For this discussion assignment, you will be analyzing externalities and market failures.

1. Name three examples of a negative externality. How do negative externalities directly and indirectly affect your life?
2. Name three examples of a positive externality. How do positive externalities directly and indirectly affect your life?
3. Provide a brief summary in your own words. What are your thoughts on the articles about coal? How does this relate to externalities and market failure?
4. Provide a brief summary in your own words. What are your thoughts on the articles about child care? How does this relate to externalities and market failure?
5. If you were appointed as the new U.S. Czar of Externalities, how would you address the negative externalities like pollution and unhealthy food in the United States right now, over the next 3-5 years, and over the next 10+ years? How would you address the positive externalities like child care and education in the United States right now, over the next 3-5 years, and over the next 10+ years? Explain your answers.

• Read this article about coal http://www.theatlantic.com/business/archive/2015/08/coals-externalities-medical-air-quality-financial-environmental/401075/
• Read this article about child care http://www.startribune.com/day-care-squeeze-is-hitting-minnesota-rural-families-hard/272439181/ and this follow-up article http://www.startribune.com/the-positive-externalities-of-child-care-and-market-failure/272590051/

Pick any 2 questions and answer it (answer should be half page long per question):

1. The Information Revolution, an economic restructuring comparable to the Agricultural Revolution and the Industrial Revolution, has brought about new questions of social interest. Elaborate.

2. Think about the trends in what and how goods and services are produced in the U.S. and global economies. Do you think that at some future time, there will be no jobs in the United States and all the jobs will be in developing economies?

3. Compare the scale of agricultural production in the advanced and developing economies.

4. China is currently the world’s second largest economy. It is predicted to surpass the U.S. to become the biggest economy in the not-too-distant future. How does this development influence the strategic balance and the position of the United States?

5. In 1990, Congress imposed a luxury tax on yachts costing more than $100,000, along with similar taxes on a handful of other luxury goods. It was estimated that the new taxes would yield more than $31 million in revenue in 1991. However, the tax actually generated a bit more than half the amount, $16.6 million. Several years later, the Joint Economic Committee estimated that the tax on yachts had led to a loss of 7,600 jobs in the U.U. boating industry. Taking account of lost income taxes and increased unemployment benefits, the U.S. government actually came out $7.6 million behind in fiscal 1991 as a result of its luxury taxes- almost $ 39 million worse than the initial projection. Congress repealed the luxury tax on yachts in 1993. What went wrong?

1. In a survey of U.S. adults with a sample size of 2004, 345 said Franklin Roosevelt was the best president since World War II. TwoTwo U.S. Two adults are selected at random from this sample without replacement. Complete parts​ (a) through​ (d).

​(a) Find the probability that both adults say Franklin Roosevelt was the best president since World War II.

​(b) Find the probability that neither adult says Franklin Roosevelt was the best president since World War II.

​(c) Find the probability that at least one of the two adults says Franklin Roosevelt was the best president since World War II.

2. The probability that a person in the United States has type B​+ blood is 12%. 4 unrelated people in the United States are selected at random. Complete parts​ (a) through​ (d).

(a) Find the probability that all five have type B​+ blood.

​(b) Find the probability that none of the five have type B​+ blood.

​(c) Find the probability that at least one of the five has type B​+ blood.

​3. A study found that 39% of the assisted reproductive technology​ (ART) cycles resulted in pregnancies. ​Twenty-five percent of the ART pregnancies resulted in multiple births.

​(a) Find the probability that a random selected ART cycle resulted in a pregnancy and produced a multiple birth.

​(b) Find the probability that a randomly selected ART cycle that resulted in a pregnancy did not produce a multiple birth.

​(c) Would it be unusual for a randomly selected ART cycle to result in a pregnancy and produce a multiple​ birth? Explain.

The 2011 National Health Interview Survey by the National Center for Health Statistics (NCHS) provides weight categorization for adults 1818 years and older based on their body mass index.

The same NCHS report breaks down the sampled individuals by age group. The percentages of obese individuals in the 2011 survey for each age group are provided in the table.

What do you conclude about the weight problem in the United States?

A: Only adults in the age group 4545 to 6464 appear to have obese individuals.

B: All age groups have a large rate of obesity. Adults 1818 to 4444 and 6565 to 7474 have the highest percentage of obese individuals.

C: All age groups have a relatively small rate of obesity. The weight problem in the United States appears to have been exaggerated.

D: All age groups have a large rate of obesity. Adults 4545 to 6464 and 6565 to 7474 have the highest percentage of obese individuals.

(b) Could you make a single pie chart for these data?

A: Yes, because the percentages in the four age groups do not add up to 100%100% .

B: No, because the percentages in the four age groups add up to 100%100% .

C: No, because the percentages in the four age groups do not add up to 100%100% .

D: Yes, because the percentages in the four age groups add up to 100%100% .

Case: ABC Corp. International Company, a manufacturer of medical device, assembles a particular product line at a wholly owned facility in Singapore. The product is designed at XYZ’s headquarters in the United States, but the different components used in the assembly process are manufactured throughout Asia and shipped to Singapore for final assembly. Some of the components are manufactured in multiple locations, so the customer can actually designate where ABC Corp. should source the components. The final product is assembled in Singapore and then shipped via FedEx Freight to customers in European Union and throughout Asia. ABC Corp. Singapore does not purchase any major components from the United States, but it invoices all of the components from Asian suppliers in U.S. dollars. Moreover, it sells the product to Asian customers in U.S. dollars. However, all of its major expenses in Singapore are paid in Singapore currency. Most of the key executive marketing decisions are made by the U.S. marketing headquarter staff, although the Singapore staff acts as a liaison with FedEx Freight personnel and deals with the local employees, most of whom come from the European Union on short-term work visas.

Part II: When it comes to translating the financial statements of entities in highly inflationary countries, which of the following approaches makes more sense and why? What are the implications of this for ABC Corporation?

1st option – Remeasure using the temporal method, even though the functional currency is the local currency for operation purposes.

2nd option – Restate for inflation and translate using the current rate method.

*Excel formulas needed* A U.S.-based firm is considering a six- year project in Colombia. The following information is available about the project: Initial investment. The initial investment of USD 750,000 is used to purchase capital equipment. This equipment will be depreciated straight line to zero. At the end of six years, the remaining equipment will be sold for Colombian Peso (COP) 25,000,000. Working capital. The investment in working capital is COP 100,000,000. There are no changes in working capital until the end of the project when the full amount is recovered. Units, price, and costs. The firm will produce 2000 units of a product annually. The selling price is expected to be COP 599000 in the first year. This price is expected to increase at a rate of 4 percent annually. The direct expense per unit is expected to be COP 200000 in the first year. This is expected to increase at a rate of 5 percent annually. Indirect expenses are expected to be COP 50,000,000 annually. Taxes and miscellaneous. Colombian taxes on income and capital gains are 34 percent. There are no additional withholding taxes. All cash flows are repatriated when generated, and there are no additional U.S. taxes. The parity conditions are assumed to hold between Colombia and the United States. The relevant inflation indexes indicate a rate of 3 percent for the United States and 6 percent for Colombia. Spot USDCOP equals 3300. Brady’s USD denominated WACC is 12 percent.

c. Use parity conditions to generate future spot rates. Calculate the project NPV in USD.

EXCEL FORMULAS only please. It will be incorrect if not run through Excel.

Thanks in advanced!

If the Fed wants to increase the money supply, it will _____ Treasury securities.

Question 17 options:

When the Fed wants to change the money supply, it usually buys or sells money market mutual funds.

Question 18 options:

The Federal Reserve is the:

Question 19 options:

An increase in the growth rate of the money supply raises both real growth and inflation in the long run.

Question 20 options:

The extra lending by the Fed during the 2007–2009 recession was done primarily to:

Question 21 options:

If the Fed wants to decrease the money supply, it will:

Question 22 options:

The Fed lends to banks:

Question 23 options:

*Excel formulas needed* A U.S.-based firm is considering a six- year project in Colombia. The following information is available about the project: Initial investment. The initial investment of USD 750,000 is used to purchase capital equipment. This equipment will be depreciated straight line to zero. At the end of six years, the remaining equipment will be sold for Colombian Peso (COP) 25,000,000. Working capital. The investment in working capital is COP 100,000,000. There are no changes in working capital until the end of the project when the full amount is recovered. Units, price, and costs. The firm will produce 2000 units of a product annually. The selling price is expected to be COP 599000 in the first year. This price is expected to increase at a rate of 4 percent annually. The direct expense per unit is expected to be COP 200000 in the first year. This is expected to increase at a rate of 5 percent annually. Indirect expenses are expected to be COP 50,000,000 annually. Taxes and miscellaneous. Colombian taxes on income and capital gains are 34 percent. There are no additional withholding taxes. All cash flows are repatriated when generated, and there are no additional U.S. taxes. The parity conditions are assumed to hold between Colombia and the United States. The relevant inflation indexes indicate a rate of 3 percent for the United States and 6 percent for Colombia. Spot USDCOP equals 3300. Brady’s USD denominated WACC is 12 percent.

b. What is the appropriate COP discount rate? Calculate the project NPV.

EXCEL FORMULAS only please. It will be incorrect if not run through Excel.

Thanks in advanced!

1. (a) Assume that the exchange rate between the U.S. dollar ($) and the Mexican peso (P) is pegged at ER=$1/P4. Assume that, initially, this exchange rate corresponds to equilibrium in the foreign exchange market. Illustrate the initial situation in the market for peso-denominated deposits using demand and supply curves.

(b) The United States now undertakes an economic policy that puts upward pressure on the interest rate on dollar-denominated deposits (i). Mexico follows an economic policy that puts downward pressure on the interest rate on peso-denominated deposits (i*). Explain and illustrate effects of the two countries’ policies in the foreign exchange market in the graph you draw in (a). If the exchange rate between the dollar and the peso had been flexible rather than fixed, what would happen?

(c) If Mexico maintains its commitment to hold the exchange rate at $1/P4, what actions must the Mexican central bank take? Explain.

(d) If the United States and Mexico continue to follow the economic policies outlined in part (b) above, what will happen if the Mexican central bank continues to take the action described in part (c)?

(e) Suppose you are a participant in the foreign exchange market. Given your answer to (d), how might you adjust your expectation of the future dollar price of the peso ( )? What effect would this have on the foreign exchange market? Would it make the Mexican central bank’s job easier or more difficult? Why?

1.

1. Explain the three key functions of the Bank of Canada
2. In the Canadian banking system, the target reserve ratio is 20 per cent and the estimated value of the cash drain ratio is 5 per cent. What is the total value of new deposits from a new deposit in a bank of $500.00? (show your calculations).

2

1. Explain the three basic functions of money.
2. Briefly explain how the bank of Canada could increase spending in the economy with an increase in the money supply using the reserve ratio requirements.

3

1. What are the two key approaches used in the new economic growth theories to explain why their theories are different from the established Neoclassical Growth theory
2. Explain the fundamental determinants of long-term economic growth for an economy

4 Consider the Canadian economy that is in long-run equilibrium with an output equal to Y*. The United States economy goes into a major slowdown causing a significant decrease in goods and services shipped into the United States from Canada. For Canada, answer the following questions:

1. What kind of shock occurred- aggregate demand or aggregate supply?
2. Explain how fiscal policies by the government of Canada can be used to drive the economy back towards Y* in the long run. Explain the steps

5 A review of the economic performance of the Canadian economy by economists at the Bank of Canada suggests that the economy has an inflationary output gap.

Explain how the Bank of Canada could use monetary policy instruments to close the inflationary output gap. Explain the process (mechanism) through which this occurs. (20 points).