True or False i. The presence of economies of scale make it is easier to achieve expansions of RGDP through increasing economic resources. j. Once it joined the Euro, Greece lost the use of both Monetary Policy and Exchange Rate changes to deal with problems in its economy. k. When a country in financial difficulty has obtained a bailout program from the IMF, it receives funds regardless of its economic performance or policies. l. PPP adjustment to converting a non-US country’s GDP into Dollars generally raises the country’s GDP when prices in the non-US country are lower than in the United States.

The Obama administration should "really open to change" by decriminalizing illegal drugs. The current administration recognizes that US is the main market for Mexican drugs: "US demand for illegal drugs is insatiable," Secretary of State Hillary Clinton says. Thus, drugs have to be decriminalized in both the US and Mexico. Use a graph to represent the difference between the US demand and the Mexican demand for drugs.

In the US there are ~300,000 cases of Chagas Disease, as well as several triatomine vectors capable of cruzi transmission. What aspect of kissing bug behavior in species found in the US is one of the major reasons for the absence of Chagas transmission? Name at least two other reasons that lead to an absence of Chagas transmission in the US. Why do kissing bug bites still result in hospitalizations in the US?

3You also have been asked to determine at both the 5% and 10% levels of significance whether the proportion of the population of universities that offers more than 50% of their student body some sort of financial aid is different from 40%. You select a random sample of universities from the population. The sample data concerning whether the university offers more than 50% of its students some form of financial aid is shown below. Answer the question posed above at each of the stated levels of significance based upon the sample data given in appendix two. If you arrive at different results for the two different parts of this problem, provide a reason for that difference. Appendix Two: University offers more than 50% of its students financial aid? (Y = yes, N = no)

Y         N         Y         Y         N         Y         N         N         N         Y         Y        

N         N         Y         Y         Y         N         N         Y         N         N         N        

N         Y         Y         Y         N         Y         Y         N         Y         N         Y

Y         N         Y         Y         Y         Y         Y         N         N         N         Y

N         Y         N         N         N         N         Y         Y         N         Y         Y

Y         Y         Y         N         Y         Y         Y         Y         N         N         Y

New combinations of genetic material give rise to genetic variability in sexually reproducing organisms through

1. crossover events between nonsister homologous chromatids.
2. crossover events between sister chromatids.
3. egg and sperm genetic recombination from distinct individuals.
4. egg and sperm genetic recombination from one individual in which crossing over and independent assortment of homologues has occurred.
5. A, C, and D all contribute to genetic variability.

Mr. Marcotte was at Joel’s Little League game last week where he ran into one of the other parents, who seemed to
be in a very upbeat mood. Mr. Richards could not seem to stop talking about his windfall in the past week on some
stocks he had bought in the last month or so. Since Mr. Marcotte is still new to the investing game, he seemed to be
somewhat overwhelmed with some of the terms like stock splits, P/E ratios, dividend payout that Mr. Richards was
using to explain his success story. Moreover, Martin Marcotte has always assumed that one needs to have a sizable
amount to invest in the stock market, not to mention the inherent risk involved in the equities market. It has not
helped that by nature Mr. Marcotte is a risk averse person, he seems to think that if he was to dabble in the stock
market, he will have the same fate as those who invested in Enron, World Com, or some of the other companies
involved in fraudulent practices.
Having the above concerns aside, Martin knows that he will not be able to achieve his financial goals by keeping his
savings in a savings account or having certificates of deposits. Therefore he has decided to research stocks further,
and together with Mrs. Marcotte start a small investment in some well-researched company. Before he does so,
however he still has several questions that he needs answered.

Part 1: The Marcottes are not sure what are the different ways one make money by investing in the stock of a company?
Please list and explain the three ways you can make money with stocks.

Part 2: Given that there are many classifications of stocks to choose from, which ones should the Marcottes invest in
initially? (Remember, their initial goal is to have sufficient funds for their kids’ college education) It may maybe
more than just one class of stock. Explain and support your recommendations for the Marcottes.

Part 3: The Marcottes are not sure if they should use a Full-Service of Discount Brokerage firm, since they feel they
will not be able to spend enough time researching individual stocks. What recommendation would you give them?
Please support your recommendation.

Part 4: What are the long term techniques that the Marcottes can follow when investing in the stock market? List and
explain two methods. Which one do you recommend for this family?

Part 5: What are the short term techniques that the Marcottes can follow when investing in the stock
market? List and explain two of the methods and explain why you would not recommend them to Marcottes.

Suppose you decide (as did Steve Jobs and Mark Zuckerberg) to start a company. Your product is a software platform that integrates a wide range of media devices, including laptop computers, desktop computers, digital video recorders, and cell phones. Your initial client base is the student body at your university. Once you have established your company and set up procedures for operating it, you plan to expand to other colleges in the area and eventually to go nationwide. At some point, hopefully sooner rather than later, you plan to go public with an IPO and then to buy a yacht and take off for the South Pacific to indulge in your passion for underwater photography. With these plans in mind, you need to answer for yourself, and potential investors, the following questions:

1. What is an agency relationship? When you first begin operations, assuming you are the only employee and only your money is invested in the business, would any agency conflicts exist? Explain your answer.

2. Suppose your company raises funds from outside lenders. What type of agency costs might occur? How might lenders mitigate the agency costs?

3. What is corporate governance? List five corporate governance provisions that are internal to a firm and are under its control.

4. Briefly describe the use of stock options in a compensation plan. What are some potential problems with stock options as a form of compensation?

5. Briefly explain how regulatory agencies and legal systems affect corporate governance.

In this chapter we really got into comparative advantage and gains from trade. We highlighted the benefit of trade, and showed that it works BOTH on the micro (individual) and macro (economy) level. Often the discussion of free trade is contrasted by comparing to its logical opposite, "protectionism". "Protectionism" is an idea that certain domestic industries should be protected (from new products or foreign producers) in order to ensure that their employees aren't negatively impacted. Those who favor protectionism have very good intent, but it is almost universally viewed as bad for economic welfare by professional economists.

There are multiple factors at work here. First, there's a concept called "Creative Destruction". Creative Destruction is the concept that new technology disrupts the existing model so much that old industries will be replaced with new industries. (Think the automobile industry destroying the horse and horse related business, the computer destroying the typewriter, the digital camera destroying film, Streaming video replacing VHS, etc). The creation of the new improved product DOES displace those who are in the old industry. It IS harmful to those impacted. However, there is clearly a benefit from the newer, improved product to society as a whole. With each evolution, societal welfare has improved, but it costs some their jobs (until they can be retrained and utilized elsewhere). Both trade and creative destruction causes a reorganization of resources and people. It's destructive, but powerful.

Question #1)

If you were an economic advisor, briefly (one paragraph) explain which of the following would be your primary economic goal: Protecting existing jobs and industries or improving societal welfare? How could you economically explain your position?  

Watch this 3-minute Video on Creative Destruction.

Identify a market that has been fundamentally changed due to creative destruction (not one mentioned in the video). Explain how the negative impacts are often more visible than the positive impacts.