Q1. In what ways is the purchase of a hammer or of labor services by the military different from the purchase of a missile system? How does this affect government procurement policies in these two areas?

Q2. Should military officers and Defense Department officials by proscribed from working for private defense contractors for a period of several years after termination of their government service?

Q3. Imagine that Congress is considering a bill to reduce the current seventeen-year life of patents to eight years. What negative effects might this change have on the rate of innovation? What positive effect might it have for the economy?

Q4. Members of the poorest fifth of U.S. households have a much smaller share of total U.S. income than is typical in other developed countries. Does this mean that the poorest fifth of U.S. households are worse off in the United States than are the poorest fifth of households elsewhere? Why or why not?

Cash flow analysis is very important in capital investment decisions, and investment experts will pay special attention to cash flows when determining whether the company is healthy. We often see that many companies have not made profits for a long time, but the market has given them a high valuation. For example, Amazon in the United States has been operating in a negative profit for a long time since its listing in 1997, but its stock price has been rising. There are also unicorn companies such as Didi, which we are familiar with. Although being not profitable, they are highly valued by the market.

• What do you think is the reason?
• How should we analyze the cash flows of a company?
• Is it possible for the cash flows to be manipulated by the company?
• Could you name some possible ways companies manipulate cash flows?

1. All else equal, if Canada raises its interest rates,

A) the dollar depreciates.

B) the U.S. demand for Canadian dollars increases.

C) the Canadian supply of Canadian dollars increases.

D) Both A and B.

E) Both A and C.

2. Suppose the exchange rates between the United States and Canada are in long-run equilibrium as defined by the idea of purchasing power parity. If the law of one price holds perfectly, then differences between U.S. and Canadian rates of inflation would

A) have no effect on nominal exchange rates.

B) be completely offset by changes in the real exchange rate.

C) be completely offset by changes in the nominal exchange rate.

D) violate the conditions for the law of one price.

E) lead to a change in the real purchasing power of each country's currency when it is converted to the other country's currency

1. Countries are _____ when they buy products and services from other countries.
A. exporters
B. retailers
C. importers
D. wholesalers

2. Which is true of an Absolute Advantage?
A. You are the only producer or source of the product.
B. You can produce the product with less resources than others.
C. This advantage does not last long.
D. all of the above

3. Opportunity cost means:
A. what you give up to make the product
B. what you will gain by making the product
C. how much society will pay for the product
D. none of the above

4. If a country sells more product than it buys, _____ exists.
A. a trade deficit
B. a trade surplus
C. a cost-cutting opportunity
D. all of the above

5. The United States has a ______________.
A. trade surplus
B. trade deficit
C. both of the above
D. none of the above

Use the Online Consumer Purchasing Model (Figure 6.11 below) to assess the effectiveness of an e-mail campaign at a small Web site devoted to the sales of apparel to the ages 18–26 young adult market in the United States. Assume a marketing campaign of 100,000 e-mails (at 25 cents per e-mail address). The expected click-through rate is 5%, the customer conversion rate is 10%, and the loyal customer retention rate is 25%. The average sale is $60, and the profit margin is 50% (the cost of the goods is $30). Does the campaign produce a profit? What would you advise doing to increase the number of purchases and loyal customers? What Web design factors would you use to keep customers coming back and increase traffic? What communications messages would you convey to current and potential customers?

The following table lists balance of payment current accounts for Country A.

Suppose that we want to determine whether or not amount of light exposure is linked to depression. We identify 5,000 participants across the United States with no intention of moving to a different permanent residence within the next two years and classify them as living in an area with high or low light exposure. We exclude those who are experiencing depression symptoms at baseline. We then follow them up for two years and determine whether they have experienced depression since baseline. There were 1500 participants residing in low-light areas and 3500 participants living in high-light areas. Of those in low-light areas, 500 participants experienced depression, and of those in high-light areas, 500 participants experienced depression. Assume the exposure is low-light. What type of study is this and which measure of association would be more useful in this case?

Using survey data to calculate statistics can be extremely valuable, but you must also make sure that the sample and questions are unbiased. Design a pair of questions that are related to the same healthcare issue: one that is unbiased and another that would result in a bias in one direction or the other.

Examples: Do you think that the rate of type II diabetes diagnoses will increase over the next 10 years? Given the large increase in childhood obesity in the United States, do you think that type II diabetes diagnoses will increase over the next 10 years?

Discuss why it is important to create a truly unbiased sample and survey questions. Then, look at your classmates' examples and comment on how their examples do or do not create a bias. Do not state which of your own questions is biased and which is unbiased. Your peers will determine which is which in their responses to you.

Royal Minty of Britain has purchased 20,000 ounces of silver from Silver Products at US$8.30, payable in 180 days. The current spot rate is 1.8127 ($US/£) and the 180-day forward is 1.7863. The CEO at Royal Minty suggests that the spot rate in six months time will be 1.7915. Interest rates in Britain are currently 4.70 percent for 180 days and 1.15 percent in the United States. a-1. Calculate the receipts if Royal Minty takes a chance on the spot rate. (Round the final answer to the nearest whole pound.) Receipts £ a-2. Calculate the receipts if Royal Minty books a forward contract. (Round the final answer to the nearest whole pound.) Receipts £ a-3. Calculate the receipts if Royal Minty buys a money market hedge. (Round intermediate calculations and the final answer to the nearest whole pound.) Receipts £