions, it will be easy for you to draw the supply and demand graph first to see the whole picture. Keep it up!

When customer wants to purchase a goods, he/she will engage in a decision-making process. Please use the model “consumer decision making process” (5 steps) to discuss the purchasing process of one high involvement purchase situation based on your own experience.

Discuss three parameters for firms operating in an oligopoly market. Even when allowed to collude, firms in an oligopoly will choose to cheat on their agreements with the rest of the cartel. Why?

What is the role each of these characters, listed below, play in the unification of Italy in the Leopard, by Giuseppe Tomasi di Lampedusa.

Characters are: Angelica, Don Calogero, Father Pirrone, and Concetta

Discuss the legal aspects of adverse impact and what recommendations could be made to reduce adverse impact .

Private tuition centres are a big industry in Singapore with over 500 such centres that reportedly serve more than 95% of all college students. Tuition fees can be high and some families pay more than $3000 a month to send their children to private tuition. Using the theory and models of market structure, examine this industry. Should government be worried about any aspect of how an industry with this particular market structure will perform?

QUESTION THREE [25]

3.1 “Patent laws, (which can last up to twenty years), in South Africa gives a pharmaceutical company monopoly power on the sale of any new medication that it discovers.” In terms of the above statement answer the following questions:

3.1.1 Discuss the profit maximisation position of the firm in the short-run and long-run whilst it is protected by the patent. (12)

3.1.2 Explain the change that occurs in terms of the market structure when the patent expires. (5)

3.1.3 Explain the profit maximising position of the new market structure in the short-run, in other words after the patent expires.