As you answer these questions, be sure that you EXPLAIN YOUR ANSWERS IN DETAIL AND SHOW YOUR CALCULATIONS. Remember you are showing off how much you know about economics and one or two sentences shows me you don’t know very much.

Question One: Fiscal Policy Assume the United States economy has the following:

• GDP is $18,500 billion down from $19,350 billion nine months ago.

• Unemployment is at 6.8% up from 4.2% nine months ago.

• Inflation is stable at 2.0%. • MPC=.75 • NRU=4.0%

• Target Inflation is 2.0%

1. Explain in detail the problem the country is facing. Include an analysis of both inflation and unemployment including whether the economy is in a recession or not.

2. What is the size of the GDP gap? Show the calculations.

3. Government could address the problem with either increasing government spending, cutting taxes or both. If the government decided to increase spending to address the problem, by how much should spending be increased? If the government decided to cut taxes to address the problem, by how much should taxes be cut? Show the calculations and provide explanations.

4. Should the government cut taxes or increase spending or some combination of both to address the problem? Detailed Explanations!!

5. What could happen to make the policy you recommended in Question 4 ineffective? On this question, be sure to read the section in your text beginning on page 275. Don’t just make something up. It will take a paragraph or two to answer this question because you need to relate the specific complication to the scenario described in the question.

Question Two: Monetary Policy Assume the United States economy has the following:

• GDP is $15,600 billion up from $13,400 billion four years ago.

• Unemployment is at 4.0% down from 7.7% three years ago.

• Inflation is at 3.7% up from 1.2% four years ago.

• NRU = 4.0%

• Target Inflation is 2.0%

1. Explain in detail the problem the country is facing.

2. Should the Federal Reserve adopt an easy money or tight money policy? Explain!

3. Which policy tool should the Federal Reserve use to carry out the policy you recommended in Question 2? Detailed explanation as to why the choice is correct and how the tool works to address the problem.

4. What could happen to make the policy you recommended in Question 2 ineffective? On this question, be sure to read the section in your text beginning on page 343. Don’t just make something up. It will take a paragraph or two to answer this question because you need to relate the specific complication to the scenario described in the question.

1. Every day, Eric takes the same street from his home to the university. There are 4 street lights along his way, and Eric has noticed the following Markov dependence. If he sees a green light at an intersection, then 60% of time the next light is also green, and 40% of time the next light is red. However, if he sees a red light, then 75% of time the next light is also red, and 25% of time the next light is green. Let 1 = “green light” and 2 = “red light” with the state space {1, 2}.

(a) Construct the 1-step transition probability matrix for the street lights.

(b) If the first light is red, what is the probability that the third light is red?

(c) Eric’s classmate Jacob has many street lights between his home and the university. If the first street light is red, what is the probability that the last street light is red? (Use the steady-state distribution.)

Victoria is doing a chi-square test to see if people in California have the same color preferences as people in Arizona. A sample of 100 Californians were polled. Thirty-five people prefer yellow, fifty people prefer green, and fifteen people prefer red. A sample of 50 Arizonans were polled. Ten people prefer yellow, ten people prefer green, and thirty people prefer red. Calculate the test statistic. State the critical value. Come to a conclusion about the null hypothesis. And state what Victoria should conclude about Californian’s and Arizonan’s color preferences? Let α = .05.

Victoria is doing a chi-square test to see if people in California have the same color preferences as people in Arizona. A sample of 100 Californians were polled. Thirty-five people prefer yellow, fifty people prefer green, and fifteen people prefer red. A sample of 50 Arizonans were polled. Ten people prefer yellow, ten people prefer green, and thirty people prefer red. Calculate the test statistic. State the critical value. Come to a conclusion about the null hypothesis. And state what Victoria should conclude about Californian’s and Arizonan’s color preferences? Let α = .05.

Victoria is doing a chi-square test to see if people in California have the same color preferences as people in Arizona. A sample of 100 Californians were polled. Thirty-five people prefer yellow, fifty people prefer green, and fifteen people prefer red. A sample of 50 Arizonans were polled. Ten people prefer yellow, ten people prefer green, and thirty people prefer red. Calculate the test statistic. State the critical value. Come to a conclusion about the null hypothesis. And state what Victoria should conclude about Californian’s and Arizonan’s color preferences? Let α = .05.

Victoria is doing a chi-square test to see if people in California have the same color preferences as people in Arizona. A sample of 100 Californians were polled. Thirty-five people prefer yellow, fifty people prefer green, and fifteen people prefer red. A sample of 50 Arizonans were polled. Ten people prefer yellow, ten people prefer green, and thirty people prefer red. Calculate the test statistic. State the critical value. Come to a conclusion about the null hypothesis. And state what Victoria should conclude about Californian’s and Arizonan’s color preferences? Let α = .05.

In an experiment in extrasensory perception (ESP), a subject in one room is asked to state the color (red or blue) of a card chosen from a deck of 50 well-shuffled cards by an individual in another room. It is unknown to the subject how many red or blue cards are in the deck.

a.)

What are your null and alternate hypotheses in this case?

b.)

If the subject identifies 32 cards correctly, determine the chances of each hypothesis being correct. Use the Gaussian approximation to the binomial distribution in making your calculations. Are these results are significant at either the 5% and 1% levels?

Imagine that you are a sales rep for a major insurance company. How can you gather customer feedback to improve your service? How can you use customer feedback that you receive about products and services for which you are not responsible? Please explain in detail

1. Use your favorite text editor or IDE to search for occurrences of setState.

2. Where you found uses of setState, refactor the code to use JavaScript functions instead of classes and the useState hook instead of setState.

   import React from 'react'
   import ColorSlider from './ColorSlider'
   import ColorOutput from './ColorOutput'
   import styles from './ColorBrowser.module.css'

   class ColorBrowser extends React.Component {
   constructor(props) {
   super(props)
   this.state = {
   red: Math.floor(Math.random() * 256),
   green: Math.floor(Math.random() * 256),
   blue: Math.floor(Math.random() * 256)
   }
   }
   updateColor(e) {
   this.setState({
   [e.target.name]: Number(e.target.value)
   })
   }
   getRandomColor() {
   this.setState({
   red: Math.floor(Math.random() * 256),
   green: Math.floor(Math.random() * 256),
   blue: Math.floor(Math.random() * 256)
   })
   }
   render() {
   return (
   <section className={styles["color-browser"]}>
   <h1>Welcome to the Color Browser</h1>
   <div className={styles.sliders}>
   <ColorSlider
   name="red"
   label="Red"
   min={0}
   max={255}
   value={this.state.red}
   onChange={this.updateColor.bind(this)}
   />
   <ColorSlider
   name="green"
   label="Green"
   min={0}
   max={255}
   value={this.state.green}
   onChange={this.updateColor.bind(this)}
   />
   <ColorSlider
   name="blue"
   label="Blue"
   min={0}
   max={255}
   value={this.state.blue}
   onChange={this.updateColor.bind(this)}
   />
   </div>

   <ColorOutput
   red={this.state.red}
   green={this.state.green}
   blue={this.state.blue}
   />
   <br/>
   <button onClick={this.getRandomColor.bind(this)}>Random Color</button>
   </section>
   )
   }
   }

   export default ColorBrowser

3. An advertising firm wants to determine the effects of the color of a magazine advertisement on the response of magazine readers. A random sample of readers is shown ads of four different colors, (Blue, Green, Yellow, Red) and three different sizes, (Small, Medium, Large.) The readers were asked to rate the ads from 1 to 12. The advertising firm felt that the size of the ad might make a difference, so they made sure that each color had an equal chance to be matched with each ad size. They weren’t so interested in the ad size; they just didn’t want the ad size to mask any differences due to the ad color.

Color: Blue,Blue,Blue,Green,Green,Green,Yellow,Yellow,Yellow,Red,Red,Red

Size: Small,Medium,Large, Small,Medium,Large, Small,Medium,Large, Small,Medium,Large

Rating: 2,3,5,3,5,6,3,6,7,8,9,12

Use a 5% significance level, α=0.05 for all hypothesis tests and confidence intervals. Conduct the appropriate analysis.

3.1 In your own words state the null and alternative hypothesis statements for the factor of interest.

3.2 What can we conclude about the factor of interest?

3.3 If appropriate, create Tukey simultaneous 95 percent confidence intervals and make pairwise comparisons if appropriate. If not appropriate, state why we would not make pairwise comparisons.