Suppose that the United States and Saudi Arabia can each produce two products, oil and personal computers. The labor requirements per unit of output are provided in the table below: Hint: Create a table that shows the amount of each good that could be produced with given the labor requirement. Assume 100 workers. Each questions point value is given in ( ).

1.   Calculate opportunity costs to produce each good: (4)
   1. Opportunity cost to produce Oil in the United States is:

2. Opportunity cost to produce an Automobile in the United States is:

3. Opportunity cost to produce Oil in Saudi Arabia is:

4. Opportunity cost to produce an Automobile in Saudi Arabia is

2. What does absolute advantage mean? (1)

3. Which country has an absolute advantage in producing oil? (1)

4. Explain your answer to #3 using the data from the table. (1)

5. What does comparative advantage mean? (1)

6. In what output(s) does the U.S. have a comparative advantage? (1)

7. Explain your answer to #6 using the data from the table. (1)

8. In what output(s) does Saudi Arabia have a comparative advantage? (1)

9. Explain your answer to #8 using the data from the table. (1)

10. What product should each country export? (1)

1. The "business cycle" refers to

short-run fluctuations in macroeconomic activity.

a long-run increase in GDP.

changes in the economy between winter and summer.

2. Which of these would be counted as part of official GDP measures?

earnings made by Uber and Lyft drivers

casual jobs that are paid in cash "under the table"

measures of happiness among a country's citizens

the damage to an environment measured in terms of deforestation

3.The U.S. gross domestic product is equal to the total market value of all

final goods and services produced by U.S. citizens in the United States.

intermediate goods and services produced by citizens in the United States.

intermediate goods and services produced by resources in the United States.

final goods and services produced by resources in the United States.

changes in the economy over the course of the four seasons.

4.

(Table) According to the table, net domestic product is

properitors income 300

capital consumption allowance 440

federal gov't purchases goods and servises 200

compensation of employees 800

personal consumption expendentiures 950

corporate profits 90

exports 60

gross private domestic investment 500

rental income 30

state and local gov't purchases of goods and services 150

net interest 100

federal govt deficit 250

imports9 0

$1,580 billion.

$1,080 billion.

$1,770 billion.

$1,330 billion.

How do each of the following transactions affect:

(1) the trade surplus or deficit for the United States AND
(2) capital inflows or outflows for the United States

a. A U.S. exporter sells software to Israel. She uses the Israeli shekels received to buy stock in an Israeli company.

The U.S. export creates a trade (Click to select)deficitsurplus and the purchase of Israeli stock creates a capital (Click to select)outflowinflow.

NX (Click to select)>=< 0.

KI (Click to select)<>= 0.

NX + KI (Click to select)<>= 0.


b. A Mexican firm uses proceeds from its sale of oil to the United States to buy U.S. government debt.

The purchase of Mexican oil creates a trade (Click to select)deficitsurplus and the Mexican purchase of U.S. bonds creates a capital (Click to select)inflowoutflow.

NX (Click to select)><= 0.

KI (Click to select)>=< 0.

NX + KI (Click to select)=>< 0.


c. A Mexican firm uses proceeds from its sale of oil to the United States to buy oil drilling equipment from a U.S. firm.

The purchase of oil from Mexico and the Mexican purchase of drilling equipment (Click to select)does createdoes not create a trade (Click to select)deficit or surplussurplusdeficit and (Click to select)does not createdoes create a capital (Click to select)inflowinflow or outflowoutflow.

NX (Click to select)<>= 0.

KI (Click to select)=>< 0.

NX + KI (Click to select)=<> 0.

Consider the following variation of Table 11-1 for the U.S. semiconductor market

1. Fill in the values for W, X, Y, and Z.
2. Suppose that before NAFTA, the United States had a 16% tariff on imported semiconductors. Which country supplied the U.S. market? Is it the lowest-cost producer?
3. After NAFTA, who supplies the U.S. market? Has either trade creation or diversion occurred because of NAFTA? Explain.
4. Now suppose that before NAFTA, the United States had an 8% tariff on imported semiconductors. Then repeat parts (b) and (c).
5. In addition to the assumptions made in (d), consider the effect of an increase in high-technology investment in Canada due to NAFTA, allowing Canadian firms to develop better technology. As a result, three years after the initiation of NAFTA, Canadian firms can begin to sell their products to the United States for $40. What happens to the U.S. trade pattern three years after NAFTA? Has either trade creation or diversion occurred because of NAFTA? Explain.

Consider the situation of United Airlines (UA), an international airline based in United States of America. As part of its business it is heavily exposed to fluctuations in the price of jet fuel and foreign exchange rates. It sells tickets in foreign currencies and has significant EUR costs. For either jet fuel costs or forex, evaluate one derivative product UA could use to hedge fluctuations in the underlying price.

• Briefly describe how the product would be used to hedge the fluctuations

• Discuss the pro’s and con’s of this product

• Suggestions and recommendations

Your answer should be no more than 500 words

A United Nations report shows the mean family income for Mexican migrants to the United States is $28,540 per year. A FLOC (Farm Labor Organizing Committee) evaluation of 26 Mexican family units reveals a mean to be $30,500 with a sample standard deviation of $10,500. Does this information disagree with the United Nations report? Apply the 0.01 significance level.

A United Nations report shows the mean family income for Mexican migrants to the United States is $28,120 per year. A FLOC (Farm Labor Organizing Committee) evaluation of 27 Mexican family units reveals a mean to be $39,750 with a sample standard deviation of $12,765. Does this information disagree with the United Nations report? Apply the 0.01 significance level.