Your role. You are an international development consultant who has been contracted by a country to provide advice on a strategy to increase long-run economic growth. The country’s current economic state. The country is currently in a stable economic situation. It’s income per capita has been growing at an almost constant but low rate for the last 10 years. Growth rate as well as the level of income per capita has been significantly lower than in neighbouring similar countries, which has made the government wonder if it would be possible to increase the rate of growth in the years to come. The average household expenditure in consumption is larger than in neighbouring similar countries while the population growth rate and capital depreciation rate are approximately the same. Your task as a consultant. The government would like to increase the growth rate of income per capita in the coming years to achieve a level of income per capita in the long run that is comparable to neighbouring similar countries. Three prestigious political leaders of the country have recommended three different policies to achieve the government’s objective. Your task is to choose the right policy for the country using the Solow Model to substantiate the arguments in favour of your choice and the arguments against the other two policy options. Policy proposals

• Political leader 1: “The government should implement a policy to permanently increase the population growth rate by, for example, improving child-care services and providing social-security payments that increase significantly when families have an additional child”.

• Political leader 2: “The government should implement a policy to incentivise consumption, so the proportion of disposable income allocated to consumption increases permanently”.

• Political leader 3: “The government should implement a policy to incentivise the population to increase the saving rate, so the proportion of disposable income allocated to saving increases permanently”. Instructions. Assume the country’s economy is currently at steady state.

a. Indicate which policy option is the best strategy to achieve the country’s economic objectives.

b. Use the Solow Model without technology to explain your answer in point (a) above. Write your answer in no more than 200 words and use the Solow Diagram to illustrate.

c. Use the Solow Model without technology to explain why the other two policy options (the two policy options you did not choose in point (a) above) are not recommendable to achieve the government’s objective. Use the Solow Diagram to illustrate your argument against each of these two policies.

E. In the real world, complete specialization does not happen and trade barriers do exist. Usually this is in the form of tariffs and other barriers to reduce imports. Several arguments are used to explain why trade barriers are needed including protecting domestic jobs and national security. Traditionally, the national security argument has been used very selectively for specific industries like. However, the recent Covid-19 crisis has put in sharp focus the issue of fragile supply chains that span over the globe. With several countries (including the US) putting restrictions on exports of vital supplies like face masks, hand sanitizers, food products, CO2 etc. for national security reasons, explain what changes in trade policy might take place over the next few years because of these complications. Discuss if and why this is now justified. (3 points) [Hint: Write a short essay on this topic (between 100-150 words). You can use the small country trade model graph to help explain your position.]

When the ratio of domestic prices to foreign prices rises:

Select one:

a. the real exchange rate appreciates only when the nominal exchange rate depreciates.

b. None of these

c. the real exchange rate appreciates even when the nominal exchange rate is constant.

d. the real exchange rate depreciates.

e. the real exchange rate appreciates only when the nominal exchange rate appreciates.

Describe the relationship between annual objectives and policies.

Your response should be at least 200 words in length.

1. Describe the differences between value delivery network and value chain. Explain how each are critical to successful marketing planning.

Discuss the financial issues surrounding building a new college football stadium based on Maxcy and Larson's "Reversal of Fortune or Glaring Misallocation: Is a New Football Stadium Worth the Cost to a University?"

Assume that U.S. can produce two goods, compact discs and apples. Compact discs are produced using capital and labor. Apples are produced using land and labor. The total supply of labor is 20 workers. Given the supply of capital, the marginal products of labors are as follows:

Suppose that the price of a compact disc is $2 and the price of apples is $1

The equilibrium allocation of labor between the compact disc sector (L_CD) and the apple sector (L_A) is respectively

B)

Suppose that the price of a compact disc is $2 and the price of apples is $1

The equilibrium wage rate (w) is

1. This question is based on the article, “The COVID-19 Fiscal Multiplier: Lessons from the Great Recession,” by Daniel J. Wilson, published on May 26, 2020, by the Federal Reserve Bank of San Francisco as part of its Economic Letters series. The article tries to assess the potential economic impact of the fiscal response to the COVID-19 pandemic. It draws parallels between the fiscal responses to the current downturn and to the Great Recession of 2008-2009 to estimate the potential range of the current fiscal multiplier and, thus, assess the extent of economic recovery in the coming quarters.

1. According to the article, how do the sizes of the fiscal responses to the current downturn and to the Great Recession compare in terms of dollar value and as percent of GDP? [8]

Answer:

2. According to the article, which component of the recent stimulus package had no counterpart in the 2008-2009 stimulus package? If that component is set aside, how does the composition of the rest of the fiscal response to COVID-19 compare with the composition of the fiscal response to the Great Recession? [8]

Answer:

3. The article mentions that the fiscal multiplier rises as the marginal propensity to consume (MPC) increases. Why does a rise in MPC increase the fiscal multiplier? [8]

Answer:

4. According to the article, why is the MPC higher for “liquidity-constrained” households compared to those that have liquid assets or can easily borrow when needed? [7]

Answer:

5. According to the article, the 2020 fiscal stimulus package amounts to about 11% of the 2019 US GDP. Given the article’s conclusion about the range of the fiscal multiplier under current conditions, how much the US GDP is expected to rise in the next couple of years as a result of the fiscal stimulus? [8]

Answer:

6. The 2020 fiscal stimulus package and the Fed’s actions that have used highly expansionary conventional and unconventional monetary policy tools have raised the prospects of the US economy and have helped the US stock market to recover quite strongly. They have prevented many other asset prices from falling. Would the impacts of the fiscal and monetary stimulus policies on asset prices help or hinder economic recovery in the US this year? [7]

Answer:

Extra Points Question: The article points out that the fiscal multiplier is found to be higher when the interest rate is at the zero lower bound (ZLB) compared to the situation when it is above zero and is not kept constant by monetary policy. What factors may explain the higher fiscal multiplier at the ZLB? Please use the IS-LM model to make a case for your answer

Does a free good mean any good I get for free? What if I was fishing with a hand-made fishing net and caught a fish. Is that considered a free good? I didn't have to pay for it and I didn't use anything that I had bought. The Native Americans used to find all their food and water and didn't pay for it. Were they free? What makes a good "free" in economics? Can you think of a good that is not scarce? If no, why?

According to the Solow model, in the steady state, both output per worker Y/L and the capital stock per worker K/L grow at the rate of technological progress, and (choose one or both)

A this is confirmed by U.S. data for the past half century—about 2 percent per year

B this means that the capital-output ratio has remained approximately constant over time

Technological progress also affects factor prices, and in the steady state, (choose two)

A the real wage is constant over time

B the real wage grows at the rate of technological progress

C the real rental price of capital is constant over time

D the real rental price of capital grows at the rate of technological progress

The economies of the world exhibit

A conditional convergence

B unconditional convergence

International differences in income per person can be attributed to (choose one or more)

A differences in the quantities of physical and human capital

B differences in the efficiency with which economies use their factors of production

The Solow model

A does not explain technological progress but, instead, takes it as exogenously given

B seeks to explain technological progress and therefore treats it as an endogenous variable

To incorporate technological progress, we write the production function as

Y = F(K, L x E), where (choose one or more)

A E is the efficiency of labor

B L x E is the effective number of workers

C g is the rate of labor-augmenting technological progress

D n is the rate of growth of the labor force

E the effective number of workers L x E is growing at the rate n + g

Most technological progress has been

A labor augmenting

B labor saving

Identify those statements that are TRUE. (Choose one or more)

A The steady-state level of capital per effective worker, k, is where break-even investment, (δ + n + g)k is equal to investment sf(k)

B According to the Solow model, only technological progress can explain sustained growth and persistently rising living standards.

C The steady-state consumption per effective worker is c* = f(k*) – (δ + n + g)k*.

D Steady-state consumption is maximized if MPK = δ + n + g

E Steady-state consumption is maximized if MPK – δ = n + g

Describe the essential features of a model economy in a monetary market of rational people for which each of the following statements is true: (These features might include the pattern of population growth, monetary growth, endowments, and government policies. Note that there may be more than one model that yields the given results.)

a. The gross rate of return on fiat money is 1. The monetary equilibrium does not maximize the utility of the future generations.

b. The price level doubles from period to period. The monetary equilibrium also maximizes the utility of the future generations.

c. The gross rate of return on fiat money is 1. The monetary equilibrium also maximize the utility of the future generations.