During the 2007-2009 recession, the Federal Reserve Bank loaned $85 billion to AIG to prevent the large insurance company from filing for bankruptcy. Lehman Brothers filed for bankruptcy during the same week and did not receive any government assistance. The Federal government also insured loans to General Motors and Chrysler. In July, 2008, 5644 companies went bankrupt in the United States. That represented an 80% increase from the previous year. Should the federal government bail out some companies experiencing financial stress and possible bankruptcy while letting other companies go under?

How do each of the following relate to the financial crisis of 2007-2008: declines in real estate values, sub-prime mortgage loans, mortgage backed securities, AIG?

Value of a Statistical Life (VSL). (a) Describe VSL in terms that a non-economist can understand. (b) Lavetti (2017) studies the wage-risk tradeoff for one of the riskiest professions in the United States, crab fishing in Alaska. The riskiness of crab fishing is driven mainly by the season and weather conditions. Lavetti collects data on the weather conditions of specific fishing trips, and the wages paid to the crew. He then runs a regression of the wage on the expected fatality rate for each trip and finds that an increase in one fatality per 1000 full time workers per year increases the mean hourly wage by $2.10. Calculate the VSL implied by this estimate, assuming that the number of hours a full time worker works in a year is 2000. (c) Does this number seem high or low to you? Briefly discuss why this might be the case.

Hemodialysis (also known as “dialysis”) is a common treatment for patients with kidney disease. In the United States, more than 468,000 patients are on dialysis (NIH, 2018). Since 1993, hospitalization rates related to the process of dialysis has risen between 47-87% (CDC, 2018).

Many patients seek dialysis care at outpatient facilities that are not inspected as frequently as other healthcare facilities, like nursing homes and hospitals. For example, in California, kidney dialysis clinics are only inspected on average once every six years.

Should kidney dialysis centers be held to the same safety standards as other healthcare facilities?

Are current regulations for dialysis centers strong enough?

Should more frequent inspections be required?

Are there other ways to reduce the risk of infection for dialysis patients?

1. We have learned in this class that the steady condition is given as: sf (k) = (n + S + g)k . Use this condition for steady state to find the steady state (long run) equilibrium values of capital per effective worker, k* , output per effective worker, y* ; consumption per effective worker, c* ; and investment per effective worker, i* , for this economy.

2. If the United States adopts policies that permanently decrease savings and investment, illustrate graphically how such a policy would affect the level of output per effective worker and capital per effective worker

3. Carefully explain three major predictions from the Solow growth model and how governments of developing (poor) countries can use those predictions to improve living standards in their economies.

In the following problem, check that it is appropriate to use the normal approximation to the binomial. Then use the normal distribution to estimate the requested probabilities.

More than a decade ago, high levels of lead in the blood put 90% of children at risk. A concerted effort was made to remove lead from the environment. Now, suppose only 14% of children in the United States are at risk of high blood-lead levels.

(a) In a random sample of 198 children taken more than a decade ago, what is the probability that 50 or more had high blood-lead levels? (Round your answer to three decimal places.)

(b) In a random sample of 198 children taken now, what is the probability that 50 or more have high blood-lead levels? (Round your answer to three decimal places.)

It is thought that prehistoric Indians did not take their best tools, pottery, and household items when they visited higher elevations for their summer camps. It is hypothesized that archaeological sites tend to lose their cultural identity and specific cultural affiliation as the elevation of the site increases. Let x be the elevation (in thousands of feet) for an archaeological site in the southwestern United States. Let y be the percentage of unidentified artifacts (no specific cultural affiliation) at a given elevation. Suppose that the following data were obtained for a collection of archaeological sites in New Mexico:

x 6.00 6.25 7.00 7.25 8.25

y 33 38 35 58 69

What percentage of the variation in y cannot be explained by the corresponding variation in x and the least-squares line?

Select one:

a. 10.8%

b. 4.2%

c. 89.2%

d. 20.4%

The U.S. Bureau of Labor Statistics released hourly wage figures for various countries for workers in the manufacturing sector. The hourly wage was $30.67 for Switzerland, $20.20 for Japan, and $23.82 for the U.S. Assume that in all three countries, the standard deviation of hourly labor rates is $3.00.

Appendix A Statistical Tables

a. Suppose 35 manufacturing workers are selected randomly from across Switzerland and asked what their hourly wage is. What is the probability that the sample average will be between $30.00 and $31.00?
b. Suppose 33 manufacturing workers are selected randomly from across Japan. What is the probability that the sample average will exceed $21.00?
c. Suppose 48 manufacturing workers are selected randomly from across the United States. What is the probability that the sample average will be less than $22.95?

The U.S. Bureau of Labor Statistics released hourly wage figures for various countries for workers in the manufacturing sector. The hourly wage was $30.67 for Switzerland, $20.20 for Japan, and $23.82 for the U.S. Assume that in all three countries, the standard deviation of hourly labor rates is $3.00.

Appendix A Statistical Tables

a. Suppose 37 manufacturing workers are selected randomly from across Switzerland and asked what their hourly wage is. What is the probability that the sample average will be between $30.00 and $31.00?
b. Suppose 38 manufacturing workers are selected randomly from across Japan. What is the probability that the sample average will exceed $21.00?
c. Suppose 47 manufacturing workers are selected randomly from across the United States. What is the probability that the sample average will be less than $22.90?

1) According to the theory of efficiency wages, paying an above-equilibrium wage may increase all of the following except

worker effort.

the natural rate of unemployment.

worker turnover.

the quality of a firm's workforce.

2) The main cause of the decline in labor force participation since 2007 is an increase in the number of

people in school.

retired workers.

discouraged workers.

disabled workers.

3) Complete the following statement.

If an economy has a large number of discouraged workers, the unempoyment rate will remain unaffected/be low and the employment-population ratio will be high/low

4) One explanation for the differing numbers of hours worked in the United States and western Europe is

stronger unions in the U.S.

greater taste for leisure in the U.S.

higher taxes in Europe.

more numerous languages in Europe.

.