Your friend at work says the U.S. economy is not doing well: "We are just not a strong economy anymore." You are not entirely convinced by her argument, so you do some research. Here is what you find:

There are three major powers in the world economy according to total GDP: China at $21.3 trillion; the EU at $19.2 trillion; and the United States at $18.6 trillion (all in real 2016 dollars). Maybe your friend is right?

Then you look at per capita GDP and it does not seem to tell the same story: China per capita GDP is $15,400; EU per capita GDP is $37,800; and U.S. per capita GDP is $57,300. Maybe your friend is wrong?

Perhaps we really need to understand what GDP measures and what it does not measure.

Using the above facts, make the case that the United States is still economically strong.

What does GDP measure and what does that tell us about our country’s economic strength?

Do you feel that GDP is valuable in understanding our country’s economic strength? Explain why or why not.

Do you believe that there is a better measure of a country’s economic strength that we should also use (in addition to GDP)? Explain your answer. If you don’t think there is, explain why.

A Namibia firm has an obligation to pay £1,000,000 in 3 months’ time and has exported goods worth US$500,000, payment of which is also expected in 3 months’ time. It is the end of the year, when the exchange rate between the Namibian dollar and the US dollar (NamD/USD) is 16.975 and the exchange rate between the Namibian dollar and the British pound (Nam/Pound) is 19.485. The exchange rate outlook is very blurred as it is believed that the exchange rates could move either way. The following probability distributions are available for the value of the exchange rates expected to prevail at the end of the 3-months period:

NamD/USD    Probability     NamD/GBP   Probability

16.575              0.20              19.378              0.10      

16.960              0.15              19.475              0.20

17,125              0.35              19.672              0.15

17.595              0.30              19.895              0.40

                                              19.915              0.15

(e) What are the expected spot exchange rates for the United States dollar and the British Pound against the Namibian dollar?

(f) How much does the Namibian firm expect to receive from its exports?

(g) How much does the Namibian firm expect to pay for its imports?

(h) What is the probability that the Namibian dollar will appreciate against the United States dollar?

(i) What is the probability that the Namibian dollar will depreciate against the British Pound?

Sandrine Machinery is a Swiss multinational manufacturing company. Currently, Sandrine's financial planners are considering undertaking a 1-year project in the United States. The project's expected dollar-denominated cash flows consist of an initial investment of $2000 and a cash inflow the following year of $2400. Sandrine estimates that its risk-adjusted cost of capital is 10%. Currently, 1 U.S. dollar will buy 0.96 Swiss franc. In addition, 1-year risk-free securities in the United States are yielding 3%, while similar securities in Switzerland are yielding 1.50%. Do not round intermediate calculations.

a) If this project was instead undertaken by a similar U.S.-based company with the same risk-adjusted cost of capital, what would be the net present value and rate of return generated by this project? Round your answers to two decimal places.

NPV = $ _____

Rate of return = _____

b) What is the expected forward exchange rate 1 year from now? Round your answer to two decimal places.

_____ SF per U.S. $

c) If Sandrine undertakes the project, what is the net present value and rate of return of the project for Sandrine? Do not round intermediate calculations. Round your answers to two decimal places.

NPV = ____Swiss Francs

Rate of return = ____%

Shopping Cart

Read at least three articles that are no more than 12 months old. Apply the content from the articles to the use of e-Commerce Shopping carts.

The following requirements must be met:

Write between 1,000 – 1,500 words using Microsoft Word in APA 6th edition style.

Use an appropriate number of references to support your position, and defend your arguments. The following are examples of primary and secondary sources that may be used, and non-credible and opinion based sources that may not be used.

Primary sources such as government websites (United States Department of Labor - Bureau of Labor Statistics, United States Census Bureau, The World Bank), peer reviewed and scholarly journals in EBSCOhost (Grantham University Online Library) and Google Scholar.

Secondary and credible sources such as CNN Money, The Wall Street Journal, trade journals, and publications in EBSCOhost (Grantham University Online Library).

Non-credible and opinion based sources such as, Wikis, Yahoo Answers, eHow, blogs, etc. should not be used.

Cite all reference material (data, dates, graphs, quotes, paraphrased statements, information, etc.) in the paper and list each source on a reference page using APA style. An overview of APA 6th edition in-text citations, formatting, reference list, and style is provided here.

Question 12 Unsaved A sample of University of Colorado students each viewed one of two simulated news reports about a terrorist bombing against the United States by a fictitious country. One report showed the bombing attack on a military target and the other on a cultural/educational site. Additionally, before viewing the news report, each student read one of two "primes." The first was a prime for forgiveness based on the biblical saying "Love thy enemy," while the second was a retaliatory prime based on the biblical saying "An eye for an eye, and a tooth for a tooth." After viewing the news report, the students were asked to rate on a scale of 1 to 12 what the U.S. reaction should be, with the lowest score (1) corresponding to the United States sending a special ambassador to the country and the highest score (12) corresponding to an all-out nuclear attack against the country.6 (Use a diagram like Figure 9.2 from the text to display the factors and treatments.) Identify the following in this experiment:

_____ eye-for-an-eye prime

_____ the students

_____ love thy neighbor prime

_____ rating of U.S. reaction to attack

_____ prime used

_____ cultural/educational target

_____ military target

_____ type of attack

Options:

1. Subjects

2. Factors

3. Treatments for the prime

4. Treatments for the type of attack

5. Response variable

10. The free-rider dilemma refers to a situation in which an individual can consume a good or service without having to pay for it. True/False?

15. The Great Depression

Multiple Choice

• was the most severe recession since the Civil War, even though it lasted only 18 months.

• was a severe and prolonged reduction in output and employment for the United States during the 1930s.

• was a severe and prolonged reduction in output and employment for the United States during the 1980s just prior to the long economic expansion of the 1990s.

• is another name for the economic downturn that followed World War II.

22. Public goods

Multiple Choice

• include most goods and services that the market produces.

• lead to the pay-as-you-go problem.

• by definition, must be produced by the government.

• can be consumed by more than one person at the same time.

24. Which of the following individuals is frictionally unemployed?

Multiple Choice

• Jennifer has not been able to find a job because she lacks computer skills.

• Jose has decided to stop looking for work in order to return to school.

• James quit his teaching job in Virginia in order to relocate to Hawaii.

• Jai Lynn lost her job because her employer had to reduce staff during the recession.

I. The government in a certain economy has offered all business significant investment tax credits. Firms as a result invest heavily in new capital equipment and households have taken mortgages to buy new homes.

1. Draw an aggregate-demand/aggregate supply diagram showing the short-run effect of the investment tax credits on the economy. Label the new levels of prices and real output. Explain in words why the aggregate quantity of output supplied changes.
2. Now use the diagram that you have drawn from part (a) to show the new long-run equilibrium of the economy. (Assume here, there’s no change in the long run aggregate-supply curve.) Explain in words why the aggregate quantity of output demanded changes between the short run and the long run.
3. How might the investment boom affect the long-run aggregate supply curve? Explain.

II. Explain whether each of the following events will increase, decrease or have no effect on the long-run aggregate supply.

1. The discovery of iron ore deposits in the United States.
2. Intel invents a new and more powerful computer chip.
3. Congress raises minimum wage to $18.
4. The United States experience a significant decline in immigration.
5. The price of raw material sharply increases.

I would like for you to reflect on the historical events, issues, and figures discussed in this class from the 1500 to present day. Choose one of more events, issues, and figures that have, in your opinion, had the greatest impact on the present day. Make an argument as to why you believe this to be case.   

Example:

After the assassination of Archduke Franz Ferdinand triggering one of the most impactful events to exist, World War I. The war began in 1914 and lasted until 1918, there were two separate sides the central powers (Germany, Austria-Hungary, Bulgaria, and the Ottoman Empire) and the allied powers (Great Britain, France, Russia, Italy, Romania, Japan, and the United States). Ultimately, Germany met its fate and signed the Treaty of Versailles which brought a great cost to their country. On the other hand, the United States being an allied power flourished from this war and had an economic boom. One side note that was remarkable was the 369th Infantry Regiment which consisted of African Americans. This was significant due to the fact that it was the very first black platoon. Many social customs eventually were faded out and society as a whole became much more open o new ideas. Innovation and technology was also a big effect from this war as it made a carpet for the industrial revolution.

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Case study#1: From Housing Bubble to Housing Bust

The United States experienced rising home ownership rates for most of the last two decades. Between 1990 and 2006, the U.S. housing market grew. Homeownership rates grew from 64% to a high of over 69% between 2004 and 2005. For many people, this was a period in which they could either buy first homes or buy a larger and more expensive home. During this time mortgage values tripled. Housing became more accessible to Americans and was considered to be a safe financial investment. The housing bubble began to show signs of bursting in 2005, as delinquency and late payments began to grow and an oversupply of new homes on the market became apparent. Dropping home values contributed to a decrease in the overall wealth of the household sector and caused homeowners to pull back on spending. Several mortgage lenders were forced to file for bankruptcy because homeowners were not making their payments, and by 2008 the problem had spread throughout the financial markets. Lenders clamped down on credit and the housing bubble burst. Financial markets were now in crisis and unable or unwilling to even extend credit to credit-worthy customers.

The housing bubble and the crisis in the financial markets were major contributors to the Great Recession that led to unemployment rates over 10% and falling GDP. While the United States is still recovering from the impact of the Great Recession, it has made substantial progress in restoring financial market stability through the implementation of aggressive fiscal and monetary policy.

The economic history of the United States is cyclical in nature with recessions and expansions. Some of these fluctuations are severe, such as the economic downturn experienced during Great Depression of the 1930’s which lasted several years. Why does the economy grow at different rates in different years? What are the causes of the cyclical behavior of the economy? This chapter will introduce an important model, the aggregate demand–aggregate supply model, to begin our understanding of why economies expand and contract over time.

Question: Analyze the above Case Study from the Aggregate Demand and Aggregate Supply Theory.

1. The Bungalow Bill Accounting Service, LLC uses computer technology and data-entry operators to provide accounting services in a competitive market. The price for each statement is $200.  Total fixed costs are $1500/week.

1. How many data entry operators would BBAS, LLC hire at a weekly wage of $250 if it were attempting to maximize profits?

2. Determine the firm’s profits.

3. Suppose a decrease in demand reduces the market price to $150 per statement.   
   1. Determine the firm’s profits
   2. Should Bill stay open in the short run? Explain.
   3. What should Bill do in the long run?  Explain.

2. Assume a firm is a monopsonist that can hire its first worker for $6 but must increase the wage rate by $3 to attract each successive worker (so that the second worker must be paid $9, the third $12, and so on). The marginal revenue product of labor is given in the table below.

Units of Labor   Marginal Revenue Product

0

1. $30

2. $24

3. $18

4. $15

5. $12

6. $10

1. Draw the firm’s labor supply, labor demand and marginal resource cost curves.
2. What will be the competitive equilibrium wage rate and the level of employment?
3. What will be the wage rate and the level of employment under monopsonistic conditions?

3.  The following table shows the hourly output per worker in two industries in the United States and Canada.

            Pretzels                        Beer

United States            8                               6  

Canada                    1                                 2

1. Explain which country has an absolute advantage in the production of beer and which country has the absolute advantage in the production of pretzels. Why?
2. Explain which country has a comparative advantage in the production of pretzels and which country has the comparative advantage in the production of beer. Why?
3. What are the terms of trade from the perspective of the United States