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Economics homework help

Topic: Impacts of a Rise in Minimum Wages in America

1. Select a research topic on an economic issue.  Consult with your instructor to discuss your ideas.

2. Conduct research on your topic using at least three sources.

3. Write a Research Paper with a Body length of 2-3 pages using APA style.

4. Double-space your Research Paper.

5. Include a Title Page, an Abstract with Key Words, a Body, and References.

6. In the Body of your Research Paper, begin with an Introductory Paragraph and end with a Concluding Paragraph.

7. Consider using the Writing Lab to provide assistance with editing your paper.

8. Your paper will be checked for plagiarism using SafeAssign. Plagiarized papers, whether intentional or simply due to ignorance will receive a total grade of zero. Read the following information on 
plagiarism
.

The Research and Writing Process

Begin this assignment by following these steps in the research process:

1. Select a topic.

2. Look for reference materials that address the topic from a wide variety of sources.

3. Focus on one particular question inside your topic to address in your paper.

4. Develop your thesis based on your reading and your analysis. 

5. Make sure you have a strong thesis.  Can you answer “yes” to these questions about your thesis?

. Does the thesis respond to the prompt or address my research question?

. Could someone disagree with this thesis?

. Is the thesis derived from considering a wide variety of sources and statistics?

When you have a strong thesis and good information from research begin writing a rough draft of your paper.  Make sure to include the following components:

1. Title Page

2. Abstract with Key Words

3. The Body of Your Paper including an Introduction and Conclusion

4. References

Economics homework help

Suppose you can separate consumers into two groups:

Group 1 has a price elasticity of demand = -3 and group 2 has a price elasticity of demand of -9. If you could conduct third degree price discrimination, which group would you charge a higher price to? Why? What would be the relative price of group 1 to group 2? Suppose that the profit maximizing price for group 2 is $12. What price should I charge group 1?

Show all your work.

Notes:

Third Degree Price Discrimination = Charging two (or more) different prices to two (or more) different types of customers when MC is the same (or the difference in MC is not large enough to justify the difference in price). Price you charge for each group depends upon their “willingness to pay” – or their price elasticity of demand

Remember third degree price requires:

· Market Power

· Some means for identifying and separating customers based on their price elasticities of demand

· Prevent Arbitrage – restrictions on resale

Examples of Third Degree Price Discrimination

· Movies – Discount admission for children

· Different price elasticity for adults and children

· Resale restrictions?Examples of Third Degree Price Discrimination

· Movies – Discount admission for children

· Different price elasticity for adults and children

· Resale restrictions?

Other Examples of Third Degree Price Discrimination

· Senior citizen and Student Discounts

· Airline travel

· Coupons

· Hardcopy versus soft cover (note: MC will be different, but won’t capture the entire price differential)

Economics homework help

Topic: Inflation in America

1. Select a research topic on an economic issue.  Consult with your instructor to discuss your ideas.

2. Conduct research on your topic using at least three sources.

3. Write a Research Paper with a Body length of 2-3 pages using APA style.

4. Double-space your Research Paper.

5. Include a Title Page, an Abstract with Key Words, a Body, and References.

6. In the Body of your Research Paper, begin with an Introductory Paragraph and end with a Concluding Paragraph.

7. Consider using the Writing Lab to provide assistance with editing your paper.

8. Your paper will be checked for plagiarism using SafeAssign. Plagiarized papers, whether intentional or simply due to ignorance will receive a total grade of zero. Read the following information on 
plagiarism
.

The Research and Writing Process

Begin this assignment by following these steps in the research process:

1. Select a topic.

2. Look for reference materials that address the topic from a wide variety of sources.

3. Focus on one particular question inside your topic to address in your paper.

4. Develop your thesis based on your reading and your analysis. 

5. Make sure you have a strong thesis.  Can you answer “yes” to these questions about your thesis?

. Does the thesis respond to the prompt or address my research question?

. Could someone disagree with this thesis?

. Is the thesis derived from considering a wide variety of sources and statistics?

When you have a strong thesis and good information from research begin writing a rough draft of your paper.  Make sure to include the following components:

1. Title Page

2. Abstract with Key Words

3. The Body of Your Paper including an Introduction and Conclusion

4. References

Economics homework help

1. Your task is to research the possible events/causes that created the expansion and the subsequent recession and recovery. Your research should include major macroeconomic concerns such as:

0. Inflation

0. Budget deficit/surplus

0. Unemployment

0. GDP

0. Fiscal/Monetary Policy

1. Write a 5-8 page paper that discusses the factors that contributed to the late 1990s and mid to late-2000s expansion and subsequent recession and recovery. Your paper should answer the following questions.

1. What factors contributed to the lengthy expansion and subsequent recession and recovery (aggregate supply/demand, planned investment, global issues, national disasters, etc.)? Discuss the history of the expansion and what led up to the Great Recession of 2007/2008.

1. What fiscal policies and/or monetary policies were used to influence economic changes?

1. What influence did the President, Congress, or Federal Reserve have in the economy?

1. What were the results of their attempts to change the economic situations?

1. Consider the general ingredients for continued economic growth and how they relate to the production possibilities analysis and long-run aggregate supply factors. What do you forecast for the economic future of the US?

1. Use data to support your assertions.

1. Follow the criteria below for writing your paper:

2. 12 pt font

2. Double spaced

2. Bold headings

2. At least 4 references

2. References in APA format

Economics homework help

1. Suppose there are two firms, A and B, operating in a market and compete on output choices (QA and QB). No other firms can enter the market. Suppose further that the market demand curve is:

P (price) = 24800 – 200(QA+QB)

Further, suppose that the marginal costs for both firms is constant and equal to $800, and there are no fixed costs.

a. Calculate and draw each firms best response function. Put QA on the Y axis and QB on the X axis.

b. Solve for the Nash Equilibrium output levels for each firm, and calculate the market price and the corresponding economic profits for each firm. Identify this point on the graph you drew in part a.

c. Suppose instead that the firm’s colluded and acted like a single monopolist. So the market demand curve is now: P = 24800 – 200Q where Q = QA+QB. Assume that MC (marginal cost) = $800. Calculate the profit maximizing market output and price levels. Assume that each firms produces half of the market output and splits evenly the monopoly profit. What are the output and profit levels for each firm?

d. (Suppose firm A believes that firm B will produce the output level identified in part c. Is it optimal for firm A to produce their output level identified in part C, or would there be another output level for firm A to maximize their own profits? Hint: Use your work in part A.

e. Given all this work, is this game a prisoner’s dilemma? Explain fully.

2. I remember when Amazon was a cute little start-up designed to compete with rival booksellers Barnes and Noble and Borders…. Please read the article linked below. Using the work done in this module together with the information in the article, please answer this question:

In your well informed opinion, to what degree (if at all) should we regulate Amazon? Why?

https://www.vox.com/recode/22836368/amazon-antitrust-ftc-marketplace

Economics homework help

Name: ___________________ Class: _________________ Date: __________

Problem Set 3

1. How does the interest rate effect explain the slope of the aggregate demand (AD) curve?

2. How does the wealth effect explain the slope of the aggregate demand (AD) curve?

3. What is the difference between a movement along the aggregate demand (AD) curve and a shift of the aggregate demand curve? Explain in terms of what causes a movement and what causes a shift.

4. What happens to investment spending when the price level rises? Explain and illustrate using a loanable funds market graph.

Economics homework help

Running head: GUIDED IMAGERY AND PROGRESSIVE MUSCLE RELAXATION

2

12

Guided Imagery and Progressive Muscle Relaxation in Group Psychotherapy

Hannah K. Greenbaum

Department of Psychology, The George Washington University

PSYC 3170: Clinical Psychology

Dr. Tia M. Benedetto

October 1, 2019

Guided Imagery and Progressive Muscle Relaxation in Group Psychotherapy

A majority of Americans experience stress in their daily lives (American Psychological Association, 2017). Thus, an important goal of psychological research is to evaluate techniques that promote stress reduction and relaxation. Two techniques that have been associated with reduced stress and increased relaxation in psychotherapy contexts are guided imagery and progressive muscle relaxation (McGuigan & Lehrer, 2007). Guided imagery aids individuals in connecting their internal and external experiences, allowing them, for example, to feel calmer externally because they practice thinking about calming imagery. Progressive muscle relaxation involves diaphragmatic breathing and the tensing and releasing of 16 major muscle groups; together these behaviors lead individuals to a more relaxed state (Jacobson, 1938; Trakhtenberg, 2008). Guided imagery and progressive muscle relaxation are both cognitive behavioral techniques (Yalom & Leszcz, 2005) in which individuals focus on the relationship among thoughts, emotions, and behaviors (White, 2000).

Group psychotherapy effectively promotes positive treatment outcomes in patients in a cost-effective way. Its efficacy is in part attributable to variables unique to the group experience of therapy as compared with individual psychotherapy (Bottomley, 1996; Yalom & Leszcz, 2005). That is, the group format helps participants feel accepted and better understand their common struggles; at the same time, interactions with group members provide social support and models of positive behavior (Yalom & Leszcz, 2005). Thus, it is useful to examine how stress reduction and relaxation can be enhanced in a group context.

The purpose of this literature review is to examine the research base on guided imagery and progressive muscle relaxation in group psychotherapy contexts. I provide overviews of both guided imagery and progressive muscle relaxation, including theoretical foundations and historical context. Then I examine guided imagery and progressive muscle relaxation as used on their own as well as in combination as part of group psychotherapy (see Baider et al., 1994, for more). Throughout the review, I highlight themes in the research. Finally, I end by pointing out limitations in the existing literature and exploring potential directions for future research.

Guided Imagery

Features of Guided Imagery

Guided imagery involves a person visualizing a mental image and engaging each sense (e.g., sight, smell, touch) in the process. Guided imagery was first examined in a psychological context in the 1960s, when the behavior theorist Joseph Wolpe helped pioneer the use of relaxation techniques such as aversive imagery, exposure, and imaginal flooding in behavior therapy (Achterberg, 1985; Utay & Miller, 2006). Patients learn to relax their bodies in the presence of stimuli that previously distressed them, to the point where further exposure to the stimuli no longer provokes a negative response (Achterberg, 1985).

Contemporary research supports the efficacy of guided imagery interventions for treating medical, psychiatric, and psychological disorders (Utay & Miller, 2006). Guided imagery is typically used to pursue treatment goals such as improved relaxation, sports achievement, and pain reduction. Guided imagery techniques are often paired with breathing techniques and other forms of relaxation, such as mindfulness (see Freebird Meditations, 2012). The evidence is sufficient to call guided imagery an effective, evidence-based treatment for a variety of stress-related psychological concerns (Utay & Miller, 2006).

Guided Imagery in Group Psychotherapy

Guided imagery exercises improve treatment outcomes and prognosis in group psychotherapy contexts (Skovholt & Thoen, 1987). Lange (1982) underscored two such benefits by showing (a) the role of the group psychotherapy leader in facilitating reflection on the guided imagery experience, including difficulties and stuck points, and (b) the benefits achieved by social comparison of guided imagery experiences between group members. Teaching techniques and reflecting on the group process are unique components of guided imagery received in a group context (Yalom & Leszcz, 2005).

Empirical research focused on guided imagery interventions supports the efficacy of the technique with a variety of populations within hospital settings, with positive outcomes for individuals diagnosed with depression, anxiety, and eating disorders (Utay & Miller, 2006). Guided imagery and relaxation techniques have even been found to “reduce distress and allow the immune system to function more effectively” (Trakhtenberg, 2008, p. 850). For example, Holden-Lund (1988) examined effects of a guided imagery intervention on surgical stress and wound healing in a group of 24 patients. Patients listened to guided imagery recordings and reported reduced state anxiety, lower cortisol levels following surgery, and less irritation in wound healing compared with a control group. Holden-Lund concluded that the guided imagery recordings contributed to improved surgical recovery. It would be interesting to see how the results might differ if guided imagery was practiced continually in a group context.

Guided imagery has also been shown to reduce stress, length of hospital stay, and symptoms related to medical and psychological conditions (Scherwitz et al., 2005). For example, Ball et al. (2003) conducted guided imagery in a group psychotherapy format with 11 children (ages 5–18) experiencing recurrent abdominal pain. Children in the treatment group (n = 5) participated in four weekly group psychotherapy sessions where guided imagery techniques were implemented. Data collected via pain diaries and parent and child psychological surveys showed that patients reported a 67% decrease in pain. Despite a small sample size, which contributed to low statistical power, the researchers concluded that guided imagery in a group psychotherapy format was effective in reducing pediatric recurrent abdominal pain.

However, in the majority of guided imagery studies, researchers have not evaluated the technique in the context of traditional group psychotherapy. Rather, in these studies participants usually met once in a group to learn guided imagery and then practiced guided imagery individually on their own (see Menzies et al., 2014, for more). Thus, it is unknown whether guided imagery would have different effects if implemented on an ongoing basis in group psychotherapy.

Progressive Muscle Relaxation

Features of Progressive Muscle Relaxation

Progressive muscle relaxation involves diaphragmatic or deep breathing and the tensing and releasing of muscles in the body (Jacobson, 1938). Edmund Jacobson developed progressive muscle relaxation in 1929 (as cited in Peterson et al., 2011) and directed participants to practice progressive muscle relaxation several times a week for a year. After examining progressive muscle relaxation as an intervention for stress or anxiety, Joseph Wolpe (1960; as cited in Peterson et al., 2011) theorized that relaxation was a promising treatment. In 1973, Bernstein and Borkovec created a manual for helping professionals to teach their clients progressive muscle relaxation, thereby bringing progressive muscle relaxation into the fold of interventions used in cognitive behavior therapy. In its current state, progressive muscle relaxation is often paired with relaxation training and described within a relaxation framework (see Freebird Meditations, 2012, for more).

Research on the use of progressive muscle relaxation for stress reduction has demonstrated the efficacy of the method (McGuigan & Lehrer, 2007). As clients learn how to tense and release different muscle groups, the physical relaxation achieved then influences psychological processes (McCallie et al., 2006). For example, progressive muscle relaxation can help alleviate tension headaches, insomnia, pain, and irritable bowel syndrome. This research demonstrates that relaxing the body can also help relax the mind and lead to physical benefits.

Progressive Muscle Relaxation in Group Psychotherapy

Limited, but compelling, research has examined progressive muscle relaxation within group psychotherapy. Progressive muscle relaxation has been used in outpatient and inpatient hospital settings to reduce stress and physical symptoms (Peterson et al., 2011). For example, the U.S. Department of Veterans Affairs integrates progressive muscle relaxation into therapy skills groups (Hardy, 2017). The goal is for group members to practice progressive muscle relaxation throughout their inpatient stay and then continue the practice at home to promote ongoing relief of symptoms (Yalom & Leszcz, 2005).

Yu (2004) examined the effects of multimodal progressive muscle relaxation on psychological distress in 121 elderly patients with heart failure. Participants were randomized into experimental and control groups. The experimental group received biweekly group sessions on progressive muscle relaxation, as well as tape-directed self-practice and a revision workshop. The control group received follow-up phone calls as a placebo. Results indicated that the experimental group exhibited significant improvement in reports of psychological distress compared with the control group. Although this study incorporated a multimodal form of progressive muscle relaxation, the experimental group met biweekly in a group format; thus, the results may be applicable to group psychotherapy.

Progressive muscle relaxation has also been examined as a stress-reduction intervention with large groups, albeit not therapy groups. Rausch et al. (2006) exposed a group of 387 college students to 20 min of either meditation, progressive muscle relaxation, or waiting as a control condition. Students exposed to meditation and progressive muscle relaxation recovered more quickly from subsequent stressors than did students in the control condition. Rausch et al. (2006) concluded the following:

A mere 20 min of these group interventions was effective in reducing anxiety to normal levels
. . . merely 10 min of the interventions allowed [the high-anxiety group] to recover from the stressor. Thus, brief interventions of meditation and progressive muscle relaxation may be effective for those with clinical levels of anxiety and for stress recovery when exposed to brief, transitory stressors. (p. 287)

Thus, even small amounts of progressive muscle relaxation can be beneficial for people experiencing anxiety.

Guided Imagery and Progressive Muscle Relaxation in Group Psychotherapy

Combinations of relaxation training techniques, including guided imagery and progressive muscle relaxation, have been shown to improve psychiatric and medical symptoms when delivered in a group psychotherapy context (Bottomley, 1996; Cunningham & Tocco, 1989). The research supports the existence of immediate and long-term positive effects of guided imagery and progressive muscle relaxation delivered in group psychotherapy (Baider et al., 1994). For example, Cohen and Fried (2007) examined the effect of group psychotherapy on 114 women diagnosed with breast cancer. The researchers randomly assigned participants to three groups: (a) a control group, (b) a relaxation psychotherapy group that received guided imagery and progressive muscle relaxation interventions, or (c) a cognitive behavioral therapy group. Participants reported less psychological distress in both intervention groups compared with the control group, and participants in the relaxation psychotherapy group reported reduced symptoms related to sleep and fatigue. The researchers concluded that relaxation training using guided imagery and progressive muscle relaxation in group psychotherapy is effective for relieving distress in women diagnosed with breast cancer. These results further support the utility of guided imagery and progressive muscle relaxation within the group psychotherapy modality.

Conclusion

Limitations of Existing Research

Research on the use of guided imagery and progressive muscle relaxation to achieve stress reduction and relaxation is compelling but has significant limitations. Psychotherapy groups that implement guided imagery and progressive muscle relaxation are typically homogeneous, time limited, and brief (Yalom & Leszcz, 2005). Relaxation training in group psychotherapy typically includes only one or two group meetings focused on these techniques (Yalom & Leszcz, 2005); thereafter, participants are usually expected to practice the techniques by themselves (see Menzies et al., 2014). Future research should address how these relaxation techniques can assist people in diverse groups and how the impact of relaxation techniques may be amplified if treatments are delivered in the group setting over time.

Future research should also examine differences in inpatient versus outpatient psychotherapy groups as well as structured versus unstructured groups. The majority of research on the use of guided imagery and progressive muscle relaxation with psychotherapy groups has used unstructured inpatient groups (e.g., groups in a hospital setting). However, inpatient and outpatient groups are distinct, as are structured versus unstructured groups, and each format offers potential advantages and limitations (Yalom & Leszcz, 2005). For example, an advantage of an unstructured group is that the group leader can reflect the group process and focus on the “here and now,” which may improve the efficacy of the relaxation techniques (Yalom & Leszcz, 2005). However, research also has supported the efficacy of structured psychotherapy groups for patients with a variety of medical, psychiatric, and psychological disorders (Hashim & Zainol, 2015; see also Baider et al., 1994; Cohen & Fried, 2007). Empirical research assessing these interventions is limited, and further research is recommended.

Directions for Future Research

There are additional considerations when interpreting the results of previous studies and planning for future studies of these techniques. For example, a lack of control groups and small sample sizes have contributed to low statistical power and limited the generalizability of findings. Although the current data support the efficacy of psychotherapy groups that integrate guided imagery and progressive muscle relaxation, further research with control groups and larger samples would bolster confidence in the efficacy of these interventions. In order to recruit larger samples and to study participants over time, researchers will need to overcome challenges of participant selection and attrition. These factors are especially relevant within hospital settings because high patient turnover rates and changes in medical status may contribute to changes in treatment plans that affect group participation (L. Plum, personal communication, March 17, 2019). Despite these challenges, continued research examining guided imagery and progressive muscle relaxation interventions within group psychotherapy is warranted (Scherwitz et al., 2005). The results thus far are promising, and further investigation has the potential to make relaxation techniques that can improve people’s lives more effective and widely available.

References

Achterberg, J. (1985). Imagery in healing. Shambhala Publications.

American Psychological Association. (2017). Stress in America: The state of our nation. https://www.apa.org/news/press/releases/stress/2017/state-nation.pdf

Baider, L., Uziely, B., & Kaplan De-Nour, A. (1994). Progressive muscle relaxation and guided imagery in cancer patients. General Hospital Psychiatry, 16(5), 340–347. https://doi.org/10.1016/0163-8343(94)90021-3

Ball, T. M., Shapiro, D. E., Monheim, C. J., & Weydert, J. A. (2003). A pilot study of the use of guided imagery for the treatment of recurrent abdominal pain in children. Clinical Pediatrics, 42(6), 527–532. https://doi.org/10.1177/000992280304200607

Bernstein, D. A., & Borkovec, T. D. (1973). Progressive relaxation training: A manual for the helping professions. Research Press.

Bottomley, A. (1996). Group cognitive behavioural therapy interventions with cancer patients: A review of the literature. European Journal of Cancer Cure, 5(3), 143–146. https://doi.org/10.1111/j.1365-2354.1996.tb00225.x

Cohen, M., & Fried, G. (2007). Comparing relaxation training and cognitive-behavioral group therapy for women with breast cancer. Research on Social Work Practice, 17(3), 313–323. https://doi.org/10.1177/1049731506293741

Cunningham, A. J., & Tocco, E. K. (1989). A randomized trial of group psychoeducational therapy for cancer patients. Patient Education and Counseling, 14(2), 101–114. https://doi.org/10.1016/0738-3991(89)90046-3

Freebird Meditations. (2012, June 17). Progressive muscle relaxation guided meditation [Video]. YouTube. https://www.youtube.com/watch?v=fDZI-4udE_o

Hardy, K. (2017, October 8). Mindfulness is plentiful in “The post-traumatic insomnia workbook.” Veterans Training Support Center. http://bit.ly/2D6ux8U

Hashim, H. A., & Zainol, N. A. (2015). Changes in emotional distress, short term memory, and sustained attention following 6 and 12 sessions of progressive muscle relaxation training in 10–11 years old primary school children. Psychology, Health & Medicine, 20(5), 623–628. https://doi.org/10.1080/13548506.2014.1002851

Holden-Lund, C. (1988). Effects of relaxation with guided imagery on surgical stress and wound healing. Research in Nursing & Health, 11(4), 235–244. http://doi.org/dztcdf

Jacobson, E. (1938). Progressive relaxation (2nd ed.). University of Chicago Press.

Lange, S. (1982, August 23–27). A realistic look at guided fantasy [Paper presentation]. American Psychological Association 90th Annual Convention, Washington, DC.

McCallie, M. S., Blum, C. M., & Hood, C. J. (2006). Progressive muscle relaxation. Journal of Human Behavior in the Social Environment, 13(3), 51–66. http://doi.org/b54qm3

McGuigan, F. J., & Lehrer, P. M. (2007). Progressive relaxation: Origins, principles, and clinical applications. In P. M. Lehrer, R. L. Woolfolk, & W. E. Sime (Eds.), Principles and practice of stress management (3rd ed., pp. 57–87). Guilford Press.

Menzies, V., Lyon, D. E., Elswick, R. K., Jr., McCain, N. L., & Gray, D. P. (2014). Effects of guided imagery on biobehavioral factors in women with fibromyalgia. Journal of Behavioral Medicine, 37(1), 70–80. https://doi.org/10.1007/s10865-012-9464-7

Peterson, A. L., Hatch, J. P., Hryshko-Mullen, A. S., & Cigrang, J. A. (2011). Relaxation training with and without muscle contraction in subjects with psychophysiological disorders. Journal of Applied Biobehavioral Research, 16(3–4), 138–147. https://doi.org/10.1111/j.1751-9861.2011.00070.x

Rausch, S. M., Gramling, S. E., & Auerbach, S. M. (2006). Effects of a single session of large-group meditation and progressive muscle relaxation training on stress reduction, reactivity, and recovery. International Journal of Stress Management, 13(3), 273–290. https://doi.org/10.1037/1072-5245.13.3.273

Scherwitz, L. W., McHenry, P., & Herrero, R. (2005). Interactive guided imagery therapy with medical patients: Predictors of health outcomes. The Journal of Alternative and Complementary Medicine, 11(1), 69–83. https://doi.org/10.1089/acm.2005.11.69

Skovholt, T. M., & Thoen, G. A. (1987). Mental imagery and parenthood decision making. Journal of Counseling & Development, 65(6), 315–316. http://doi.org/fzmtjd

Trakhtenberg, E. C. (2008). The effects of guided imagery on the immune system: A critical review. International Journal of Neuroscience, 118(6), 839–855. http://doi.org/fxfsbq

Utay, J., & Miller, M. (2006). Guided imagery as an effective therapeutic technique: A brief review of its history and efficacy research. Journal of Instructional Psychology, 33(1), 40–43.

White, J. R. (2000). Introduction. In J. R. White & A. S. Freeman (Eds.), Cognitive-behavioral group therapy: For specific problems and populations (pp. 3–25). American Psychological Association. https://doi.org/10.1037/10352-001

Yalom, I. D., & Leszcz, M. (2005). The theory and practice of group psychotherapy (5th ed.). Basic Books.

Yu, S. F. (2004). Effects of progressive muscle relaxation training on psychological and health-related quality of life outcomes in elderly patients with heart failure (Publication No. 3182156) [Doctoral dissertation, The Chinese University of Hong Kong]. ProQuest Dissertations and Theses Global.

Economics homework help

ASSIGNMENT DESCRIPTIONS:

Case Analysis (max 3 pages):

o The analysis write ups/summary should include the following components:

a) Overview of major issues,

b) Applications of key themes from the textbook into the case

c) Your analysis, including assumptions (if needed)

d) Recommendations and action plan

e) References (exclusive of the page limit)

f) appendix (if needed).

o Formatting each component as subheadings is recommended in your case written assignment.
o For (a) overview of major issues, describe the challenges/problems/issues outlined in the case.
This section should be clear and succinct. You can make use of bullet points to describe the issues.
o For (b) applications of key themes, elaborate what you have learned from the assigned case by
directly relating/connecting the case to concepts and themes described in the different chapters.
o For (c), your analysis should include your thoughts about the case in your own words. In this
section, you should put down your own thoughts and opinions about the issues/challenges
described in the case. However, your thoughts/opinions should be based on textbook concepts and
arguments. In this section, you can also bring in outside information (such as the latest news,
articles, references to any calculations, charts, diagrams or graphs*). Also, be sure to answer any
questions that are assigned at the end of each case. You can also use these questions as a guide to
develop the other sections of your case summary/write-up.
In the analysis section, you can also write about the company’s* internal strengths, weaknesses,
and external threat and opportunities (SWOT).
*the company which is the focus of the case.

o For (d) recommendations, you need to provide the course of action that you think can be taken to
address the issues/problems outlined in the case. Your recommendations need to be based on your
analysis (section c) of the case.
o For (e) references, properly cite all the sources of information you have used throughout the case.
o For (f) appendix, include any calculations, charts, diagrams or graphs. The appendix
should help to further support your analysis—not simply be “tacked on.” It should
serve a purpose. All calculations and figures must be clearly labeled and referred to in
the body text of the case.

o The summary paper should be no longer than 3 pages max. Please use MS word format (.doc).

* All calculations, charts, diagrams, graphs or figures must be clearly labeled and
inserted in the appendix.

Economics homework help

ECON 401

Advanced Macroeconomics

Midterm Exam Answers

Fabio Ghironi
University of Washington

May 5, 2020

Important: My suggested answers include a lot more than I expected you could know and

write. I am including the material I am including so you can continue learn from this exam about

things we do not have time to discuss in class.

Problem 1: Government Spending in the RBC Model (50 Points)

Consider the RBC model with government spending that you studied in Homework 1.

The representative household maximizes:

Et

∞∑
s=t

βs−t
C
1−γ
s

1 −γ
,

where 0 < β < 1 and γ > 0, subject to the constraint:

Ct + It + Xt = r̃tKt + wt

in each period. In this constraint, Xt is exogenous lump-sum taxation, which we assume is equal

to government spending. The rest of the notation is as in the slides.

The law of motion for capital is:

Kt+1 = (1 −δ) Kt + It, 0 < δ < 1,

in each period.

The production function is:

Yt = A
α
t K

1−α
t , 0 < α < 1.

You found in the homework that the solution for consumption and capital in the log-linearized

model in which there is no deviation of the exogenous productivity At from its trend path (i.e., it

is at+1 = at = at−1 = 0) and there are only the government spending shocks xt = φxt−1 + εt is

given by:

ct = ηckkt + ηcxxt,

kt+1 = ηkkkt + ηkxxt,

in each period, where the η’s are elasticities that depend on the parameters of the model and the

ratio X̄t/Ȳt, which I told you to treat as exogenously given.

• Use the method of undetermined coeffi cients described in the slides to find the

expressions for ηck, ηcx, ηkk, and ηkx as functions of the underlying parameters

and of X̄t/Ȳt.

Answer

Substituting ct+1 = ηckkt+1 + ηcxxt+1, ct = ηckkt + ηcxxt, and kt+1 = ηkkkt + ηkxxt in the log-linear

Euler equation that you obtained in Homework 1, and using Et (xt+1) = φxt, yields:

ηck(ηkkkt + ηkxxt) + ηcxφxt −ηckkt −ηcxxt = −σλ3 (ηkkkt + ηkxxt) ,

or, after rearranging:

ηck (ηkk − 1) kt + [ηcx (φ− 1) + ηckηkx] xt = −σλ3ηkkkt −σλ3ηkxxt.

Equating coeffi cients on xt in the left- and right-hand side of the equation, we have:

ηcx (φ− 1) + ηckηkx = −σλ3ηkx, (1)

2

and equating coeffi cients on kt:

ηck (ηkk − 1) = −σλ3ηkk. (2)

Now recall that you also obtained the following equation in Homework 1:

kt+1 = λ1kt + λ4xt + (1 −λ1 −λ2 −λ4) ct.

Hence, substituting ct = ηckkt + ηcxxt into this equation, yields:

kt+1 = λ1kt + λ4xt + (1 −λ1 −λ2 −λ4) (ηckkt + ηcxxt),

or:

kt+1 = [λ1 + (1 −λ1 −λ2 −λ4) ηck] kt + [λ4 + (1 −λ1 −λ2 −λ4) ηcx] xt.

It follows that the elasticities ηkk and ηkx are given by:

ηkk = λ1 + (1 −λ1 −λ2 −λ4) ηck,

ηkx = λ4 + (1 −λ1 −λ2 −λ4) ηcx.

Substituting these expressions into equations (1) and (2) yields, respectively:

ηcx (φ− 1) + ηck [λ4 + (1 −λ1 −λ2 −λ4) ηcx] = −σλ3 [λ4 + (1 −λ1 −λ2 −λ4) ηcx] (3)

and:

ηck [λ1 + (1 −λ1 −λ2 −λ4) ηck] −ηck = −σλ3 [λ1 + (1 −λ1 −λ2 −λ4) ηck] . (4)

Therefore, from equation (4):

(1 −λ1 −λ2 −λ4) η2ck + [λ1 − 1 + σλ3 (1 −λ1 −λ2 −λ4)] ηck + σλ1λ3 = 0,

or:

Q2η
2
ck + Q1ηck + Q0 = 0,

3

where we defined:

Q0 ≡ σλ1λ3,

Q1 ≡ λ1 − 1 + σλ3 (1 −λ1 −λ2 −λ4) ,

Q2 ≡ 1 −λ1 −λ2 −λ4.

As in the slides, the correct solution for ηck is:

ηck =
1

2Q2

(
−Q1 −


Q21 − 4Q0Q2

)

since the other root would imply unstable dynamics.

Once we have the solution for ηck, we can compute ηcx from equation (3) as:

ηcx = −
λ4 (σλ3 + ηck)

(1 −λ1 −λ2 −λ4) (σλ3 + ηck) + φ− 1
.

The solutions for output and return to investment follow immediately from the production

function and the log-linear investment return that you obtained in Homework 1:

yt = ηykkt with ηyk ≡ 1 −α,

and

rt = −λ3kt.

To find the solution for investment and compute its dynamics, note that

It = Yt −Ct −Xt.

Hence, log-linearizing this equation yields:

it =
Ȳt
K̄t

K̄t
Īt
yt −

C̄t
K̄t

K̄t
Īt
ct −

X̄t
Ȳt

Ȳt
K̄t

K̄t
Īt
xt.

You know from Homework 1 that:
Ȳt
K̄t

=
r + δ

1 −α
,

4

and
C̄t
K̄t

=

(
r + δ

1 −α

)(
1 −

X̄t
Ȳt

)
−g −δ.

Moreover, the law of motion for capital (Kt+1 = (1 −δ) Kt + It) immediately implies:

K̄t
Īt

=
1

g + δ
.

Therefore, it follows that:

it =
r + δ

(1 −α) (g + δ)
yt −

[
r + δ

(1 −α) (g + δ)

(
1 −

X̄t
Ȳt

)
− 1
]
ct −

X̄t
Ȳt

[
r + δ

(1 −α) (g + δ)

]
xt,

which you can use to compute the path of investment given the solutions for yt and ct and the

exogenous path of xt.

• Modify the Excel file posted in the Files section of the course Canvas appro-

priately to trace the responses of ct, kt+1, yt, rt, and it to a 1 percent positive

innovation to government spending at time t = 0 with persistence φ = 0.9 and no

other innovations in the following periods. Set the value of X̄t/Ȳt to 0.2. Include

your modified file with your answers. Highlight in red the modifications you make

to my original file.

Answer

See the Excel file included with this document.

• What is your intuition for how the variables respond to the government spending

shock? Explain the responses as clearly as you can.

Answer

The increase in government spending results in an immediate contraction of investment and con-

sumption, which fall already in period 0, and a gradual contraction of capital and output, which

begin falling in period 1, before all variables gradually return to their trend levels. Even if the

return to capital accumulation rises from period 1 on (consistent with the higher marginal prod-

uct of capital implied by a lower capital stock) before returning to trend, this is not suffi cient to

stimulate higher investment in response to the expansion of government spending. The response

5

of consumption is smoother over time than that of investment because of the household’s desire to

smooth consumption fluctuations across periods captured by the Euler equation. Falling investment

and declining capital stock imply that government spending expansion results in a contraction of

output below trend until the economy returns to its long-run path.

Why do consumption and investment fall? Remember: Government spending coincides with

taxation in our exercise. If we denote government spending with GOVt, it is true that Yt =

Ct + It + GOVt, from which you may expect an expansionary impact of higher GOVt, but the

government’s budget constraint implies that GOVt = Xt, the lump-sum tax that household’s must

pay to finance government spending. Higher taxes reduce household wealth and induce the repre-

sentative household to respond by lowering its consumption and investment, ultimately resulting

in a contraction of the economy.

For your “fun,”notice what happens if you make the increase in government spending permanent

by setting φ = 1: In that case, a permanent, downward adjustment of consumption is the only thing

that happens, with no change in investment, capital, and output. Why? When the shock is not

permanent, the household is smoothing its negative consumption effect over time by reducing

investment, making it possible to sustain a smoother consumption profile with declining capital.

When the shock is permanent, it implies an immediate, permanent reduction of household wealth

with a consumption effect that cannot be smoothed by adjusting investment. The best thing to

do is simply to adjust consumption immediately and permanently downward, leaving investment,

capital, and output unchanged.

• Do you think the response of consumption would be different if the government

did not finance the increase in government spending today (taken to be time 0)

with the lump-sum tax, but instead financed by issuing debt to be repaid by

taxation in the future? What is your intuition for your answer?

Answer

No. The response would not be different. The reason is that, in this model, shifting taxation to

the future by using government debt would not alter household behavior because households would

recognize anyway that higher government spending today (at time 0) would mean higher taxes in

the future. This would induce the household to reduce its consumption (and investment) today in

response to the implied wealth reduction (i.e., it does not matter that taxes are increased in the

6

future instead of today).

This result is a manifestation of something that is known as Ricardian Equivalence, which

happens when we have infinite-horizon, intertemporally optimizing, identical households subject

to lump-sum taxation. (The concept of Ricardian Equivalence was so named by Robert Barro of

Harvard University, who formalized thoughts by David Ricardo and Antonio de Viti de Marco.) In

this environment, as you learned from Homework 1, the household’s Euler equation is not affected

by taxation. Moreover, the household’s and the government’s intertemporal budget constraints,

and the aggregate resource constraint of the economy, are not affected by the timing of taxation

versus government debt. This implies that changes in the timing of taxation versus debt do not

matter. (Another way of saying this is the statement that government debt is not net wealth.)

How do we see all this? What follows is obviously material I did not expect that you would

know anything about, but that you should study as part of your work for this course.

The resource constraint of the economy is the statement that the economy’s production (Yt)

has to be equal to the economy’s absorption of resources (Ct + It + GOVt). You already saw that,

in absence of government debt, combining the household’s budget constraint

Ct + It + Xt = r̃tKt + wt

with the government’s budget constraint GOVt = Xt and the fact that total income must equal the

total of payments to factors of production (Yt = r̃tKt + wt) implies Yt = Ct + It + GOVt.

Now suppose that the government can finance excesses of spending over taxation by issuing

bonds that pay an interest rate rDt . Let Dt denote the government’s debt at the beginning of

period t. It follows that the government’s budget constraint becomes:

Dt+1 =
(
1 + rDt

)
Dt + GOVt −Xt. (5)

The government begins the period with debt Dt, it pays the interest burden of this debt (rDt Dt), it

spends GOVt, and it receives the revenue from taxation Xt. This determines the debt with which

the government will begin period t + 1. When GOVt > Xt, the government is running a deficit–

often referred to as primary deficit because it does not include interest expenditure for previously

accumulated debt, rDt Dt. When GOVt < Xt, the government is running a (primary) surplus.

7

The household’s budget constraint now is:

Ct + It + Xt + Dt+1 = (1 + r
D
t )Dt + r̃tKt + wt. (6)

In addition to labor income and capital income, the household now also holds the debt issued by

the government and receives its interest payments. Among the uses of the household’s resources,

we have the fact that the household buys the bonds that the government issues during period t,

i.e., Dt+1.

Now notice that we still have Yt = r̃tKt + wt. Hence, the household’s budget constraint (6) can

be rewritten as:

Ct + It + Xt + Dt+1 = (1 + r
D
t )Dt + Yt. (7)

Notice also that the government’s budget constraint (5) implies:

Xt =
(
1 + rDt

)
Dt + GOVt −Dt+1. (8)

Substituting (8) into (7) immediately implies Yt = Ct+It+GOVt, proving thathaving introduced

government debt does not affect the economy’s aggregate resource constraint.

This is not suffi cient, however, to prove that the timing of taxation versus debt does not matter.

For that, we need to look at the government’s and the household’s intertemporal budget constraints.

What are these? The budget constraints we have introduced are period budget constraints. They

describe how the household’s and the government’s resources and their uses are connected within

any given period, determining next period’s starting position based on this period’s starting posi-

tion, resources, and uses. The intertemporal budget constraint captures how an agent’s resources

and their uses are connected (and constrained) over time, across the span of the agent’s lifetime.

To understand this concept, let us begin with the government’s budget constraint. In order to

simplify the algebra, I am going to assume that the interest rate on government bonds is constant:

rDt = r
D in all periods. Allowing for time variation of the interest rate on government bonds would

not change the key conclusions, but it would make the algebra more complicated. With a constant

interest rate, the government period budget constraint becomes:

Dt+1 =
(
1 + rD

)
Dt + GOVt −Xt. (9)

8

Note that the same constraint must hold also in period t + 1, so that:

Dt+2 =
(
1 + rD

)
Dt+1 + GOVt+1 −Xt+1. (10)

We can solve this equation for Dt+1 to obtain:

Dt+1 =
Dt+2

1 + rD

GOVt+1
1 + rD

+
Xt+1

1 + rD
. (11)

If we substitute this into (9) for Dt+1 and we rearrange, we have:

Dt+2
1 + rD

=
(
1 + rD

)
Dt + GOVt +

GOVt+1
1 + rD

−Xt −
Xt+1

1 + rD
. (12)

Now, notice that equation (9) must hold also in t + 2, implying:

Dt+3 =
(
1 + rD

)
Dt+2 + GOVt+2 −Xt+2,

or:

Dt+2 =
Dt+3

1 + rD

GOVt+2
1 + rD

+
Xt+2

1 + rD
.

And we can substitute this into (12) to obtain:

Dt+3

(1 + rD)
2

=
(
1 + rD

)
Dt + GOVt +

GOVt+1
1 + rD

+
GOVt+2

(1 + rD)
2
−Xt −

Xt+1
1 + rD


Xt+2

(1 + rD)
2
. (13)

If we do the same substitution again and again, until some time t + T , we get:

Dt+T

(1 + rD)
T−1 =

(
1 + rD

)
Dt + GOVt +

GOVt+1
1 + rD

+
GOVt+2

(1 + rD)
2

+ … +
GOVt+T−1

(1 + rD)
T−1

−Xt −
Xt+1

1 + rD

Xt+2

(1 + rD)
2
− …−

Xt+T−1

(1 + rD)
T−1 ,

or, in compact form,:

Dt+T

(1 + rD)
T−1 =

(
1 + rD

)
Dt +

t+T−1∑
s=t

(
1

1 + rD

)s−t
GOVs −

t+T−1∑
s=t

(
1

1 + rD

)s−t
Xs. (14)

Now, our government has an infinite horizon. Hence, let us take the limit of both sides of (14)

9

for T →∞:

lim
T→∞

Dt+T

(1 + rD)
T−1 =

(
1 + rD

)
Dt +

∞∑
s=t

(
1

1 + rD

)s−t
GOVs −

∞∑
s=t

(
1

1 + rD

)s−t
Xs. (15)

Consider the limitat the left-handsideof this equation. Because, 1/
(
1 + rD

)
< 1, 1/

(
1 + rD

)T−1
must tend to 0 as T goes to infinite. It follows that, unless Dt+T (government debt) is exploding

to infinite at a rate faster than the interest rate, it must be:

lim
T→∞

Dt+T

(1 + rD)
T−1 = 0.

Hence, unless the government is letting its debt explode, it must be:

0 =
(
1 + rD

)
Dt +

∞∑
s=t

(
1

1 + rD

)s−t
GOVs −

∞∑
s=t

(
1

1 + rD

)s−t
Xs. (16)

This is the government’s intertemporal budget constraint: The government’s initial debt plus

interestplus thegovernment’s totaldiscountedspendingover timemustbebalancedbythe totaldis-

countedrevenue fromtaxation. Note that this is equivalent to the statement that limT→∞Dt+T/
(
1 + rD

)T−1
=

0, i.e., to the statement that debt is not exploding. (In an economy with growth, we would want

to think about debt as a ratio to GDP, and to spending and revenue from taxation as ratios to

GDP. Once we do that, it is the difference between interest rate and growth rate that matters for

intertemporal debt sustainability, but I am leaving growth out of the picture for now. Suggested

exercise for you: Re-do the algebra above thinking in terms of ratios to GDP, assuming that GDP

is growing at a constant rate g so that Yt+1 = (1 + g) Yt.) Government behavior must be such that

both the period budget constraint (9) and the intertemporal budget constraint (16) are satisfied in

each period.

Notice an implication of equation (16): It is not the timing of government spending versus

taxation that matters for the sustainability of government finances over time. It is the discounted

total of spending and taxation.

Now consider the household’s budget constraint, taking into account that Yt = r̃tKt +wt. With

constant interest rate on government debt, it is:

Ct + It + Xt + Dt+1 = (1 + r
D)Dt + Yt. (17)

10

This constraint implies:

Dt+1 = (1 + r
D)Dt + Yt − (Ct + It + Xt) .

But this equation is similar to (9)! We can proceed exactly as we did for the government’s budget

constraint and obtain the household’s intertemporal budget constraint:

0 =
(
1 + rD

)
Dt +

∞∑
s=t

(
1

1 + rD

)s−t
Ys −

∞∑
s=t

(
1

1 + rD

)s−t
(Cs + Is + Xs) . (18)

The household’s initial asset position (the portfolio of government bonds it begins period t with)

plus interest plus the total discounted income stream over the household’s infinite lifetime must

balance the sum of the total discounted uses of household resources for consumption, investment,

and tax payments. (In obtaining (18), we use limT→∞Dt+T/
(
1 + rD

)T−1
= 0.) Note that also

here the timing of taxation does not matter: It is the discounted total over the household’s lifetime

that matters for the intertemporal constraint that must be satisfied in each period along side the

period constraint (18).

One more step: Equation (16) implies:

(
1 + rD

)
Dt =

∞∑
s=t

(
1

1 + rD

)s−t
Xs −

∞∑
s=t

(
1

1 + rD

)s−t
GOVs.

Hence, substituting this into (18) yields:

0 =

∞∑
s=t

(
1

1 + rD

)s−t
Xs −

∞∑
s=t

(
1

1 + rD

)s−t
GOVs

+
∞∑
s=t

(
1

1 + rD

)s−t
Ys −

∞∑
s=t

(
1

1 + rD

)s−t
(Cs + Is + Xs) .

The terms involving taxation cancel, and this equation can be rewritten as:

∞∑
s=t

(
1

1 + rD

)s−t
Ys =

∞∑
s=t

(
1

1 + rD

)s−t
(Cs + Is + GOVs) . (19)

This is just the intertemporal version of the aggregate resource constraint Yt = Ct + It + GOVt!

Not surprisingly, total production and total absorption must balance not just within the period but

also intertemporally. And again, the timing of taxation is nowhere to be seen.

11

So, we have a model in which taxes do not show up in the Euler equation that determines

consumption versus investment decisions and in which intertemporal constraints show no impact

of the timing of debt versus taxation. These things together ensure Ricardian Equivalence.

Things would be different if taxation distorted household decisions instead of being lump sum.

Suppose that government spending is financed by taxing capital income at the rate XPt as I men-

tioned in the Homework 1 answers. The government budget constraint would become:

Dt+1 =
(
1 + rD

)
Dt + GOVt −XPt r̃tKt,

and the household’s budget constraint would become:

Ct + It + Dt+1 = (1 + r
D)Dt + (1 −XPt )r̃tKt + wt.

We would still have Yt = Ct + It + GOVt and its intertemporal counterpart (19), and we would still

have intertemporal constraints for government and household that balance initial positions plus

total discounted resources with total discounted uses. But now the timing of taxation XPt versus

debt would matter (i.e., Ricardian Equivalence would not hold). Why? Because the tax rate XPt

shows up in the Euler equation, and this is going to affect the time profile of capital accumulation,

consumption, and output. In this case, the government’s choices of when to use debt versus taxes

to finance spending would matter!

Finally, one more thing: Ricardian Equivalence is obviously the implication of an extreme,

unrealistic scenario. Besides distortionary taxation, there are many other reasons for it to break. An

important one is heterogeneity across agents in the economy. For instance, Ricardian Equivalence

does not hold in overlapping generations (OLG) models in which the economy is populated by

agents of different ages, unless we assume that everyone cares about the welfare of offsprings

enough that bequests ensure that everyone has the same assets (and therefore the model behaves

like one with identical agents). Another simple way to break Ricardian Equivalence is to assume

that a fraction of the agents in the economy behaves as those we modeled in the RBC setup, but

the remaining fraction does not accumulate assets and just lives “paycheck to paycheck.”(In macro

models, those agents are often referred to as hand-to-mouth consumers.) This will break Ricardian

Equivalence (by implying different asset positions between the two groups, just like the no-bequests

OLG models) and, in standard models, it will also ensure that government spending expansion is

expansionary if the fraction of hand-to-mouth consumers is suffi ciently large. (This was studied by

12

N. Gregory Mankiw of Harvard University.)

Problem 2: Markups, Distortions, and Optimal Inflation in the New Keynesian

Model (30 Points)

The optimality condition for price setting by wholesaler j in the New Keynesian model with sticky

prices that we studied can be written as:

1

1 −ε

(
pt (j)

Pt

)− ε
ε−1

Yt +
ε

ε− 1

(
pt (j)

Pt

)−2ε−1
ε−1

mct (j) Yt −ψ
(

pt (j)

pt−1 (j)
− 1
)

Pt
pt−1 (j)

+
βψ

1 + πt+1

(
pt+1 (j)

pt (j)
− 1
)
Pt+1
pt (j)

pt+1 (j)

pt (j)

= 0,

where I am using pt (j) to denote the price set by wholesaler j instead of Pjt, mct (j) denotes

the wholesaler’s marginal cost of production, Yt (instead of yt) denotes the output of the final

retail bundle (which has price Pt), and πt+1 is the inflation rate between t and t + 1 (πt+1 ≡

(Pt+1 −Pt) /Pt); ε > 1 is the flexible-price markup, ψ ≥ 0 is the scale parameter for the cost of

adjusting prices, and β is the representative household’s discount factor.

Now let us make one more change of notation and set:

ε =
θ

θ − 1
.

If you replace ε with θ/ (θ − 1) everywhere in the equation above, you get:

−(θ − 1)
(
pt (j)

Pt

)−θ
Yt + θ

(
pt (j)

Pt

)−θ−1
mct (j) Yt −ψ

(
pt (j)

pt−1 (j)
− 1
)

Pt
pt−1 (j)

+
βψ

1 + πt+1

(
pt+1 (j)

pt (j)
− 1
)
Pt+1
pt (j)

pt+1 (j)

pt (j)

= 0. (20)

• Note that (
pt (j)

Pt

)−θ
Yt = yt (j)

by virtue of the demand function facing the wholesaler (where yt (j) denotes the

wholesaler’s output). Use this and algebra to show that equation (20) can be

13

rewritten as:

pt (j)

Pt
=

θ

θ − 1


1 + ψ(θ − 1) yt (j)


(
pt(j)
pt−1(j)

− 1
)

Pt
pt−1(j)

− β
1+πt+1

(
pt+1(j)
pt(j)

− 1
)
Pt+1
pt(j)

pt+1(j)
pt(j)





−1

mct (j) .

Make sure to write all the steps in your answer.

Answer

Using (pt (j) /Pt)
−θ
Yt = yt (j), equation (20) becomes:

−(θ − 1) yt (j) + θ
(
pt (j)

Pt

)−1
yt (j) mct (j) −ψ

(
pt (j)

pt−1 (j)
− 1
)

Pt
pt−1 (j)

+
βψ

1 + πt+1

(
pt+1 (j)

pt (j)
− 1
)
Pt+1
pt (j)

pt+1 (j)

pt (j)

= 0,

which we can rearrange as:

θ

(
pt (j)

Pt

)−1
yt (j) mct (j) = (θ − 1) yt (j) + ψ


(
pt(j)
pt−1(j)

− 1
)

Pt
pt−1(j)

− β
1+πt+1

(
pt+1(j)
pt(j)

− 1
)
Pt+1
pt(j)

pt+1(j)
pt(j)


 ,

or:

(
pt (j)

Pt

)−1
=

(
θ − 1
θ

)
1

mct (j)
+

ψ

θyt (j) mct (j)


(
pt(j)
pt−1(j)

− 1
)

Pt
pt−1(j)

− β
1+πt+1

(
pt+1(j)
pt(j)

− 1
)
Pt+1
pt(j)

pt+1(j)
pt(j)


=

(
θ − 1
θ

)
1

mct (j)


1 + ψ(θ − 1) yt (j)


(
pt(j)
pt−1(j)

− 1
)

Pt
pt−1(j)

− β
1+πt+1

(
pt+1(j)
pt(j)

− 1
)
Pt+1
pt(j)

pt+1(j)
pt(j)




 .

Hence,

pt (j)

Pt
=

θ

θ − 1


1 + ψ(θ − 1) yt (j)


(
pt(j)
pt−1(j)

− 1
)

Pt
pt−1(j)

− β
1+πt+1

(
pt+1(j)
pt(j)

− 1
)
Pt+1
pt(j)

pt+1(j)
pt(j)





−1

mct (j) .

This equation implies that the wholesaler sets the price of its good as a markup over marginal

cost. When prices are flexible (ψ = 0), the markup boils down to the constant θ/ (θ − 1) (or ε in

14

the original notation). When prices are sticky (ψ > 0), the markup is time-varying and given by:

θ

θ − 1

{
1 +

ψ

(θ − 1) yt (j)

[(
pt (j)

pt−1 (j)
− 1
)

Pt
pt−1 (j)


β

1 + πt+1

(
pt+1 (j)

pt (j)
− 1
)
Pt+1
pt (j)

pt+1 (j)

pt (j)

]}−1
.

This captures the fact that costs of price adjustment give the wholesalers an incentive to smooth

price changes across periods, absorbing the consequences of shocks in part by letting the markup

component of prices vary. Let us denote the expression for the markup charged by wholesaler j

with µt (j):

µt (j) ≡
θ

θ − 1

{
1 +

ψ

(θ − 1) yt (j)

[(
pt (j)

pt−1 (j)
− 1
)

Pt
pt−1 (j)


β

1 + πt+1

(
pt+1 (j)

pt (j)
− 1
)
Pt+1
pt (j)

pt+1 (j)

pt (j)

]}−1
.

(21)

Therefore:
pt (j)

Pt
= µt (j) mct (j) .

Now, if labor is the only factor of production, and technology is such that yt(j) = Ztnt(j), the

wholesaler’s marginal cost is equal to the real wage (wt) divided by productivity:

mct (j) =
wt
Zt
.

• Why is this the expression of marginal cost?

1 Answer

The production function yt(j) = Ztnt(j) implies that producing one unit of output (yt(j) = 1)

requires nt(j) = 1/Zt units of labor. Since each unit of labor is paid the real wage wt, this implies

that the cost of producing one unit of output (marginal cost) is wt/Zt.

Note that this implies that marginal cost is identical across all the wholesalers. Optimal price

setting becomes:
pt (j)

Pt
= µt (j)

wt
Zt
.

However, now consider that all the wholesalers in the economy are symmetric to each other. Other

than the fact that each one of them produces a wholesaler-specific good over which it has monopoly

power, they are all identical. Hence, they will all set the same markup µt (j) = µt and the same

15

price pt (j) = pt. We thus have:
pt
Pt

= µtwt. (22)

Finally, consider the production function of the representative retailer:

Yt =

[∫ 1
0
yt (i)

θ−1
θ di

] θ
θ−1

.

Since every wholesaler produces the same amount yt (i) = yt, it follows that Yt = yt (the amount

of the final bundle produced by the retailer is equal to the amount of output produced by every

wholesaler). Given the demand function for a wholesaler’s output:

yt =

(
pt
Pt

)−θ
Yt,

it is immediate to prove formally that it has to be Pt = pt.

• Write this proof.

Answer

Imposing Yt = yt in the demand function yt = (pt/Pt)
−θ
Yt implies 1 = (pt/Pt)

−θ, from which it

follows immediately that it has to be Pt = pt.

Given Pt = pt, it follows that the optimal price setting equation (22) implies:

wt =
Zt
µt
.

Now, the first-order condition for optimal labor supply implies:

U1−n (ct, 1 −nt)
Uc (ct, 1 −nt)

= wt,

where ct is consumption in period t, and 1 −nt is leisure.

With flexible prices and perfect competition, it would be wt = Zt (the marginal product of

labor), and the amount of labor employed would be determined by:

U1−n (ct, 1 −nt)
Uc (ct, 1 −nt)

= Zt.

In our economy with monopoly power and sticky prices, the real wage is lower than the marginal

16

product of labor, and the amount of labor employed by the economy is such that:

U1−n (ct, 1 −nt)
Uc (ct, 1 −nt)

=
Zt
µt
,

• What are the distortions that affect this condition?

Answer

There are two sources of distortion (two distortions) that impinge on this condition: One is

monopoly power. In and of itself, monopoly power implies the presence of a constant wedge

1/µ = (θ − 1) /θ in the condition that would otherwise equate the marginal rate of substitution

between leisure and consumption to the marginal product of labor. The other distortion is price

stickiness, which implies that the wedge is time varying and equal to 1/µt, with µt determined by

equation (21) once you have imposed symmetry in it:

µt =
θ

θ − 1

{
1 +

ψ

(θ − 1) yt

[(
Pt
Pt−1

− 1
)

Pt
Pt−1


β

1 + πt+1

(
Pt+1
Pt
− 1
)
Pt+1
Pt

Pt+1
Pt

]}−1
=

θ

θ − 1

{
1 +

ψ

(θ − 1) yt
[πt (1 + πt) −βπt+1 (1 + πt+1)]

}−1
, (23)

where we used the definition of the inflation rate πt ≡ (Pt −Pt−1) /Pt−1.

• Suppose you are the central banker and you can commit the economy to a choice

of inflation rate. What inflation rate would you choose and why?

Answer

The central banker would want to commit to a policy of zero inflation: πt = 0 in all periods.

Monetary policy cannot do anything directly ab

Economics homework help

ECON 401

Advanced Macroeconomics

Midterm Exam

Fabio Ghironi
University of Washington

April 29, 2020

Instructions:

You have 5 hours to work on this exam. It is worth 100 points, contributing to your overall

score for the course as described in the Syllabus. You may consult all course materials and standard

Internet resources while working on the exam, but your work must be original and you may not

solicit or obtain assistance from or provide assistance to other people for any specific content of the

exam. Activities considered cheating include copying or closely paraphrasing content from websites

and discussing exam questions with other students. All exams will be checked for originality and

copied content, and anyone found cheating will be assigned a zero score for the exam. Read

carefully each step of each problem before you jump into working on it and do not panic if you

cannot complete everything. The exam is intended also to stretch your knowledge by forcing you

to use the tools and information you have acquired to think about some things we have not talked

about in class. I want to see how you think about those things based on what you learned. In

Problems 2 and 3 below, if there is an item that you cannot complete, just take the result in that

item for granted and move on to the next one.

Problem 1: Government Spending in the RBC Model (50 Points)

Consider the RBC model with government spending that you studied in Homework 1.

The representative household maximizes:

Et

∞∑
s=t

βs−t
C
1−γ
s

1 − γ
,

where 0 < β < 1 and γ > 0, subject to the constraint:

Ct + It + Xt = r̃tKt + wt

in each period. In this constraint, Xt is exogenous lump-sum taxation, which we assume is equal

to government spending. The rest of the notation is as in the slides.

The law of motion for capital is:

Kt+1 = (1 − δ) Kt + It, 0 < δ < 1,

in each period.

The production function is:

Yt = A
α
t K

1−α
t , 0 < α < 1.

You found in the homework that the solution for consumption and capital in the log-linearized

model in which there is no deviation of the exogenous productivity At from its trend path (i.e., it

is at+1 = at = at−1 = 0) and there are only the government spending shocks xt = φxt−1 + εt is

given by:

ct = ηckkt + ηcxxt,

kt+1 = ηkkkt + ηkxxt,

in each period, where the η’s are elasticities that depend on the parameters of the model and the

ratio X̄t/Ȳt, which I told you to treat as exogenously given.

• Use the method of undetermined coeffi cients described in the slides to find the

expressions for ηck, ηcx, ηkk, and ηkx as functions of the underlying parameters

2

and of X̄t/Ȳt.

• Modify the Excel file posted in the Files section of the course Canvas appro-

priately to trace the responses of ct, kt+1, yt, rt, and it to a 1 percent positive

innovation to government spending at time t = 0 with persistence φ = 0.9 and no

other innovations in the following periods. Set the value of X̄t/Ȳt to 0.2. Include

your modified file with your answers. Highlight in red the modifications you make

to my original file.

• What is your intuition for how the variables respond to the government spending

shock? Explain the responses as clearly as you can.

• Do you think the response of consumption would be different if the government

did not finance the increase in government spending today (taken to be time 0)

with the lump-sum tax, but instead financed by issuing debt to be repaid by

taxation in the future? What is your intuition for your answer?

Problem 2: Markups, Distortions, and Optimal Inflation in the New Keynesian

Model (30 Points)

The optimality condition for price setting by wholesaler j in the New Keynesian model with sticky

prices that we studied can be written as:

1

1 − ε

(
pt (j)

Pt

)− ε
ε−1

Yt +
ε

ε − 1

(
pt (j)

Pt

)−2ε−1
ε−1

mct (j) Yt − ψ
(

pt (j)

pt−1 (j)
− 1
)

Pt
pt−1 (j)

+
βψ

1 + πt+1

(
pt+1 (j)

pt (j)
− 1
)
Pt+1
pt (j)

pt+1 (j)

pt (j)

= 0,

where I am using pt (j) to denote the price set by wholesaler j instead of Pjt, mct (j) denotes

the wholesaler’s marginal cost of production, Yt (instead of yt) denotes the output of the final

retail bundle (which has price Pt), and πt+1 is the inflation rate between t and t + 1 (πt+1 ≡

(Pt+1 − Pt) /Pt); ε > 1 is the flexible-price markup, ψ ≥ 0 is the scale parameter for the cost of

adjusting prices, and β is the representative household’s discount factor.

3

Now let us make one more change of notation and set:

ε =
θ

θ − 1
.

If you replace ε with θ/ (θ − 1) everywhere in the equation above, you get:

− (θ − 1)
(
pt (j)

Pt

)−θ
Yt + θ

(
pt (j)

Pt

)−θ−1
mct (j) Yt − ψ

(
pt (j)

pt−1 (j)
− 1
)

Pt
pt−1 (j)

+
βψ

1 + πt+1

(
pt+1 (j)

pt (j)
− 1
)
Pt+1
pt (j)

pt+1 (j)

pt (j)

= 0. (1)

• Note that (
pt (j)

Pt

)−θ
Yt = yt (j)

by virtue of the demand function facing the wholesaler (where yt (j) denotes the

wholesaler’s output). Use this and algebra to show that equation (1) can be

rewritten as:

pt (j)

Pt
=

θ

θ − 1


1 + ψ(θ − 1) yt (j)


(
pt(j)
pt−1(j)

− 1
)

Pt
pt−1(j)

− β
1+πt+1

(
pt+1(j)
pt(j)

− 1
)
Pt+1
pt(j)

pt+1(j)
pt(j)





−1

mct (j) .

Make sure to write all the steps in your answer.

This equation implies that the wholesaler sets the price of its good as a markup over marginal

cost. When prices are flexible (ψ = 0), the markup boils down to the constant θ/ (θ − 1) (or ε in

the original notation). When prices are sticky (ψ > 0), the markup is time-varying and given by:

θ

θ − 1

{
1 +

ψ

(θ − 1) yt (j)

[(
pt (j)

pt−1 (j)
− 1
)

Pt
pt−1 (j)


β

1 + πt+1

(
pt+1 (j)

pt (j)
− 1
)
Pt+1
pt (j)

pt+1 (j)

pt (j)

]}−1
.

This captures the fact that costs of price adjustment give the wholesalers an incentive to smooth

price changes across periods, absorbing the consequences of shocks in part by letting the markup

component of prices vary. Let us denote the expression for the markup charged by wholesaler j

with µt (j):

µt (j) ≡
θ

θ − 1

{
1 +

ψ

(θ − 1) yt (j)

[(
pt (j)

pt−1 (j)
− 1
)

Pt
pt−1 (j)


β

1 + πt+1

(
pt+1 (j)

pt (j)
− 1
)
Pt+1
pt (j)

pt+1 (j)

pt (j)

]}−1
.

4

Therefore:
pt (j)

Pt
= µt (j) mct (j) .

Now, if labor is the only factor of production, and technology is such that yt(j) = Ztnt(j), the

wholesaler’s marginal cost is equal to the real wage (wt) divided by productivity:

mct (j) =
wt
Zt
.

• Why is this the expression of marginal cost?

Note that this implies that marginal cost is identical across all the wholesalers. Optimal price

setting becomes:
pt (j)

Pt
= µt (j)

wt
Zt
.

However, now consider that all the wholesalers in the economy are symmetric to each other. Other

than the fact that each one of them produces a wholesaler-specific good over which it has monopoly

power, they are all identical. Hence, they will all set the same markup µt (j) = µt and the same

price pt (j) = pt. We thus have:
pt
Pt

= µtwt. (2)

Finally, consider the production function of the representative retailer:

Yt =

[∫ 1
0
yt (i)

θ−1
θ di

] θ
θ−1

.

Since every wholesaler produces the same amount yt (i) = yt, it follows that Yt = yt (the amount

of the final bundle produced by the retailer is equal to the amount of output produced by every

wholesaler). Given the demand function for a wholesaler’s output:

yt =

(
pt
Pt

)−θ
Yt,

it is immediate to prove formally that it has to be Pt = pt.

• Write this proof.

5

Given Pt = pt, it follows that the optimal price setting equation (2) implies:

wt =
Zt
µt
.

Now, the first-order condition for optimal labor supply implies:

U1−n (ct, 1 − nt)
Uc (ct, 1 − nt)

= wt,

where ct is consumption in period t, and 1 − nt is leisure.

With flexible prices and perfect competition, it would be wt = Zt (the marginal product of

labor), and the amount of labor employed would be determined by:

U1−n (ct, 1 − nt)
Uc (ct, 1 − nt)

= Zt.

In our economy with monopoly power and sticky prices, the real wage is lower than the marginal

product of labor, and the amount of labor employed by the economy is such that:

U1−n (ct, 1 − nt)
Uc (ct, 1 − nt)

=
Zt
µt
,

• What are the distortions that affect this condition?

• Suppose you are the central banker and you can commit the economy to a choice

of inflation rate. What inflation rate would you choose and why?

Problem 3: The New Keynesian Phillips Curve (20 Points)

Once you impose symmetry across wholesalers in the optimality condition for wholesaler price

setting in the New Keynesian model we studied, you have the following relation between real

marginal cost (mct), output (yt), and inflation in periods t and t + 1 (respectively, πt and πt+1):

1

1 − ε
(1 − εmct) yt − ψπt (1 + πt) + βψπt+1 (1 + πt+1) = 0,

where the notation is the same as in Problem 2. Sanjay Chugh refers to this equation as the New

Keynesian Phillips Curve (NKPC). Most scholars think of the NKPC as the equation that you find

after log-linearizing this equation and imposing equilibrium conditions on mct. This question asks

6

you to explore the implications of this equation for the behavior of markups.

Start by recalling from Problem 2 that, in equilibrium, it has to be:

mct =
1

µt
,

where µt is the markup charged by every wholesaler. Therefore, the NKPC equation above can be

rewritten as:
1

1 − ε

(
1 −

ε

µt

)
yt − ψπt (1 + πt) + βψπt+1 (1 + πt+1) = 0. (3)

Denote the steady-state levels of variables by dropping the time subscript.

• Suppose that the steady-state inflation rate is zero. Use equation (3) to show

that the steady-state markup µ is such that µ = ε.

In addition to assuming that π = 0, assume also that the steady-state level of output is equal

to 1: y = 1. Use hats to denote percentage deviations from the steady state, so that:

ŷt ≡
dyt
y

= dyt,

µ̂t ≡
dµt
µ

=
dµt
ε
.

In the case of inflation, focus on gross inflation, but note, however, that our assumption that π = 0

implies:

π̂t ≡
d (1 + πt)

1 + π
= d (1 + πt) = dπt.

• Log-linearize equation (3) and write the resulting equation with only µ̂t on the

left-hand side as a linear function of only π̂t and π̂t+1 on the right-hand side.

• What happens to the markup if current inflation increases?

• Given the observation that real wages in the United States are pro-cyclical or

a-cyclical in response to demand expansions (i.e., if aggregate demand rises, real

wages rise or stay flat), can you explain why a countercyclical markup was a de-

sirable feature of New Keynesian models? (Hint: Remember that the real wage,

wt, is equal to the marginal product of labor– MPL– under perfect competition,

but this is no longer the case when we have monopolistic competition, and, as you

7

reviewed in Problem 2, the wedge between wt and MPLt created by the markup

becomes time-varying when prices are sticky.)

8

Economics homework help

Assignment 3: Country Selection and
Marketing Mix Strategies
50 points in total

The purpose of the assignment is to select a market that fits your product as you go international
with it, and decide what marketing strategies to follow.

Step #1. Product Selection. Select a U.S. product that you want to sell internationally. It can be a
product from your place of work, or any product that you are knowledgeable or interested about.
You will sell this product in a foreign market (another country).

Step #2. Country Selection (10 points). Select a market (a country) based on your market screening.
Following the steps for market screenings for a country that you read about in chapter 12, explain
what factors would be important in your market (country) screening. Go through each of the first
four steps in the screening process and describe what kind of criteria would be desirable for your
product in terms of: Basic needs potential, Financial and economic forces, political and legal forces,
and cultural forces.

Step #3. Select a mode of entry (10 points). Review the advantages and challenges of the different
modes of entry and select the most appropriate for your type of product and country you selected.
Explain why you are choosing that mode of entry over others.

Step #4. Marketing Strategies. Based on the information above, and your knowledge of the
product, explain how you would modify the product so that it fits better in the new market. You
should focus on the following marketing strategies:

A. PRODUCT (10 points) – How or what would you change about the product to better fit this
new market? Explain your answer.

B. PROMOTION (10 points) –
I. Would you use the same message to promote your product or would you change

it? What would be the new message intention or theme? Explain.
II. What form of promotion would work best for the type of product and new market

conditions? Select only one of the following and explain why you are selecting it:
advertising, personal selling, sales promotion (discounts, coupons…), or public
relations. (hint: review the advantages and disadvantages of each type of
promotion and see which one fits your product best)

C. PRICE (5 points) – what would be the best pricing strategy to follow and why?

D. PLACE (Distribution) (5 points) – can you use a similar approach to getting the product to
your customer as it is used in the U.S.A. or do you want to modify the distribution of the
product. Do some research of the new country’s infrastructure and availability of channels
of distribution? Explain your decision/answer.

Grading Rubric: See the point distribution for each question for a total of 50 points. The quality of your
answer will be awarded points according to the scale in this rubric.

For questions worth 10 pts:

For questions worth 5 pts:

Good:

10

5

Fair:

8

3

Poor:

5

2

Unacceptable

0

0

Country Selection (10 pts)

Mode of entry (10 pts)

Product strategy (10 pts)

Promotion strategy (10 pts)

Price strategy (5 pts)

Place strategy (5 pts)

TOTAL POINTS EARNED:

Economics homework help

Module 3 – Case

Introduction to Macroeconomics

Assignment Overview

In this assignment you will be applying the reading and research you have done to answer questions dealing with production, unemployment, and inflation. This is a multi-part assignment, so make sure that you have addressed each question or topic. The best way to approach this assignment is to prepare your responses in outline form following the order of each question/topic. This will help you keep track of your responses.

Case Assignment

Submit a 4- to 5-page paper that addresses the following questions. Be sure to use references within the paper to support your answers.

1. Why is there unemployment even when the economy is at “full employment”? What are some “costs of unemployment”?

2. Is the CPI a biased measure of the inflation rate? Explain your answer.

3. Explain how some government tax revenue and spending can depend on the state of the economy.

4. Explain some limitations of using GDP as an indicator of standard of living (be sure to do some research on your own to find any alternative measures).

Assignment Expectations

Use information from the modular background readings as well as any good quality resource you can find. Cite all resources you use and provide a reference list at the end of your paper.

Length: 4–5 typed and double-spaced pages in 12-point Times New Roman font.

In addition to the overall quality, depth, grammar, and organization of the paper, the following will, in particular, be assessed:

The level of your understanding of the key concepts of the major macroeconomic indicators.

Some in-text references to modular background readings. APA formatting is encouraged. Use this site from Purdue Owl for help with APA: https://tinyurl.com/3rnc5vt

Economics homework help

Writing a Research Paper

PET 3510

Writing a Research Paper

• Choosing Your Topic
• Narrowing Your Topic

• Writing a Thesis Statement

• Creating an Outline

• Breadth. You may need to start broad and
let your research take you narrower.
“Cone it down”

• Originality. Choose a topic that will allow
you to contribute to the field, rather than
just regurgitate facts.

• Sources. Choose a topic that has scholarly
grounding.

Choosing Your Topic

• Focus on a specific TYPE or CLASS

• Focus on a particular PLACE or REGION

• Focus on a certain TIME PERIOD

• Focus on a certain ASPECT
o Social, legal, medical, ethical, biological,

psychological, economic, political, philosophical, etc.

• Focus on a specific POPULATION
o Gender, age, occupation, ethnicity, nationality,

educational attainment, species, etc.

• Focus on a RELATIONSHIP with two or more topics

• COMBINE different kinds of focuses

Narrowing Your Topic

1. Use journalistic questions: who?, what?, when?, where?,
why? how?

2. Review recent literature (journals, trade papers, etc.)

3. Recall questions asked.

4. Apply your paper to your career goals.

Narrowing Your Topic

Thesis sTaTemenT
• The thesis statement is like an outline in miniature. It

is a “roadmap” for the rest of the paper.

• A typical thesis statement gives brief mention to each
of the paper’s main points, and it also states the
overall argument the writer wishes to make.

• It directly answers the question asked of you.

• It makes a claim that others might dispute.

• It is usually a single sentence near the end of the first
paragraph that presents your argument to the reader.

idenTifying a sTrong
Thesis sTaTemenT

• Do I answer the question?

• Have I taken a position that others might challenge
or oppose?

• Does my thesis pass the “So what?” test?

• Does my essay support my thesis specifically and
without wandering?

• Does my thesis pass the “how and why?” test?

The Writing Process

• Aids in the process of writing
• Helps you organize your ideas
• Presents your material in a logical form
• Shows the relationships among ideas in your

writing
• Constructs an ordered overview of your

writing
• Defines boundaries and groups
• Prevents you from “straying” from the topic

Benefits of an Outline

• Research: Perform initial research to learn
about your chosen topic.

• Brainstorm: List all the ideas that you want
to include in your paper.

• Organize: Group related ideas together.

• Order: Arrange material in subsections from
general to specific or from abstract to
concrete.

• Label: Create main and sub headings.

Creating an Outline

• Begin early! A strong, detailed outline is a
crucial step of the writing process.

• Refer to your outline often. A strong outline
provides a consistent backbone during the
writing process.

• Be as specific as possible. This will be your
guide throughout the entire writing process.

Outline Tips

• Avoid having too many subheadings. This
may indicate that you can further narrow the
topic of your paper.

• Don’t be afraid to change your outline.
Further research may provide additional
information or counterpoints.

• Allow yourself enough time to make
changes. Attempting a complete overhaul of
your paper the night before it’s due is both
frustrating and often futile.

Outline Tips

7 Parts of a Research Paper
1. Abstract

– Brief summary of the
paper (100-200 words)

2. Introduction
– 5 W’s & The H

3. Review of Literature
– The cone

4. Methods
– The research recipe

5. Results
– What you got
– Use charts & graphs

6. Discussion
– Why you got what you

got
– What it means
– How to use this

information
– Future directions

7. References

Economics homework help

ECON 401

Advanced Macroeconomics

Topic 1

The Stochastic Growth Model

Fabio Ghironi

University of Washington

Introduction

• This course explores modern theories of macroeconomic fluctuations.

• The goal will be to take you as close as possible to understanding how many macroecono-
mists at academic and policy institutions think about business cycles and policy questions,

including the crisis created by COVID-19, by studying a sequence of models.

• We will start from the stochastic growth model (also known as real business cycle—RBC—
model), in which fluctuations are the result of random shocks to technology and economic

outcomes are efficient.

1

Introduction, Continued

• In this course, the word efficiency has a very precise meaning:

– The market economy is efficient when the outcome it generates is the same as the

outcome that would be chosen by a benevolent social planner in charge of allocating

resources.

• The market economy is efficient in the RBC model: A benevolent planner who acts to
maximize social welfare would not do better than the market.

• This implies that this is a model in which there is no role for policy to improve on market
outcomes.

2

Introduction, Continued

• We will study the RBC model not because we believe that it is an accurate, realistic theory
of how the macroeconomy works, but because it is a useful starting point to become familiar

with concepts, tools, and techniques that we will use many times throughout the quarter.

• We will then introduce a number of more realistic features into our framework: monopoly
power, nominal rigidity, financial market frictions, labor market imperfections, producer entry

dynamics, heterogeneity across agents, and more.

• These features will imply that the economy we model is no longer efficient: Policy can
improve outcomes relative to the market.

• We will conclude the course with an example of how the tools we study can be used to
analyze the COVID-19 crisis.

3

Introduction, Continued

• The tools used in the RBC model became the foundation of the mainstream framework
for studying macroeconomic fluctuations in the 1980s, starting with seminal work by Finn

Kydland of U.C. Santa Barbara and Edward Prescott of Arizona State University published

in Econometrica in 1982.

• The model studies fluctuations of the economy around its growth trend (business cycles)
triggered by unexpected, random shocks, assuming that agents in the economy act to

optimize intertemporal objective functions under rational expectations about the future.

• In its standard versions, the analysis assumes that shocks generate departures from trend
that disappear over time: For instance, an unexpected improvement in technology causes

the economy’s GDP to rise above trend for some time, but eventually the effect of the shock

disappears, and the economy is back chugging along its trend growth path.

• The figure in the next slide shows the behavior of U.S. GDP since 1947. It gives you an
illustration of situations in which the standard approach can work (much of the time) but also

situations in which it will do very poorly (the aftermath of the Great Recession that followed

the Global Financial Crisis of 2007-08).

– U.S. GDP appears to have returned to its post-Great Recession trend in the aftermath of
the COVID-19 recession, but the standard solution technique for many models that we
will learn (log-linearization) may have problems because of the size of this shock.

4

B
ill
io
n
s
o
f
C
h
ai
n
ed
2
01
2
D
o
lla
rs

1950 1960 1970 1980 1990 2000 2010 2020
2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

20,000

Real Gross Domestic ProductReal Gross Domestic Product

Shaded areas indicate U.S. recessions. Source: U.S. Bureau of Economic Analysis fred.stlouisfed.org

Introduction, Continued

• As we were saying, market outcomes are efficient in the basic RBC model.

• This happens because there are no distortions (or frictions) that would cause a benevolent
social planner to choose outcomes that differ from the market ones.

• But the usefulness of the model does not depend the assumption that business cycles are
triggered by technology shocks or that of an efficient model-economy.

• Many scholars have studied the consequences of other types of shocks and of departures
from an efficient environment by modifying the model and the approach to it in the directions

we will talk about.

5

Introduction, Continued

• We will introduce distortions, obstacles to the smooth functioning of markets, realistic
features that will allow us to tackle questions that the basic RBC setup cannot address—

including issues that have taken center stage in discussions on macroeconomics since the

Great Recession.

• Studying the RBC model will prepare us to study those more realistic models, and it will help
us understand exactly when and why market outcomes in those models are not efficient, and

therefore when and why there is a role for policy in addressing those suboptimal outcomes.

– Put differently, understanding the outcomes in an efficient model-economy helps us

understand the mechanisms through which distortions lead to inefficient outcomes when

we introduce realistic features in our models, and when and how policy action can be

optimal.

6

Solving Models

• In studying the RBC model, we will pay special attention to the procedure for solving it.

• The difficulty in solving the model is a fundamental non-linearity that arises from the
interaction between multiplicative elements, such as Cobb-Douglas production, and additive

elements, such as capital accumulation and depreciation.

• This non-linearity makes it impossible, in general, to solve the model without resorting to
some kind of approximation.

– The only case in which this problem does not arise is when capital depreciates fully in

one period and agents utility from consumption takes the logarithmic form.

– This is a very special, unrealistic combination of assumptions.

7

Solving Models, Continued

• The solution method that we will study for the more general scenario is called log-
linearization.

• It starts from the model’s optimality conditions and budget constraints and transforms them
into a system of log-linear expectational difference equations in which all endogenous

variables are function of the capital stock and of the exogenous shocks that cause

fluctuations.

• Variables in the log-linearized model measure percentage deviations of original variables
from their trend (or steady-state) levels.

– We will use the words trend and steady state interchangeably, with the understanding

that underlying variables are constant in steady state only if long-run growth is zero,

otherwise they are moving at their trend-growth rate.

• The approximated model can then be solved using a method known as the method of
undetermined coefficients.

• An advantage of this solution method over alternatives is that it can be applied also to
models in which the market outcome is not efficient.

8

Solving Models, Continued

• There are plenty of situations in which you would not want to log-linearize your model (and
therefore assume that your variables always display a tendency to return to the steady state

around which you approximated the original, non-linear model).

– There are cases in which log-linearization is used also in non-stationary environments

(scenarios in which the economy does not eventually return to its steady state, or trend,

after shocks), but this is appropriate only for specific types of exercises.

• Log-linearization limits the range of questions you can study, or it can yield very misleading
conclusions.

• For example, log-linearization cannot handle phenomena like the Great Recession and the
years that followed and situations in which accounting for nonlinearity (like the zero—or

effective—lower bound on central bank policy interest rates) is necessary to understand

what is happening.

• But log-linearization is still used to work on many other interesting, important questions and
understanding how it works also helps us understand its limitations and why alternative,

more complicated techniques become necessary in other scenarios.

9

Households in the Basic RBC Model

• Consider an economy populated by a large number of identical, infinitely lived households,
all subject to the same uncertainty.

• At time t, the representative household maximizes its expected intertemporal utility from t to
the infinite future, discounting utility in future periods according to a discount factor β:

Et

[
∞∑
s=t

βs−tu(Cs)

]
= Et

(
∞∑
s=t

βs−t
C1−γs
1 −γ

)
, 0 < β < 1, (1)

where Et denotes the expectation based on the information available at time t,
∑∞

s=t is the

summation operator for time that goes from the current period (t) all the way to infinite, and

Cs is consumption in period s (s = t, …,∞).

• We assume that this expectation is rational, i.e., the household uses optimally all the
information that is available to it.

– Much macroeconomic literature studies the consequences of departures from rationality.

It is one of the many topics that, unfortunately, we do not have time to study. Michael

Woodford of Columbia University has been doing very interesting work in this area

recently.

10

The Intertemporal Utility Function

• The expression

Et

(
∞∑
s=t

βs−t
C1−γs
1 −γ

)
is a compact way of writing

Et

(
C
1−γ
t

1 −γ
+ β

C
1−γ
t+1

1 −γ
+ β2

C
1−γ
t+2

1 −γ
+ … + β∞

C
1−γ
t+∞

1 −γ

)
.

• Discounting by β captures the idea that households care about utility from current
consumption more than they care about utility from future consumption.

– Very interesting literature has explored the consequences of different forms of discount-

ing. See, for instance, work by David Laibson of Harvard University.

11

The Intertemporal Utility Function, Continued

• γ > 0 is the coefficient of relative risk aversion:

– It measures the attitude of our representative household toward risk (uncertainty).

– If γ were equal to zero—linear utility—the household would not care about risk. It would

be perfectly indifferent between a certain level of consumption and an uncertain one.

– If you are not familiar with the concept of risk aversion, you find more information in

Appendix A.

12

The Intertemporal Utility Function, Continued

• Let us define the parameter σ ≡ 1
γ
.

• This is known as the elasticity of intertemporal substitution.

– As we shall see, it measures the responsiveness of consumption to interest rate

changes: the willingness of agents to postpone or anticipate consumption across periods

in response to movement in interest rates.

• Tight connection between attitude toward uncertainty (γ) and toward intertemporal
substitution (σ) is an undesirable feature of the model when studying important questions

(for instance, related to asset pricing).

• Larry Epstein of Boston University and Stanley Zin of NYU developed a framework that
unties risk aversion from intertemporal substitution. Their work, published in the Journal of

Political Economy in 1989, became widely used to address important questions.

• We will stick to the basic framework, keeping in mind that it has significant limitations (see
Appendix A for an example).

13

Capital Accumulation and Labor Supply

• Households can accumulate a single asset, homogeneous physical capital, Kt and

Kt+1 = (1 − δ)Kt + It, 0 < δ ≤ 1 (2)

where Kt is the capital stock with which the household begins period t, It is investment in

period t, δ is the rate of capital depreciation, and Kt+1 is the stock of capital with which the

household will begin period t + 1.

• Each household supplies a fixed amount of labor (Nt = 1) in each period in a perfectly
competitive labor market.

14

The Budget Constraint

• The representative household’s consumption is constrained by:

Ct + It = r̃tKt + wt, (3)

where r̃t is the rental rate the household receives from the firms that rent its capital in a

perfectly competitive rental market, and wt is the wage (Nt = 1 implies wtNt = wt = labor

income).

– This is the household’s period budget constraint: A constraint like this applies to every

period (to every s, for s = 0, …,∞).

• (2) and (3) imply that the household’s budget constraint can be rewritten as:

Ct + Kt+1 = (1 + r̃t − δ)Kt + wt. (4)

• The problem of the household is to maximize (1) subject to (4).

• How do we solve such intertemporal optimization problem?

15

Solving the Household’s Problem: Intuitive Approach

• Let us start with in intuitive approach.

• Suppose we have a household that must decide what to do with 1 dollar in the current period
(t): it can use it to buy consumption in t (let us assume that 1 unit of consumption costs 1

dollar) or it can invest it in an asset that will generate the uncertain gross return Rt+1 at time

t + 1.

• Consider what the two possible choices do for the household:

• If it uses the dollar to buy consumption, it obtains the benefit given by the increment in utility
from consuming an extra unit of consumption today—the marginal utility of consumption:

u′(Ct).

• If it invests the dollar, it will receive the return Rt+1 at time t + 1. In terms of the utility
increment generated by the extra consumption this allows the household to do at t + 1, this

translates into u′(Ct+1)Rt+1.

16

Notation Digression

• When we are dealing with functions of only one variable, we will denote the first derivative
by using a superscript “′” and the second derivative by using a superscript “′′.”

• When we are dealing with functions of more than one variable, we will denote the first partial
derivative with respect to a variable by having that variable indicated once as subscript and

the second derivative by having the variable indicated twice as subscript.

– Example: The first derivatives of the function f(x,y) with respect to x and to y are

denoted fx(x,y) and fy(x,y), respectively, and the second derivatives are fxx(x,y) and

fyy(x,y) (I am omitting cross derivatives, assuming things are clear).

• An alternative way of indicating partial first derivatives that may appear in these course
slides will be to use numerical subscripts referring to the variable with respect to which we

are taking the derivative.

– Example: The first derivatives of the function f(x,y) with respect to x and to y are

denoted f1(x,y) and f2(x,y), respectively, and the second derivatives are f11(x,y) and

f22(x,y) (again omitting cross derivatives).

• Do not use “′” or “′′” superscripts when denoting derivatives of functions of more than one
variable in this course.

• Why? Because f ′(x,y) does not tell anyone with respect to what variable the derivative is
taken!

17

Solving the Household’s Problem: Intuitive Approach, Continued

• But the household does not know Ct+1and Rt+1 with certainty at time t, when it is taking its
decision. Hence, it will compute its expectation of Rt+1u

′(Ct+1) based on the information it

has at time t: Et [u
′(Ct+1)Rt+1].

• Moreover, in comparing the benefit of consuming today to that of investing (and thus
postponing consumption to the next period), the household will discount the future benefit

with the discount factor β.

• Hence, the household will compare u′(Ct) and βEt [u′(Ct+1)Rt+1].

• When is the household happy with the allocation of its resources across periods?

18

Solving the Household’s Problem: Intuitive Approach, Continued

• When it is indifferent between the two alternatives!

• In other words, for the household’s behavior to be optimized, it must be the case that:

u′(Ct) = βEt [u
′(Ct+1)Rt+1] .

• This optimality condition is known as Euler equation.

• In our model, the asset the household can invest in is capital, and the return that an extra
unit of capital today generates at t + 1 is 1 + r̃t+1 − δ: the undepreciated portion of that unit
of capital plus the rental rate that it generates.

• Hence, the Euler equation for optimal capital accumulation in our model is:

u′(Ct) = βEt [u
′(Ct+1)(1 + r̃t+1 − δ)] ,

or, given the assumed form of the period utility function,

C
−γ
t = βEt

[
C
−γ
t+1(1 + r̃t+1 − δ)

]
. (5)

19

Solving the Household’s Problem: Doing the Math

• Now let us show how we can obtain this equation by doing math.

• The budget constraint (4) can be rearranged as:

Ct = −Kt+1 + (1 + r̃t − δ)Kt + wt. (6)

• Recall that the household faces a constraint like (4) in every period—put differently, it faces
a sequence of constraints like (4) for time that goes from t to ∞.

• In the generic period s, it has to be:

Cs = −Ks+1 + (1 + r̃s − δ)Ks + ws. (7)

• We can substitute this constraint for Cs in the objective of the household, which will therefore
be maximizing:

Et

{
∞∑
s=t

βs−t
[−Ks+1 + (1 + r̃s − δ)Ks + ws]1−γ

1 −γ

}
. (8)

20

Solving the Household’s Problem: Doing the Math

• What does the household choose?

• The household takes the rental rate and the wage as given—as we mentioned above, they
are determined in perfectly competitive markets in which all agents are price takers.

• Moreover, at any time s, Ḱs is predetermined : It is the capital stock with which the household
begins the period. It was determined in the previous period.

• Having substituted investment and consumption out of the problem through our manipulation
of constraints and substitutions (the substitution of (2) into (3), and the substitution of (7)

into (1)) leaves Ks+1 as the only variable that the household actually chooses at any time s.

21

Solving the Household’s Problem: Doing the Math

• Without loss of generality, focus on s = t. The first-order condition for the household’s
optimal behavior follows from setting the derivative of (8) with respect to Kt+1: equal to 0.

• To find this derivative most transparently, note what happens if we write the summation in
(8) explicitly. The household maximizes:

[−Kt+1 + (1 + r̃t − δ)Kt + wt]1−γ

1 −γ
+ βEt

{
[−Kt+2 + (1 + r̃t+1 − δ)Kt+1 + wt+1]1−γ

1 −γ

}

+β2Et

{
[−Kt+3 + (1 + r̃t+2 − δ)Kt+2 + wt+2]1−γ

1 −γ

}
+ …

• Note also that everything in the first term is known at time t (Kt+1 is chosen at t). Therefore,
we can drop the expectation operator from that term.

• As you see, Kt+1: appears in two consecutive terms of this expression. Hence, taking the
derivative yields:

−(1 −γ)
[−Kt+1 + (1 + r̃t − δ)Kt + wt]−γ

1 −γ

+βEt

{
(1 −γ) [−Kt+2 + (1 + r̃t+1 − δ)Kt+1 + wt+1]−γ

1 −γ
(1 + r̃t+1 − δ)

}

22

Solving the Household’s Problem: Doing the Math

• If you simplify the 1 −γ terms, substitute (7) for s = t and s = t + 1, respectively, in the first
and in the second term of this expression, and set it equal to 0, you immediately find:

−C−γt + βEt
[
C
−γ
t+1(1 + r̃t+1 − δ)

]
= 0,

or

C
−γ
t = βEt

[
C
−γ
t+1(1 + r̃t+1 − δ)

]
,

i.e., the Euler equation (5).

• A sequence of such equations (one for every s = t, …,∞) must be satisfied for the household
to be optimizing its consumption and investment behavior over time.

23

The Transversality Condition

• It turns out that the Euler equation is actually not the only optimality condition the household
must satisfy:

• The Euler equation describes optimal behavior between any two consecutive periods (s and
s + 1, for s = t, …,∞), but the household is solving an infinite horizon problem that requires
it to look beyond any pair of consecutive periods.

• The additional condition that must be satisfied is known as transversality conditions, and it
has this form:

lim Et
T−→∞

[
βTu′(ct+T )(1 + r̃t+T − δ)Kt+T

]
= 0. (9)

• We are not going to do the math to show why this condition must hold.

24

The Transversality Condition, Continued

• Intuitively, if the expression on the left-hand side were strictly positive, the household would
be overaccumulating capital, so that a higher expected lifetime utility could be achieved by

increasing consumption today.

• The counterpart to such non-optimality in a finite horizon model would be that the household
dies with positively valued capital holdings: There is no bequest motive in our model for

which anyone would want to die with positively valued assets!

• Condition (9) cannot be violated on the negative side because the marginal utility of
consumption is never negative, 0 < δ ≤ 1, and capital (a factor of production) must be
positive.

25

Euler Equations and Transversality Conditions

• One way to look at Euler equations and transversality conditions is to observe that Euler
equations rule out arbitrage opportunities between consecutive periods (when the Euler

equation holds, the household cannot increase its utility by changing consumption and

capital holdings between two consecutive periods).

• Transversality conditions rule out permanent/infinite-horizon arbitrages (the household
cannot increase its utility by increasing consumption permanently).

• Euler equations represent short-run optimality conditions, which all candidate paths for
optimality of consumption and investment must satisfy, while the transversality condition

gives an additional long-run optimality condition, which (under the assumptions we are

making on the shape of the period utility function) only one of the short-run optimal paths

satisfies.

– Concavity of the utility function ensures that we do not need to compute second-order

conditions for the household’s maximization problem.

26

The Rental Rate and Production

• Households rent capital to firms and, with competitive markets,

r̃t =
∂Yt
∂Kt

(marginal product of capital),

where Yt is output.

• We assume that output in the economy is given by a Cobb-Douglas production function. In
aggregate per capita terms,

Yt = (AtNt)
αK1−αt = At

αK1−αt (10)

where 0 < α < 1 and At denotes exogenous technology (which is subject to random

shocks).

• Therefore,

r̃t = (1 −α)
(
At
Kt


and the Euler equation (5) becomes:

C
−γ
t = βEt

{
C
−γ
t+1

[
(1 −α)

(
At+1
Kt+1


+ 1 − δ

]}
(11)

27

Efficiency and the Planner’s Outcome

• There are no distortions in the model-economy we are considering (markets are perfectly
competitive).

• Then, the decentralized, competitive equilibrium generated by market behavior coincides
with the solution of the problem that a benevolent social planner would solve.

• Specifically, the planner would recognize that the following aggregate per capita resource
constraint must be satisfied in each period:

Yt = Ct + It.

• Thus, from (3) and (??),
Yt = r̃tKt + wt,

or

wt = Yt − r̃tKt
(as implied by Euler’s output exhaustion theorem).

28

Efficiency and the Planner’s Outcome, Continued

• So, (4) becomes:
Ct + Kt+1 = (1 − δ)Kt + Yt,

or, taking (10) into account,

Ct + Kt+1 = (1 − δ)Kt + AtαK1−αt . (12)

• A planner would recognize that the gross return at t + 1 from investing one unit of the
consumption good at t in capital would be:

Rt+1 ≡ (1 −α)
(
At+1
Kt+1


+ 1 − δ,

i.e., the marginal product of capital at t + 1 plus undepreciated capital.

29

Efficiency and the Planner’s Outcome, Continued

• Now, maximizing (1) subject to (12) yields:

C
−γ
t = βEt

{
C
−γ
t+1

[
(1 −α)

(
At+1
Kt+1


+ 1 − δ

]}
,

or

C
−γ
t = βEt

(
C
−γ
t+1Rt+1

)
, (13)

i.e., at an optimum, the cost of investing one unit of consumption today in capital

accumulation (the marginal utility of one unit of consumption today) must be equal to the

expected discounted marginal utility value of the gross return from investing one unit of

consumption good in capital accumulation.

• As expected, (13) (the Euler equation from the solution of the planner’s problem) and (11)
(the Euler equation for the decentralized, market solution) are identical once the definition of

Rt+1 is taken into account.

30

Steady-State Growth

• Let us look for a steady-state, or balanced growth path of the model, in which technology,
capital, and consumption all grow at a constant common growth rate.

• We denote this growth rate as:

G ≡
At+1

At
(overbars denote steady-state levels).

• In steady-state, the gross rate of return on capital, Rt+1, becomes a constant R, while the
first-order condition (13) becomes:

Gγ = βR, (14)

or, in logs (letting r ≡ log R and g ≡ log G):

g =
log β + r

γ
= σ log β + σr.

• This condition, relating the equilibrium growth rate of consumption to the intertemporal
elasticity of substitution times the real interest rate, is a standard result of models with power

utility.

31

Steady-State Growth, Continued

• The definition of R and equation (14) imply that, in steady state, the constant technology-
capital ratio is:

At

Kt
=

[
Gγ/β − (1 − δ)

1 −α

]1/α
.

• A higher rate of technology growth leads to a lower capital stock for a given level of
technology.

– The reason is that, in steady state, faster technology growth must be accompanied by

faster consumption growth.

– Agents will accept a steeper consumption path only if the rate of return on capital is

higher, which requires a lower capital stock.

• Setting Gγ/β = R ≈ 1 + r yields:

At

Kt

(
r + δ

1 −α

)1/α
. (15)

32

Steady-State Growth, Continued

• It is possible to solve for various ratios of variables that are constant along a steady-state
growth path.

• These ratios can be expressed in terms of four underlying parameters:

– g, the log technology growth rate;

– r, the log real return on capital;

· strictly speaking, r is an endogenous variable of our model, but we treat is as a
parameter as we recognize that it must satisfy r = − log β + g

σ
= − log β + γg.

– α, the exponent on labor and technology in the production function, or equivalently,

labor’s share of output;

– and δ, the rate of capital depreciation.

33

Steady-State Growth, Continued

• For purposes of “calibration,” interpreting periods as quarters, benchmark values of these
parameters may be:

g = .005 (2% at annual rate),

r = .015 (6% at annual rate),

α = .667,

δ = .025 (10% at annual rate).

• These are all plausible numbers for the U.S. economy.

• Given r = .015 and g = .005, r = − log β + γg defines the pairs of values for γ and β such
that r = .015 and g = .005.

34

Steady-State Growth, Continued

• Using the production function and (15), we find the constant steady-state output capital
ratio:

Y t

Kt
=

(
At

Kt



r + δ

1 −α
. (16)

• Similarly, in steady state, the consumption-output ratio is constant at (see below for
Ct/Kt):

Ct

Y t
=
Ct/Kt

Y t/Kt
≈ 1 −

(1 −α)(g + δ)
r + δ

. (17)

• At the benchmark parameter values above, it must be:

Y t

Kt
= .118 (.472 at annual rate) and

Ct

Y t
= .745,

fairly reasonable values.

35

A Non-Linear Model of Fluctuations

• Outside the steady state, the model we laid out is a system of non-linear equations for
consumption, capital, output, and technology.

• Nonlinearities are caused by incomplete capital depreciation (δ < 1 in (12) and in
Rt+1 = (1 −α)

(
At+1
Kt+1


+ 1 − δ) and by time variation in the consumption-output ratio (or the

savings rate).

• Exact analytical solution of the model is possible only in the unrealistic special case in which
capital depreciates fully in one period (δ = 1) and agents have log utility (γ = 1), so that the

consumption-output ratio (and therefore the savings rate) is always constant.

• You find the details on how this special case works in Appendix B.

• The problem is that δ = 1 and γ = 1 are extremely restrictive hypotheses. In all other cases,
the model features a mixture of multiplicative and additive terms that make an exact solution

impossible.

• How do we proceed?

36

Log-Linearization

• Our solution approach will be to seek an approximate analytical solution by transforming the
model into a system of approximate log-linear difference equations.

• In doing so, we are going to rely on the following result: For small deviations of the variable
Xt from the steady state Xt, it is:

dXt

Xt
=
Xt −Xt
Xt

≈ d log Xt = log Xt − log Xt,

and we are going to define:

xt ≡
dXt

Xt
.

• Now, interpret all lower-case variables below as zero-mean percentage deviations from the
steady state of the model that we obtained above.

37

Log-Linearization, Continued

• From the production function,
yt = αat + (1 −α)kt. (18)

This one is easy: Just take logs of the production function and remember that Nt = 1; (18)

holds exactly, i

Economics homework help

Development Economics

Problem Set 2

Sherif Khalifa

1. (a) What are the causes of the World food crisis?

(b) Describe the agrarian systems prevalent in the Developing world:

1

2. Consider the following graph:

MC

MB

20
Quantity

MB/MC

15

25

10

(a) The consumer surplus =

(b) The producer surplus =

3. Consider the following table, and assume the wage= $60:

Worker MPL APL

1 100 100

2 90 95

3 80 90

4 70 85

5 60 80

6 50 75

7 40 70

8 30 65

9 20 60

10 10 55

2

If the resource is privately owned:

(a) The employment level =

(b) The surplus =

If the resource is publicly owned:

(c) The employment level =

(d) The surplus =

4. Consider the following graph:

MPL APL

35
Labor

Return to Labor

40

70

20

Wage

If the resource is privately owned:

(a) The employment level =

(b) The surplus =

If the resource is publicly owned:

(c) The employment level =

(d) The surplus =

3

5. Consider the following graph:

MCP

MB

125
Quantity

Price

25

20

MCS

15

200

(a) The percentage of the pollution tax paid by consumers =

(b) The percentage of the pollution tax paid by producers =

6. Consider the following table about the technology of producing cars and TVs, where
labor is the only factor of production:

1 Car 1 TV

Country 1 20 labor 5 labor

Country 2 50 labor 25 labor

(a) Country 1 has a comparative advantage in :

(b) Country 2 has a comparative advantage in :

4

(c) Assume that each country has 1000 workers, draw the production possibility frontier

of each country?

TV

Car

TV

Car

Country1 Country2

(d) The trade price:

(e) Assume that the autarky production is when both countries devote half of their labor

to produce each good. Now, suppose that country 1 devotes 40% of their labor to produce

cars and 60% to produce TVs, while country 2 devotes 75% of their labor to produce cars and

25% to produce TVs, and then they decide to trade such that the number of cars available for

consumption in both countries after trade is the same as in autarky. Complete the following

table:

Country 1 Country 2

Cars TVs Cars TVs

Autarky

Production & Consumption

Trade

Production

Trade

Consumption

Gains from Trade

5

7. Consider the following production possibility frontiers of two countries:

10
Agriculture

Manufacturing

10

20

20

3

75

5

Developing

5
Agriculture

Manufacturing

20

25

10

8

2

4

3

Developed

(a) The autarky price in the Developing country =

(b) The autarky price in the Developed country =

(c) The trade price between the two countries =

(d) The combination of production in autarky in the Developing country =

(e) The combination of production in autarky in the Developed country =

(f) The combination of consumption in autarky in the Developing country =

(g) The combination of consumption in autarky in the Developed country =

(h) The combination of production in trade in the Developing country =

(i) The combination of production in trade in the Developed country =

(j) The combination of consumption in trade in the Developing country =

(k) The combination of consumption in trade in the Developed country =

6

8. Consider the following graph of the market for cars.

S

D

15
Quantity

Price

70

60

40

301710 40

In the case of autarky:

(a) The quantity of domestic car production =

(b) The price of domestic cars =

In the case of free trade:

(c) The quantity of imported cars =

(d) The price of cars =

If the country imposes a tariff on imported cars:

(e) The quantity of imported cars =

(f) The price of cars =

(g) The tariff imposed on each imported car =

(h) The import revenues collected by the government =

7

9. To produce a boat, you need wood as an intermediate good. If this country imports
both boats and wood, a 10% tariffrate can be imposed on boat imports, and a 5% tariffrate

can be imposed on wood imports. The price of a boat is $1000 before the tariff, and the price

of one unit of wood is $100. Knowing that three units of wood are required to produce one

boat.

(a) The value added before both tariffs are imposed =

(b) The value added after both tariffs are imposed =

(c) The value added after imposing a tariff on boats only =

(d) The value added after imposing a tariff on wood only =

(e) The effective rate of protection after imposing both tariffs =

(f) The effective rate of protection if only the tariff on boats is imposed =

(g) The effective rate of protection if only the tariff on wood is imposed =

8

10. Consider the following balance of payments:

Item Amount

Exports 35

Imports 65

Investment income 2

Debt service payments 20

Net remittances 5

Foreign direct investment 7

Foreign portfolio investment 8

Resident capital outflow 30

(a) The balance in the current account =

(b) The balance in the capital account =

11. If the exchange rate between the Mexican Peso and the U.S.$ is 3 Pesos=1$. If this
rate changed to 2 Pesos=1$.

(a) Are the Mexican exports cheaper or more expensive due to this change?

(b) What can the Mexican policy makers do to return to the initial exchange rate?

If the exchange rate between the Mexican Peso and the U.S.$ is 3 Pesos=1$. If this rate

changed to 4 Pesos=1$.

(c) Are the Mexican exports cheaper or more expensive due to this change?

(d) What can the Mexican policy makers do to return to the initial exchange rate?

9

Economics homework help

ECON 401

Advanced Macroeconomics

Topic 2

New Keynesian Macroeconomics

Fabio Ghironi

University of Washington

NEW KEYNESIAN THEORY:
MONOPOLY PRICING

RELEVANT MARKET STRUCTURE(S)?

Introduction

 Real business cycle (RBC)/neoclassical theory
 All (goods) prices are determined in perfect competition
 In both consumption-leisure and consumption-savings dimensions
 Critical assumption: no firm is a price setter  no firm has any market

power

 New Keynesian theory
 Starting point: firms do wield (at least some) market power
 Critical assumption: firms do set their (nominal) prices
 Purposeful setting/re-setting of (nominal) prices may entail costs of

some sort
 “Menu costs,” but soon interpret more broadly
 Central issue in macro: how do “costs of adjusting prices” (“sticky prices”)

affect monetary policy insights and recommendations?

 Upcoming analysis
 Step 1: Develop theory in which firms are purposeful price setters, not

price takers
 Step 2: Superimpose on the theory some “costs” of setting/re-setting

nominal prices
 Step 3: Study optimal monetary policy

MONOPOLISTIC COMPETITION

Basics of New Keynesian Theory

 Monopolistically-competitive view of goods markets the foundation of NK
theory
 An intermediate market structure between pure perfect competition

and pure monopoly

 Framework
 Allows for purposeful price setting by firms
 Retains some competitive features of pure supply-and-demand theory
 Assumes that goods are imperfect substitutes

 The foundation/essence of market power
 In contrast to the perfect substitutability of goods in theory of pure perfect

competition

 Markup
 The ratio of a firm’s unit sales price to its marginal cost of production
 A key concept in the theory of monopoly/monopolistic competition
 A key measurable (sort of…) empirical concept

 Perfect competition: markup = _____

NK MODEL OVERVIEW

Basics of New Keynesian Theory

 Monopolistic competition in goods markets the underlying market structure
 Operationalize by dividing goods markets into two “sectors”

 Retail firms
 Each sells a perfectly-substitutable “retail good” in a perfectly-

competitive market
 Purchase differentiated “wholesale goods” in monopolistically-

competitive markets

 Wholesale firms
 An “infinite” number of them
 Each produces a “wholesale good” imperfectly substitutable with any

other “wholesale good”
  each wholesale firm is a price setter
 “Wholesale goods” sold to retail firms

 Conceptual separation allows for separate consideration of
 Price setting at the microeconomic level
 Determination of market outcomes at the macroconomic level

RETAIL FIRMS

Basics of New Keynesian Theory

 A representative retail firm
 Operates a “production function” that “bundles together” wholesale goods

into retail goods
 Inputs: wholesale goods ONLY, no labor or other inputs required
 Example: a retail store that produces no goods of its own

 Dixit-Stiglitz aggregator function/”production function”
 Workhorse building block of NK theory

 Parameter ε measures curvature
 Elasticity of substitution between any pair of differentiated wholesale

goods is ε/(ε-1)
 ε also the critical determinant of profit-maximizing markup
 Restriction for NK model to make any sense: ε > 1
 Setting ε = ____ recovers perfect competition (i.e., RBC, not NK)

1 1/

0t it
y y di


    

Output of the retail good

(Also a basic building
block of theory of
international trade)

An infinity (continuum) or differentiated wholesale goods

See all
this soon

RETAIL FIRMS

Basics of New Keynesian Theory

 A continuous infinity of wholesale goods
 A metaphor for “many varieties of goods”
 Easier to deal with mathematically than discrete infinity (tools of

calculus can be applied!)
 And normalize to continuum [0,1] (could also say, i.e., [0,2], etc…)

 Schematic structure of goods markets

 Representative retail firm’s profit function

1

0t t it it
P y P y di

Nominal price of the retail good Nominal price of wholesale good i

Substitute Dixit-Stiglitz production function

1 11/

0 0t it it it
P y di P y di


     

RETAIL FIRMS

Analysis

 Representative retail firm’s profit-maximization problem

 FOC with respect to yjt (for any j)

.

.

.

 …after several rearrangements

  0..

1 11/

0 0
max

it i
t it it it

y
P y di P y di


 

      Chooses profit-maximizing quantity of
input of each wholesale good. Focus
analysis on any arbitrary wholesale
good – call it yjt.

1
jt

jt t
t

P
y y

P


 

  
 

DEMAND
FUNCTION FOR
GOOD j

WHOLESALE FIRMS

Basics of New Keynesian Theory

 Focus on the activities of an arbitrary wholesale firm j
 Symmetry: assume that every wholesale firm makes decisions analogously

 Consistent with the representative-agent approach
 So can speak of a “representative” wholesale firm

 Assume zero fixed costs of production

 Operates a constant-returns-to-scale (CRS) production technology in order
to produce its unique, differentiated output
 CRS: if all inputs are scaled up by the factor x, total output is scaled up

by the factor x
 Implementation of theory requires specifying neither the factors of

production (i.e., labor, capital, etc) nor a production function (f(.))

 Marginal cost of production
 = average cost of production
 is invariant to the quantity produced

 i.e., mc is NOT a function mc(quantity)

Together,
these imply
a simple
description
of
production

WHOLESALE FIRMS

Analysis

 Representative wholesale firm’s profit-maximization problem

 The sole choice object is Pjt
 Compute FOC!

max
jt

jt jt t jt jt
P

P y Pmc y

mc is NOT a function of quantity
produced – CRS assumption.

FC = 0  mc = ac

Conversion of production costs into
nominal terms requires factor Pt, NOT Pjt.
Because costs are not denominated in the
firm’s own prices.

Total revenue depends on
firm’s production and its
own product price.

1 1
max

jt

jt jt
jt t t jt tP

t t

P P
P y Pmc y

P P

 
     

   
   

Substitute in demand function for
wholesale good j.

The critical point of analysis of
monopoly: the firm understands
and internalizes the effect of its
price on the quantity that it sells.

WHOLESALE FIRMS

Analysis

 Representative wholesale firm’s profit-maximization problem

 FOC with respect to Pjt (lengthy algebra…)

.

.

.
 …after several rearrangements

 Define relative price as

1 1
max

jt

jt jt
jt t t jt tP

t t

P P
P y Pmc y

P P

 
     

   
   

2 1 2 1
1 1 1 11 0

1 1jt t t jt t t t
P P y P P mc y

   
   

 

 
    

 

jt
jt

t

P
mc

P


Optimal relative price of wholesale firm
j is a markup ε over marginal cost of
production.

KEY PRICING RESULT OF DIXIT-
STIGLITZ THEORY.

jt
jt

t

P
p

P
 jt jtp mc

In which case
can express
pricing rule as

/jt jt jtp mc  Or as optimal markup rule

THE DIXIT-STIGLITZ FRAMEWORK

Conclusion

 Key prediction of basic Dixit-Stiglitz theory

 Firms aim to keep their prices at a constant markup over marginal cost

 Empirical relevance of DS constant markup prediction?
 Not very in the short run…
 …but maybe in the long run

 Markups generally observed to be countercyclical (with respect to GDP)
 During expansions, markups decline; during recessions, markups rise
 (detrended, business cycle frequencies)

 DS framework has long been the main starting point for pricing theories;
recent incorporation into studying
 Customer switching effects
 Brand loyalty
 Search costs

jt
jt

jt

p
mc

  

NEXT: The Dixit-Stiglitz framework as the
foundation of New Keynesian sticky-price models.

NEW KEYNESIAN THEORY:
THE MODERN STICKY-PRICE MODEL

RELEVANT MARKET STRUCTURE(S)?

Introduction

 Real business cycle (RBC)/neoclassical theory
 All (goods) prices are determined in perfect competition
 In both consumption-leisure and consumption-savings dimensions
 Critical assumption: no firm is a price setter  no firm has any market

power

 New Keynesian theory
 Starting point: firms do wield (at least some) market power
 Critical assumption: firms do set their (nominal) prices
 Purposeful setting/re-setting of (nominal) prices may entail costs of

some sort
 “Menu costs,” but soon interpret more broadly
 Central issue in macro: how do “costs of adjusting prices” (“sticky prices”)

affect monetary policy insights and recommendations?

 Upcoming analysis
 Step 1: Develop theory in which firms are purposeful price setters, not

price takers
 Step 2: Superimpose on the theory some “costs” of setting/re-setting

nominal prices
 Step 3: Study optimal monetary policy

NOW

MENU COSTS

Basics of New Keynesian Theory

 Do firms incur “costs” in the very act of setting/re-setting nominal prices?
 If so, what is the nature and prevalence of these costs?
 A central issue in price theory

 Menu cost – any and all costs incurred directly due to the price (re-)setting
process
 Independent of any physical production costs – i.e., NOT a cost captured by

standard “production functions”

 Two common views of nature of menu costs
 Fixed menu cost: total menu cost is independent of the magnitude of the price

change being considered
 Example: cost of printing new prices on restaurant menus is probably independent

of what the new prices are

 Convex menu cost: total menu cost is convex and increasing in the magnitude of
the price change being considered

 Example: if “menu cost” includes “cost of angering customers,” “managerial
time,” etc., convexity assumption may be more appropriate

 Both fixed and convex are likely aspects of menu costs
 Formal theoretical NK model typically focuses only on convex menu costs

Anderson and
Simester;

Zbracki et al
papers

MODELING CONVEX MENU COSTS

Basics of New Keynesian Theory

 Introduce menu costs at level of wholesale firms
 Because they actually (re-)set prices!
 What does it mean for a firm that is not a price-setter to incur costs of

setting prices?…

 Wholesale firm j incurs real menu cost of nominal price adjustment

 REAL cost of price adjustment – denominated in goods
 Parameter Ψ > 0 governs “importance” of menu costs

 Ψ = 0 means no menu cost, which recovers basic Dixit-Stiglitz framework

 Convex: the larger the percentage deviation of Pjt from Pjt-1, the larger the
menu cost
 Implication: a disincentive to adjusting prices “too quickly”

 Question: are downward adjustments just as costly as upward adjustments?
 Intuition: “no” Anderson and Simester evidence: “maybe?…”

2

1

1
2

jt

jt

P
P

 
  

 

RETAIL FIRMS

Analysis

 Representative retail firm’s profit-maximization problem

 FOC with respect to yjt (for any j)

.

.

.

 …after several rearrangements

 IDENTICAL TO BASIC (FLEXIBLE-PRICE) DIXIT-STIGLITZ FRAMEWORK!

  0..

1 11/

0 0
max

it i
t it it it

y
P y di P y di


 

      Chooses profit-maximizing quantity of
input of each wholesale good. Focus
analysis on any arbitrary wholesale
good – call it yjt.

1
jt

jt t
t

P
y y

P


 

  
 

DEMAND
FUNCTION FOR
GOOD j

WHOLESALE FIRMS

Basics of New Keynesian Theory

 Focus on the activities of an arbitrary wholesale firm j
 Symmetry: assume that every wholesale firm makes decisions analogously

 Consistent with the representative-agent approach
 So can speak of “the” wholesale firm

 Assume zero fixed costs of production

 Operates a constant-returns-to-scale (CRS) production technology in order
to produce its unique, differentiated output
 CRS: if all inputs are scaled up by the factor x, total output is scaled up

by the factor x
 Implementation of theory requires specifying neither the factors of

production (i.e., labor, capital, etc) nor a production function (f(.))

 Marginal cost of production
 = average cost of production
 is invariant to the quantity produced

 i.e., mc is NOT a function mc(quantity)

 AND ALSO INCUR QUADRATIC MENU COSTS

Together,
these imply
a simple
description
of
production

2

1

1
2

jt

jt

P
P

 
  

 

The basis for “sticky” or
“sluggish” nominal
price adjustment

WHOLESALE FIRMS

Analysis

 Representative wholesale firm’s period-t profit function

 Presence of menu cost makes wholesale firm’s profit-maximization problem
a DYNAMIC one
 Because any nominal price chosen in a given period has consequences

for profits in the subsequent period through menu costs
 Firm pricing problem is forward-looking

 Dynamic (two-period) profit function

2

1

ax 1m
2jt

jt
jt jt t jt jt

j
P t

t

P
P y Pmc y P

P

 
    

 

mc is NOT a function of quantity produced – CRS
assumption. FC = 0  mc = ac OF PRODUCTION!

Conversion of production costs into
nominal terms requires factor Pt,
NOT Pjt. Because costs are not
denominated in the firm’s own
prices.

Total revenue depends on
firm’s production and its
own product price.

Period-t menu costs, conversion of which into nominal
terms requires factor Pt, NOT Pjt. Because costs are
not denominated in the firm’s own prices.

2 2

1
1 1 1

1
1 1 1

1

max 1
1

1
2 2jt

jt jt
jt jt t jt jt t jt jt t t j

t
P t t

jt jt

P P
P y Pmc y P P y P mc y P

P P
 


    


    
               

  

Discount factor requires inflation adjustment.

And background assumption: no agency problem.

WHOLESALE FIRMS

Analysis

 Representative wholesale firm’s profit-maximization problem

2 2

1
1 1 1 1 1 1

1 1

max 1
2 1 1 2jt

jt jt
jt jt t jt jt t jt jt t t jt tP

jt t jt

P P
P y Pmc y P P y P mc y P

P P
  


     
 

    
                   

Substitute in demand function for
wholesale good j in both period t
and t+1 (and t+2, t+3, t+4, …)

The critical point of analysis of
monopoly: the firm understands
and internalizes the effect of its
price on the quantity that it sells.

2
1 1

1 1 1

2
1 1

1 1 1
1 1 1 1 1 1

1

max 1
2

1
1 2

jt
t t jt t

jt jt jt
jt

jt jt

tP
jt jt jt

jt jt jt
jt t

jt
t t t t

t

y Pmc y P
P P P

P P P
P

P P P

y P mc y

P

P P P
P

 
 

 
 

 

 

  

 
  

     

     
            

     
 

                            
In period t, firm chooses Pjt.

So FOC with respect to Pjt…

WHOLESALE FIRMS

Analysis

 Representative wholesale firm’s profit-maximization problem

 FOC with respect to Pjt

 If ψ = 0, collapses to

 Existence of menu costs (ψ > 0) complicates pricing rule

2
1 1

1 1 1

2
1 1

1 1 1
1 1 1 1 1 1

1

max 1
2

1
1 2

jt
t t jt t

jt jt jt
jt

jt jt

tP
jt jt jt

jt jt jt
jt t

jt
t t t t

t

y Pmc y P
P P P

P P P
P

P P P

y P mc y

P

P P P
P

 
 

 
 

 

 

  

 
  

     

     
            

     
 

                            

2 1
1 111 1

1

2
1

1 1

1
11 1 1 0

1 1 1
jt jtt t

t t t t t
jt

jt
jt jt

jt jt jtjt t

P PP P
P y P mc y

P
P

P P
P PP P

 


 


 

  


  

 


 

   
                

jt
t

t

P
mc

P
 Exactly the flexible-price Dixit-Stiglitz pricing rule

SYMMETRIC EQUILIBRIUM

Analysis

 Now drop the distinction between “retail goods” and “wholesale goods”
 Suppose “goods” are all identical

 A macro perspective
 The “representative good”…
 …since macro analysis is most concerned with aggregates

 Impose symmetry by now dropping j indexes – i.e., now suppose Pjt = Pt

2 1 2 1
1 1 11 1 1 1

1 1 1

1
1 1 0

1 1 1
t t t t t

t t t t t t t
t t t t t t

P P P P P
P P y P P mc y

P P P P P

   
    

  

 
     

  

   
        

     

…and use definition of inflation Pt/Pt-1 = 1 + πt

  1 1 1
1 1 1

1
1 1 1 0

1 1
t t t t t

t t
t t t t t t

P P P P P
mc y

P P P P P


 
 

  

  

   
        

    

Several terms combine…
= 1 = 1

NEW KEYNESIAN PHILLIPS CURVE

Analysis

 The New Keynesian Phillips Curve (NKPC)

 Links period-t inflation to period-t marginal costs of production and period-
(t+1) inflation

 “Classical” Phillips Curve
 A link between period-t inflation and one component of period-t

marginal costs of production (employment)
 No “forward-looking” elements in it

 Forward-looking pricing/inflation behavior the key idea articulated by NKPC
 Pricing decisions are inherently dynamic

 NKPC the cornerstone idea in New Keynesian theory

 Here derived from Rotemberg framework…can derive off alternative theories

  1 1
1

1 (1 ) (1 ) 0
1 t t t t t t

mc y    
  

     

ECON 401

Advanced Macroeconomics

Alternative New Keynesian Foundation

Fabio Ghironi

University of Washington

Introduction

• When we studied the monopolistic competition foundation of the New Keynesian model
that Sanjay Chugh introduces in his textbook and slides, I mentioned that we could have

set up the model without introducing the separation between wholesalers and retailers

by just assuming that the representative consumer consumers a bundle of differentiated

final products produced by firms with monopoly power that operate under monopolistic

competition.

• These notes/slides show you how to do that.

1

A Consumption Bundle

• Suppose that instead of the homogeneous retail good produced by Chugh’s perfectly
competitive retailers, households in our economy consume a bundle of differentiated

products that combines these products according to:

Ct =

(∫ 1
0

ct(j)
θ−1
θ dj

) θ
θ−1

,

where θ > 1 is the elasticity of substitution between differentiated goods in the bundle, and

ct(j) denoted consumption of product j, which is produced under monopolistic competition

by firm j.

• The consumer has period utility U(Ct) (or U(Ct,1 − Nt) if we want to have endogenous
labor supply in the model) and the dynamics of Ct are determined by an intertemporal

maximization problem as usual.

• We are interested in the expressions for the CPI of this economy (Pt) and for how the
consumer allocates the Ct determined by the appropriate Euler equation to the individual

differentiated ct(j)’s.

2

The Welfare-Consistent CPI

• The welfare-based consumer price index of this economy is obtained as solution to the
problem of finding the minimum amount of spending needed to purchase one unit of the

bundle Ct.

• Formally,

Pt ≡ min
ct(j)

∫ 1
0

pt(j)ct(j)dj subject to Ct = 1,

where pt(j) is the price of good j, or, substituting the expression for Ct,

Pt = min
ct(j)

∫ 1
0

pt(j)ct(j)dj subject to

(∫ 1
0

ct(j)
θ−1
θ dj

) θ
θ−1

= 1.

• The Lagrangian for this problem is:

L =

∫ 1
0

pt(j)ct(j)dj + λt

[
1−

(∫ 1
0

ct(j)
θ−1
θ dj

) θ
θ−1
]
,

where λt is the Lagrange multiplier.

3

The Welfare-Consistent CPI, Continued

• Taking the derivative of this expression with respect to ct(j), setting it equal to zero, using(∫ 1
0
ct(j)

θ−1
θ dj
) θ

θ−1
= Ct, and rearranging yields:

ct(j) =

(
pt(j)

λt

)−θ
Ct,

or:

ct(j) =

(
pt(j)

λt

)−θ
once we recall the constraint Ct = 1.

• Now substitute the expression ct(j) = (pt(j)/λt)−θ into
(∫ 1

0
ct(j)

θ−1
θ dj
) θ

θ−1
= 1.

• Simple algebra then allows you to obtain:

λt =

(∫ 1
0

pt(j)
1−θdj

) 1
1−θ

.

4

The Welfare-Consistent CPI, Continued

• Therefore,

ct(j) =

(
pt(j)

λt

)−θ
= pt (j)

−θ
(∫ 1

0

pt(j)
1−θdj

) θ
1−θ

.

• Recall that Pt is defined as the value of spending (
∫ 1
0
pt(j)ct(j)dj) such that spending needed

for Ct = 1 is minimized, i.e., such that ct(j) obeys this expression.

– As usual in this class, the shapes of objective function and constraint are such that it is

not necessary to verify second-order conditions.

• Hence,

Pt =

∫ 1
0

pt(j)
1−θ
(∫ 1

0

pt(j)
1−θdj

) θ
1−θ

dj =

(∫ 1
0

pt(j)
1−θdj

) 1
1−θ

.

• Note that this expression for the price index implies the usual property that Pt = pt in the
symmetric equilibrium of the model.

5

Differentiated Good Demand

• The optimal demand for each individual differentiated good j is found by solving the problem:

max
ct(j)

Ct subject to…

∫ 1
0

pt(j)ct(j)dj = St,

where St is an exogenously imposed amount of spending.

– Note that this does not mean finding a different Ct from the one implied by the

intertemporal utility maximization problem.

– Ct remains determined by the relevant Euler equation.

– The solution to the problem we are studying now will tell us how best to allocate Ct
across the individual differentiated goods.

6

Differentiated Good Demand, Continued

• Substituting the expression for Ct in the maximization problem above yields:

max
ct(j)

(∫ 1
0

ct(j)
θ−1
θ dj

) θ
θ−1

subject to…

∫ 1
0

pt(j)ct(j)dj = St,

and the Lagrangian for this problem is

L =

(∫ 1
0

ct(j)
θ−1
θ dj

) θ
θ−1

+ φt

(
St −

∫ 1
0

pt(j)ct(j)dj

)
.

• Taking the derivative of the Lagrangian with respect to ct(j), setting it equal to zero, using(∫ 1
0
ct(j)

θ−1
θ dj
) θ

θ−1
= Ct, and rearranging yields:

ct(j) = (φtpt(j))
−θ
Ct.

• Substituting this into Ct =
(∫ 1

0
ct(j)

θ−1
θ dj
) θ

θ−1
yields an equation that can be solved for φt to

obtain:

φt =

(∫ 1
0

pt(j)
1−θdj

)− 1
1−θ

.

• But comparing this to the expression for Pt obtained above immediately implies that
φt = P

−1
t .

7

Differentiated Good Demand, Continued

• Hence,

ct(j) =

(
pt(j)

Pt

)−θ
Ct.

• Note that this demand function has the same expression as the demand of a differentiated
wholesale good by the retailer in Sanjay Chugh’s version of the New Keynesian framework.

• Hence, everything else follows identically.

• In particular, producer j’s profit maximization problem will yield:
pt (j)

Pt
=

θ

θ −1
mct(j).

• Identical production functions and symmetry across producers will imply mct(j) = mct,
pt (j) = pt, and the price index expression will imply Pt = pt, as we already noted.

• The demand expression for ct(j) in the symmetric equilibrium will in turn imply ct = Ct, very
much like we had Yt (output of the retail bundle) = yt (output of each wholesale good) in

Chugh’s framework.

• All the properties of the framework, under flexible or sticky prices, follow identically.

8

Economics homework help

Prompt/Points 5 0

Named Institution

Section Total (of 5)

Prompt/Points 25-30 19-24 13-18 7-12 1-6 0

Timeline, purpose,
advertisement
examples, competition,
including one minority
institution

All six parts described Missing a part but others
described

Missing two but others
described or two or
more parts present and
not described

Missing three but
others described or
three or more parts
present and not
described

Missing four but
others described or
four or more parts
present and not
described

Did not
address
prompt

Section Total (of 30)

Prompt/Points 13-15 10-12 7-9 4-6 1-3 0

Recent policy event Recent policy event is
described and institution’s
role is described

Recent policy event is
described or institution’s
role is described

Recent policy event is
mentioned and
institution’s role is
described

Recent policy event is
mentioned or
institution’s role is
mentioned

Something is written
about recent policy
events

Did not
address
prompt

Section Total (of 15)

Prompt/Points 5 4 3 2 1 0

Zip code research Population, income,
education, race, state
employment, unemployment
rate, poverty rate

Missing one Missing two Missing 3 Missing 4-5

Section Total (of 5)

Prompt/Points 9-10 7-8 5-6 3-4 1-2 0

Fiscal and monetary
policy affects

Takes position on monetary
policy, supports position,
demonstrates
understanding of the role of
fiscal stimulus and monetary
policy in shrinking economy

Takes position on monetary
policy, supports position, or
demonstrates
understanding of the role of
fiscal stimulus and monetary
policy in shrinking economy

Takes position on
monetary policy and
addresses fiscal policy

Takes position on
monetary policy or
addresses fiscal
policy

Mentions stimulus
and/or bank lending

The task is
not
addressed.

Section Total (of 10)

Prompt/Points 13-15 10-12 7-9 4-6 1-3 0

Interview Describes circumstances of
first account, describes
overall banking experience,
describes accounts and
upward mobility, describes
agency of account, follow
up question

Missing one task or two
tasks not described

Missing two tasks or
three tasks not
described

Missing three tasks or
four tasks not
described

Missing four or more
tasks or five tasks not
described

The task is
not
addressed.

Prompt/Points 5 4 3 2 1 0

PowerPoint: minimum
five slides not including
title page and works
cited page.

Five slides are organized
and presented.

Four slides are organized
and presented or content
could have been organized
in four slides without
affecting overall quality.

Three slides are
organized and
presented or content
could have been
organized in two slides
without affecting overall
quality.

Two slides are
organized and
presented or content
could have been
organized in one slide
without affecting
overall quality.

The project is small
and could have been,
or is, organized on one
slide without affecting
overall quality.

The task is
not
addressed.

Section Total (of 20)

Prompt/Points 9-10 7-8 5-6 3-4 1-2 0

Use scholarly resources
from the library and/or
industry websites.
Minimum of three
sources (“Works Cited”)
page. Use MLA or APA

APA or MLA style are
completely correct with no
more than a few minor
errors and three scholarly
sources are cited.

APA or MLA style are
generally correct but with
multiple errors and three
scholarly sources are cited.

APA or MLA style are
identifiable but there
are errors in formatting
or there are only two
scholarly sources.

Multiple sources may
be identifiable in text
but are not in a works
cited page or sources
are not at all
scholarly. APA or
MLA style is not
reasonably met.

At least one source is
mentioned in text.

The task is
not
addressed.

Section Total (of 10)

Prompt/Points 11-15 6-10 1-5 0

Responded to at least
two classmates

Responded with detailed
comments to at least two

Responded with comments
to at least two or detailed
comments to one

Responded with limited
comments to two or
only one student post

The task is not
addressed.

Section Total (of 15)

Grand Total

1

Economics homework help

Copyright

Real Options Exercises
Harvard Business School Case 9-208-045
Courseware 9-208-703

Tables A & B

Real Options Exercises
Problem 2
Table A
Round 1
Year 0 1 2 3 4 5 6 7 8 9
After-tax cash flow 10.0 12.0 15.0 15.5 15.9 16.4 16.9 17.4 17.9
Investment -145.0
Net cash flow -145.0 10.0 12.0 15.0 15.5 15.9 16.4 16.9 17.4 17.9
Round 2
Year 0 1 2 3 4 5 6 7 8 9
After-tax cash flow 20.0 24.0 30.0 30.9 31.8 32.8
Investment -250.0
Net cash flow 0 0 0 -250.0 20.0 24.0 30.0 30.9 31.8 32.8
Round 3
Year 0 1 2 3 4 5 6 7 8 9
After-tax cash flow 40.0 48.0 60.0
Investment -450.0
Net cash flow 0 0 0 0 0 0 -450.0 40.0 48.0 60.0
Table B
Rounds 1-3
Year 0 1 2 3 4 5 6 7 8 9
After-tax cash flow 0.0 10.0 12.0 15.0 35.5 39.9 46.4 87.8 97.2 110.7
Investment -145.0 -250.0 -450.0
Net cash flow -145.0 10.0 12.0 -235.0 35.5 39.9 -403.6 87.8 97.2 110.7

Appendix

Black-Scholes-Merton Value of a European Call Option, Expressed as a Percentage of Underlying Asset Value
NPVq = (Underlying asset value) / PV(Exercise price)
0.30 0.35 0.40 0.45 0.50 0.55 0.60 0.65 0.70 0.75 0.80 0.82 0.84 0.86 0.88 0.90 0.92 0.94 0.96 0.98 1.00 1.02 1.04 1.06 1.08 1.10 1.12 1.14 1.16 1.18 1.20 1.25 1.30 1.35 1.40 1.45 1.50 1.75 2.00 2.50
0.05 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.1 0.3 0.6 1.2 2.0 3.1 4.5 6.0 7.5 9.1 10.7 12.3 13.8 15.3 16.7 20.0 23.1 25.9 28.6 31.0 33.3 42.9 50.0 60.0 0.05
0.10 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.1 0.2 0.3 0.5 0.8 1.2 1.7 2.3 3.1 4.0 5.0 6.1 7.3 8.6 10.0 11.3 12.7 14.1 15.4 16.8 20.0 23.1 25.9 28.6 31.0 33.3 42.9 50.0 60.0 0.10
0.15 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.1 0.2 0.5 0.7 1.0 1.3 1.7 2.2 2.8 3.5 4.2 5.1 6.0 7.0 8.0 9.1 10.2 11.4 12.6 13.8 15.0 16.2 17.4 20.4 23.3 26.0 28.6 31.1 33.3 42.9 50.0 60.0 0.15
0.20 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.1 0.4 0.8 1.5 1.9 2.3 2.8 3.4 4.0 4.7 5.4 6.2 7.1 8.0 8.9 9.9 10.9 11.9 13.0 14.1 15.2 16.3 17.4 18.5 21.2 23.9 26.4 28.9 31.2 33.5 42.9 50.0 60.0 0.20
0.25 0.0 0.0 0.0 0.0 0.0 0.1 0.2 0.5 1.0 1.8 2.8 3.3 3.9 4.5 5.2 5.9 6.6 7.4 8.2 9.1 9.9 10.9 11.8 12.8 13.7 14.7 15.7 16.7 17.7 18.7 19.8 22.3 24.7 27.1 29.4 31.7 33.8 42.9 50.0 60.0 0.25
0.30 0.0 0.0 0.0 0.1 0.1 0.3 0.7 1.2 2.0 3.1 4.4 5.0 5.7 6.3 7.0 7.8 8.6 9.4 10.2 11.1 11.9 12.8 13.7 14.6 15.6 16.5 17.4 18.4 19.3 20.3 21.2 23.5 25.8 28.1 30.2 32.3 34.3 43.1 50.1 60.0 0.30
0.35 0.0 0.0 0.1 0.2 0.4 0.8 1.4 2.3 3.3 4.6 6.2 6.8 7.5 8.2 9.0 9.8 10.6 11.4 12.2 13.0 13.9 14.8 15.6 16.5 17.4 18.3 19.2 20.1 21.0 21.9 22.7 24.9 27.1 29.2 31.2 33.2 35.1 43.5 50.2 60.0 0.35
0.40 0.0 0.1 0.2 0.5 0.9 1.6 2.4 3.5 4.8 6.3 8.0 8.7 9.4 10.2 11.0 11.7 12.5 13.4 14.2 15.0 15.9 16.7 17.5 18.4 19.2 20.1 20.9 21.8 22.6 23.5 24.3 26.4 28.4 30.4 32.3 34.2 36.0 44.0 50.5 60.1 0.40
0.45 0.1 0.2 0.5 1.0 1.7 2.6 3.7 5.0 6.5 8.1 9.9 10.6 11.4 12.2 12.9 13.7 14.5 15.3 16.2 17.0 17.8 18.6 19.4 20.3 21.1 21.9 22.7 23.5 24.3 25.1 25.9 27.9 29.8 31.7 33.5 35.3 37.0 44.6 50.8 60.2 0.45
0.50 0.2 0.5 1.0 1.7 2.6 3.7 5.1 6.6 8.2 10.0 11.8 12.6 13.4 14.2 14.9 15.7 16.5 17.3 18.1 18.9 19.7 20.5 21.3 22.1 22.9 23.7 24.5 25.3 26.1 26.8 27.6 29.5 31.3 33.1 34.8 36.4 38.1 45.3 51.3 60.4 0.50
0.55 0.5 1.0 1.7 2.6 3.8 5.1 6.6 8.3 10.0 11.9 13.8 14.6 15.4 16.1 16.9 17.7 18.5 19.3 20.1 20.9 21.7 22.4 23.2 24.0 24.8 25.5 26.3 27.0 27.8 28.5 29.2 31.0 32.8 34.5 36.1 37.7 39.2 46.1 51.9 60.7 0.55
0.60 0.9 1.6 2.5 3.7 5.1 6.6 8.3 10.1 11.9 13.8 15.8 16.6 17.4 18.1 18.9 19.7 20.5 21.3 22.0 22.8 23.6 24.3 25.1 25.8 26.6 27.3 28.1 28.8 29.5 30.2 30.9 32.6 34.3 35.9 37.5 39.0 40.4 47.0 52.5 61.0 0.60
0.65 1.4 2.4 3.6 4.9 6.5 8.2 10.0 11.9 13.8 15.8 17.8 18.6 19.3 20.1 20.9 21.7 22.5 23.2 24.0 24.7 25.5 26.2 27.0 27.7 28.4 29.1 29.8 30.5 31.2 31.9 32.6 34.2 35.8 37.4 38.9 40.3 41.7 48.0 53.3 61.4 0.65
0.70 2.1 3.3 4.7 6.3 8.1 9.9 11.9 13.8 15.8 17.8 19.8 20.6 21.3 22.1 22.9 23.6 24.4 25.2 25.9 26.6 27.4 28.1 28.8 29.5 30.2 30.9 31.6 32.3 32.9 33.6 34.2 35.8 37.3 38.8 40.3 41.6 43.0 49.0 54.0 61.9 0.70
0.75 3.0 4.4 6.1 7.9 9.8 11.7 13.7 15.8 17.8 19.8 21.8 22.5 23.3 24.1 24.8 25.6 26.3 27.1 27.8 28.5 29.2 29.9 30.6 31.3 32.0 32.7 33.3 34.0 34.6 35.3 35.9 37.4 38.9 40.3 41.7 43.0 44.3 50.0 54.9 62.4 0.75
0.80 4.0 5.7 7.5 9.5 11.5 13.6 15.7 17.7 19.8 21.8 23.7 24.5 25.3 26.0 26.8 27.5 28.3 29.0 29.7 30.4 31.1 31.8 32.4 33.1 33.8 34.4 35.1 35.7 36.3 36.9 37.5 39.0 40.4 41.8 43.1 44.4 45.6 51.1 55.8 63.0 0.80
0.85 5.1 7.1 9.1 11.2 13.3 15.5 17.6 19.7 21.8 23.8 25.7 26.5 27.2 28.0 28.7 29.4 30.2 30.9 31.6 32.2 32.9 33.6 34.2 34.9 35.5 36.2 36.8 37.4 38.0 38.6 39.2 40.6 41.9 43.3 44.5 45.8 46.9 52.2 56.7 63.6 0.85
0.90 6.4 8.5 10.7 13.0 15.2 17.4 19.6 21.7 23.8 25.8 27.7 28.4 29.2 29.9 30.6 31.3 32.0 32.7 33.4 34.1 34.7 35.4 36.0 36.6 37.3 37.9 38.5 39.1 39.6 40.2 40.8 42.1 43.5 44.7 46.0 47.1 48.3 53.3 57.6 64.3 0.90
0.95 7.8 10.1 12.5 14.8 17.1 19.4 21.6 23.7 25.7 27.7 29.6 30.4 31.1 31.8 32.5 33.2 33.9 34.6 35.2 35.9 36.5 37.2 37.8 38.4 39.0 39.6 40.1 40.7 41.3 41.8 42.4 43.7 45.0 46.2 47.4 48.5 49.6 54.5 58.6 65.0 0.95
1.00 9.3 11.8 14.3 16.7 19.1 21.4 23.6 25.7 27.7 29.7 31.6 32.3 33.0 33.7 34.4 35.1 35.7 36.4 37.0 37.7 38.3 38.9 39.5 40.1 40.7 41.2 41.8 42.4 42.9 43.4 44.0 45.2 46.5 47.6 48.8 49.9 50.9 55.6 59.5 65.7 1.00
1.05 10.9 13.6 16.1 18.6 21.0 23.3 25.6 27.7 29.7 31.6 33.5 34.2 34.9 35.6 36.2 36.9 37.6 38.2 38.8 39.4 40.0 40.6 41.2 41.8 42.4 42.9 43.5 44.0 44.5 45.0 45.5 46.8 48.0 49.1 50.2 51.2 52.2 56.7 60.5 66.5 1.05
1.10 12.6 15.4 18.0 20.6 23.0 25.3 27.5 29.6 31.6 33.5 35.4 36.1 36.7 37.4 38.1 38.7 39.3 40.0 40.6 41.2 41.8 42.3 42.9 43.5 44.0 44.5 45.1 45.6 46.1 46.6 47.1 48.3 49.4 50.5 51.6 52.6 53.5 57.9 61.5 67.2 1.10
1.15 14.4 17.2 20.0 22.5 25.0 27.3 29.5 31.6 33.6 35.4 37.2 37.9 38.6 39.2 39.9 40.5 41.1 41.7 42.3 42.9 43.5 44.0 44.6 45.1 45.6 46.2 46.7 47.2 47.7 48.2 48.6 49.8 50.9 51.9 52.9 53.9 54.9 59.0 62.5 68.0 1.15
1.20 16.2 19.1 21.9 24.5 27.0 29.3 31.5 33.6 35.5 37.3 39.1 39.7 40.4 41.0 41.7 42.3 42.9 43.5 44.0 44.6 45.1 45.7 46.2 46.7 47.3 47.8 48.3 48.7 49.2 49.7 50.1 51.3 52.3 53.3 54.3 55.2 56.1 60.2 63.5 68.8 1.20
1.25 18.1 21.1 23.9 26.5 29.0 31.3 33.5 35.5 37.4 39.2 40.9 41.5 42.2 42.8 43.4 44.0 44.6 45.2 45.7 46.3 46.8 47.3 47.8 48.4 48.8 49.3 49.8 50.3 50.7 51.2 51.6 52.7 53.7 54.7 55.7 56.6 57.4 61.3 64.5 69.6 1.25
1.30 20.0 23.0 25.9 28.5 31.0 33.3 35.4 37.4 39.3 41.0 42.7 43.3 43.9 44.5 45.1 45.7 46.3 46.8 47.4 47.9 48.4 48.9 49.4 49.9 50.4 50.9 51.3 51.8 52.2 52.7 53.1 54.1 55.1 56.1 57.0 57.9 58.7 62.4 65.5 70.4 1.30
1.35 21.9 25.0 27.9 30.5 33.0 35.2 37.3 39.3 41.1 42.8 44.4 45.1 45.7 46.3 46.8 47.4 47.9 48.5 49.0 49.5 50.0 50.5 51.0 51.5 52.0 52.4 52.9 53.3 53.7 54.1 54.6 55.6 56.5 57.4 58.3 59.1 59.9 63.5 66.5 71.1 1.35
1.40 23.9 27.0 29.9 32.5 34.9 37.1 39.2 41.1 42.9 44.6 46.2 46.8 47.4 47.9 48.5 49.0 49.6 50.1 50.6 51.1 51.6 52.1 52.6 53.0 53.5 53.9 54.3 54.8 55.2 55.6 56.0 56.9 57.9 58.7 59.6 60.4 61.2 64.6 67.5 71.9 1.40
1.45 25.8 29.0 31.9 34.5 36.9 39.1 41.1 43.0 44.7 46.4 47.9 48.5 49.0 49.6 50.1 50.7 51.2 51.7 52.2 52.7 53.2 53.6 54.1 54.5 55.0 55.4 55.8 56.2 56.6 57.0 57.4 58.3 59.2 60.0 60.9 61.6 62.4 65.7 68.4 72.7 1.45
1.50 27.8 31.0 33.8 36.4 38.8 40.9 42.9 44.8 46.5 48.1 49.6 50.1 50.7 51.2 51.8 52.3 52.8 53.3 53.7 54.2 54.7 55.1 55.6 56.0 56.4 56.8 57.2 57.6 58.0 58.4 58.8 59.7 60.5 61.3 62.1 62.9 63.6 66.8 69.4 73.5 1.50
1.55 29.8 33.0 35.8 38.4 40.7 42.8 44.8 46.6 48.2 49.8 51.2 51.8 52.3 52.8 53.3 53.8 54.3 54.8 55.3 55.7 56.2 56.6 57.0 57.4 57.8 58.2 58.6 59.0 59.4 59.7 60.1 61.0 61.8 62.6 63.3 64.1 64.7 67.8 70.3 74.3 1.55
1.60 31.8 35.0 37.8 40.3 42.6 44.6 46.5 48.3 49.9 51.4 52.8 53.4 53.9 54.4 54.9 55.4 55.9 56.3 56.8 57.2 57.6 58.0 58.5 58.9 59.2 59.6 60.0 60.4 60.7 61.1 61.4 62.3 63.1 63.8 64.5 65.2 65.9 68.8 71.3 75.1 1.60
1.65 33.8 36.9 39.7 42.2 44.4 46.4 48.3 50.0 51.6 53.1 54.4 54.9 55.4 55.9 56.4 56.9 57.3 57.8 58.2 58.6 59.1 59.5 59.9 60.2 60.6 61.0 61.4 61.7 62.1 62.4 62.7 63.5 64.3 65.0 65.7 66.4 67.0 69.9 72.2 75.9 1.65
1.70 35.8 38.9 41.6 44.0 46.2 48.2 50.0 51.7 53.2 54.7 56.0 56.5 57.0 57.5 57.9 58.4 58.8 59.2 59.7 60.1 60.5 60.9 61.2 61.6 62.0 62.3 62.7 63.0 63.4 63.7 64.0 64.8 65.5 66.2 66.9 67.5 68.2 70.9 73.1 76.6 1.70
1.75 37.7 40.8 43.5 45.9 48.0 50.0 51.7 53.4 54.8 56.2 57.5 58.0 58.5 58.9 59.4 59.8 60.2 60.7 61.1 61.5 61.8 62.2 62.6 62.9 63.3 63.6 64.0 64.3 64.6 64.9 65.3 66.0 66.7 67.4 68.0 68.7 69.2 71.9 74.0 77.4 1.75
2.00 47.3 50.1 52.5 54.6 56.5 58.2 59.7 61.1 62.4 63.6 64.6 65.0 65.4 65.8 66.2 66.6 66.9 67.3 67.6 67.9 68.3 68.6 68.9 69.2 69.5 69.8 70.0 70.3 70.6 70.8 71.1 71.7 72.3 72.9 73.4 73.9 74.4 76.5 78.3 81.0 2.00
2.25 56.1 58.6 60.7 62.5 64.1 65.6 66.8 68.0 69.1 70.0 70.9 71.3 71.6 71.9 72.2 72.5 72.8 73.1 73.4 73.7 73.9 74.2 74.4 74.7 74.9 75.2 75.4 75.6 75.8 76.0 76.3 76.8 77.2 77.7 78.1 78.5 78.9 80.6 82.1 84.3 2.25
2.50 64.0 66.1 67.9 69.4 70.8 72.0 73.1 74.0 74.9 75.7 76.4 76.7 77.0 77.2 77.5 77.7 78.0 78.2 78.4 78.7 78.9 79.1 79.3 79.5 79.7 79.9 80.0 80.2 80.4 80.6 80.7 81.1 81.5 81.9 82.2 82.6 82.9 84.3 85.4 87.2 2.50
2.75 70.9 72.7 74.2 75.4 76.6 77.5 78.4 79.2 79.9 80.5 81.1 81.4 81.6 81.8 82.0 82.2 82.4 82.6 82.7 82.9 83.1 83.3 83.4 83.6 83.7 83.9 84.0 84.2 84.3 84.4 84.6 84.9 85.2 85.5 85.8 86.0 86.3 87.4 88.3 89.7 2.75
3.00 76.9 78.3 79.5 80.5 81.4 82.2 82.9 83.5 84.1 84.6 85.1 85.3 85.4 85.6 85.8 85.9 86.1 86.2 86.4 86.5 86.6 86.8 86.9 87.0 87.1 87.3 87.4 87.5 87.6 87.7 87.8 88.1 88.3 88.5 88.8 89.0 89.2 90.0 90.7 91.8 3.00
3.50 86.0 86.9 87.6 88.3 88.8 89.3 89.7 90.1 90.5 90.8 91.1 91.2 91.3 91.4 91.5 91.6 91.6 91.7 91.8 91.9 92.0 92.1 92.1 92.2 92.3 92.4 92.4 92.5 92.6 92.6 92.7 92.8 93.0 93.1 93.3 93.4 93.5 94.0 94.4 95.1 3.50
4.00 92.0 92.5 92.9 93.3 93.6 93.9 94.2 94.4 94.6 94.8 94.9 95.0 95.0 95.1 95.2 95.2 95.3 95.3 95.4 95.4 95.4 95.5 95.5 95.6 95.6 95.7 95.7 95.7 95.8 95.8 95.8 95.9 96.0 96.1 96.2 96.2 96.3 96.6 96.8 97.2 4.00
4.50 95.7 96.0 96.2 96.4 96.6 96.7 96.9 97.0 97.1 97.2 97.3 97.3 97.3 97.4 97.4 97.4 97.5 97.5 97.5 97.5 97.6 97.6 97.6 97.6 97.6 97.7 97.7 97.7 97.7 97.8 97.8 97.8 97.9 97.9 97.9 98.0 98.0 98.2 98.3 98.5 4.50
5.00 97.8 97.9 98.1 98.2 98.3 98.3 98.4 98.5 98.5 98.6 98.6 98.6 98.6 98.7 98.7 98.7 98.7 98.7 98.7 98.7 98.8 98.8 98.8 98.8 98.8 98.8 98.8 98.8 98.8 98.9 98.9 98.9 98.9 98.9 99.0 99.0 99.0 99.1 99.1 99.2 5.00
6.00 99.5 99.5 99.6 99.6 99.6 99.6 99.7 99.7 99.7 99.7 99.7 99.7 99.7 99.7 99.7 99.7 99.7 99.7 99.7 99.7 99.7 99.7 99.7 99.7 99.7 99.7 99.7 99.7 99.7 99.8 99.8 99.8 99.8 99.8 99.8 99.8 99.8 99.8 99.8 99.8 6.00
Note: Values in the table represent percentages of underlying asset values: e.g., 39.3 denotes a call option worth 39.3% of the underlying asset value.
Values in the table were computed from the Black-Scholes option pricing model.
The format of the table was adapted from Brealey and Myers, Principles of Corporate Finance, 4th edition, McGraw-Hill, Inc., New York, 1991, Appendix Table 6, pp. AP12-13.
&C
&C
Cumulative Volatility s√t

Economics homework help

ECON 401

Advanced Macroeconomics

Topic 3

Macroeconomic Policy

Fabio Ghironi

University of Washington

OPTIMAL MONETARY POLICY:
THE FLEXIBLE PRICE CASE

BASICS OF OPTIMAL POLICY ANALYSIS

Introduction

 Describe the demand-side environment (i.e., consumers)
 Arguments of utility function?
 Which assets trade in private-sector financial markets?
 Derive consumer optimality conditions

 Describe the supply-side environment (i.e., firms)
 Which inputs are used in production process?
 Derive firm profit-maximizing conditions

 So far: simple factor price = marginal product conditions (i.e., wage = mpn, etc.)
 Soon: New Keynesian firm analysis more involved (price-setting decisions)

 Describe actions/role of government
 How is monetary policy conducted? How is fiscal policy conducted?
 How do government policy choices affect private sector behavior?

 Describe resource constraint

 Describe private-sector equilibrium
 For given policy choices by government, how does market equilibrium arise?
 How does price adjustment/setting affect market clearing?

 Optimal policy analysis best thought of as picking a government policy that induces the
“best” private-sector equilibrium

CASH-IN-ADVANCE FRAMEWORK

Demand-Side Environment

 Cash-in-advance (CIA) an alternative way of modeling role of money
 Alternative to MIU framework
 Highlights medium-of-exchange role of money

 Representative consumer
 Period-t utility function u(c, 1-n)
 Subjective discount factor β
 Period-t budget constraint just as in MIU model

…and so on for period t+1, t+2, etc.

 In each period, a cash-in-advance constraint

Captures idea that (nominal) consumption expenditures limited by how much cash
(money) an individual has

(Technically want to model as inequality constraint, , but equality suffices
to illustrate main ideas)

Total time is “1 unit.”

t t tPc M

1 1 1t t tP c M  

in period t

in period t+1

2 2 2t t tP c M   and so on…

t t tPc M

1 1 1( )
b

t t t t t t t t t t t t t tt tPc P B M S a P w n B M S D a           
Lump-sum tax (used to effect changes in money
supply – more soon…)

CASH-IN-ADVANCE FRAMEWORK: ANALYSIS

Demand-Side Environment

 Lagrangian

 FOCs

ct:

nt:

Mt:

Bt:

at:

 Combine into “MRS = price ratio” type of optimality conditions

 

2
1 1 2 2

1 1 1

1 1 1 1 1 1 1 1 1 1 1 1 1

1 1

( ,1 ) ( ,1 ) ( ,1 ) …

( )

( )

t t t t t t

b
t t t t t t t t t t t t t t t t

t t t t

b
t t t t t t t t t t t t t t t t

t t

u c n u c n u c n

W n M B S D a Pc P B M S a

M Pc

W n M B S D a P c P B M S a

M P

 

 

 



   

  

            

 

     

           
 

           
  1 1
….

t tc 

λ is multiplier on budget
constraint

μ is multiplier on CIA
constraint

1

2

1

( ,1 )
1

( ,1 ) 1
t t t

t
t t t

u c n i
w

u c n i


 

    

2 1

2 1 1 1

( ,1 )
(1 )

( ,1 )
t t t t

t
t t t t

u c n W P
r

u c n W P
 

  


 


Consumption-leisure
optimality condition

Consumption-savings
optimality condition

CASH-IN-ADVANCE FRAMEWORK: ANALYSIS

Demand-Side Environment

 Consumption-leisure optimality condition

Relevant relative price ratio depends on real wage….
…but also here on nominal interest rate

 Nominal interest rate (i.e., fact that transactions are monetary) acts as a tax
on consumption-leisure margin

 Optimal policy analysis in CIA framework
 Reduces to determining the welfare-maximizing (aka utility-

maximizing) tax to impose on consumption-leisure margin
  What is the optimal nominal interest rate?

 Efficiency concerns will shape the answer to the optimal policy question

1

2

1

( ,1 )
1

( ,1 ) 1
t t t

t
t t t

u c n i
w

u c n i


 

    

CASH-IN-ADVANCE FRAMEWORK

Supply-Side Environment

 Firms
 Very simple model of production
 Production technology in every period

 Can think of Cobb-Douglas with capital share = 0

 Profit maximization
 In every period, representative firm maximizes profit (in real terms)

  Labor demand function

 Perfectly elastic labor demand function reflects lack of diminishing
marginal product

( )t t ty f n n 

( )t t tf n w n

1tw t 

CASH-IN-ADVANCE FRAMEWORK

Government Policy

 Government
 Assume only monetary policy is operative
 Ignore fiscal policy considerations

 Central bank’s budget constraint – in every period t,

 Lump-sum tax τ used to implement changes in nominal money supply

 Lump-sum assumption allows for
 Ignoring fiscal considerations – i.e., monetary policy is independent of

fiscal policy
 Private sector views central bank’s policy decisions as independent of

any individual market participant’s decisions
 “Independent of” is the crux of the idea of “lump sum”…

 Suppose policy set according to a money-growth-rate rule

 gt the growth rate of money supply in period t; isomorphic to interest rate rule

1t t tM M  

1 1(1 )t t t t t tM g M g M    

CASH-IN-ADVANCE FRAMEWORK

Private-Sector Equilibrium

 Resource constraint – in every period t,

 All output used for (only) consumption

 Summarize private-sector equilibrium conditions

 Consumption-leisure optimality condition

 Consumption-savings optimality condition

 Cash-in-advance constraint

 Labor-demand condition

 Resource constraint

t tc n

1tw 

1

2

1

( ,1 )
1

( ,1 ) 1
t t t

t
t t t

u c n i
w

u c n i


 

    

2 1

2 1 1 1

( ,1 )
(1 )

( ,1 )
t t t t

t
t t t t

u c n W P
r

u c n W P
 

  


 

t
t

t

M
c

P

Describes
demand
side

Describes
supply side

t tc n
Describes
market
clearing

CASH-IN-ADVANCE FRAMEWORK

Private-Sector Equilibrium

 Condense private-sector equilibrium conditions….

 …by imposing wt = 1 and nt = ct everywhere

 Consumption-leisure optimality condition

 Consumption-savings optimality condition

 Cash-in-advance constraint

 Limit attention to steady-state (i.e., long run) policy questions

 Can express entire steady-state private-sector equilibrium as

1

2

1

( ,1 )
1

( ,1 ) 1
t t t

t t t

u c c i
u c c i


 

    

2

2 1 1

( ,1 )
(1 )

( ,1 )
t t

t
t t

u c c
r

u c c

 


 

1

1
1

t t t
t

t t t

M c g
c

P c 


  


Rewriting in terms of growth
rates

 
 

2

1

,1 1
1 1,1

u c c g
g gu c c 

 

   

OPTIMAL POLICY ANALYSIS

Optimal Policy Analysis

 Can express entire steady-state private-sector equilibrium as

 Defines implicitly a reaction function

 A (potentially complicated..) summary description of how private-sector
equilibrium quantities depend on any given choice of government policy g

 Maintained assumption
 Central bank knows/understand perfectly the private-sector reaction function
 Realism? Impossible for a central bank to literally know this…
 …but provides a starting point for analysis

  Central bank takes into account the reaction function when setting
(optimal) policy

 
 

2

1

,1 1
1 1,1

u c c g
g gu c c 

 

   

( )c g

( )c g

OPTIMAL POLICY ANALYSIS

Optimal Policy Analysis

 Goal of policy makers
 Maximize welfare (utility) of representative consumer
 In steady-state

 The formal policy problem
 Choose g that maximizes private-sector welfare
 The c(g) function summarizes the behavior of private markets

   
0

,1
,1

1
s

s

u c c
u c c


 


Recall infinite
summation formula

   
0

,( )1 ( )
( ),1 ( )

1
s

s

u c g c g
u c g c g


 


Taking into account
private-sector reaction
function

OPTIMAL POLICY ANALYSIS

Optimal Policy Analysis

 Optimal monetary policy problem

 FOC with respect to g
 KEY: NOW need to take into account the dependence of private-market outcomes

on the policy in place

 Compare with private-sector equilibrium

 If policy is set optimally

 QUESTION: What money growth rate g achieves this outcome?
 g = β – 1 aligns the private-sector outcome with the policymaker’s

desired outcome

   
0

,( )1 ( )
max ( ),1 ( )

1
s

g
s

u c g c g
u c g c g


 


 
 

2

1

,1 1
1 1,1

u c c g
g gu c c 

 

   

 
 

2

1

,1
1

,1

u c c

u c c


ALIGNING THESE
IS THE GOAL!

FRIEDMAN RULE

Optimal Policy Analysis

 Optimal long-run money growth rate is g = β – 1
 With β < 1…
 …money supply should decrease in the long run!

 Optimal long-run inflation
 Monetarist link

 Long-run deflation!
 Central bank should seek to target negative inflation on average

 Optimal long-run nominal interest rate
 i = 0 from Fisher relation (aka consumption-savings optimality

condition)

 The Friedman Rule
 Seminal 1969 analysis
 Whether stated in terms of long-run target for nominal interest rate or

long-run target for inflation/money growth

1 0g    
A normative statement

UNDERSTANDING THE FRIEDMAN RULE

Optimal Policy Analysis

 What does g = β – 1 achieve?

 Eliminates the wedge in the consumption-leisure dimension
 Economic efficiency achieved if

 Private-sector outcome

 Friedman Rule allows policy makers to achieve economic efficiency in
private markets – even though central bank is NOT a Social Planner
 Notice very nuanced/precise statements/logic…

 Sets the (opportunity) costs of holding alternative nominal assets (money
and nominal bonds) equal to each other

 Makes CIA constraint “disappear” (examine consumer
FOCs)

 
 

2

1

,1
1

,1

u c c

u c c


Derive based on SOCIAL PLANNER
problem.

Distinct from OPTIMAL POLICY
problem!

 
 

2

1

,1 1
1 1,1

u c c g
g gu c c 

 

   

1 00g i     

PRACTICAL RELEVANCE OF FRIEDMAN RULE

Conclusion

 A benchmark in the theory of monetary policy
 Akin to the theoretical benchmark Ricardian Equivalence provides for

fiscal policy…

 Do monetary authorities actually follow the Friedman Rule?
 Japan for the past 10+ years: nominal interest rates virtually zero
 U.S. right now: nominal interest rates virtually zero

 But does this seem attributable to “good policy” in “normal times”
 …or the need to run the best policy in bad times?

 Friedman Rule a very controversial result in monetary theory
 Strikes many as simply not sensible or practical
 Question: What (important) features of the economy are missing from

the analysis on which the Friedman Rule is premised?

 Keynesian/New Keynesian answer: sticky prices need to be considered in
any normative analysis of monetary policy
 Next: New Keynesian policy analysis

OPTIMAL MONETARY POLICY:
THE STICKY-PRICE CASE

RELEVANT MARKET STRUCTURE(S)?

Introduction

 Real business cycle (RBC)/neoclassical theory
 All (goods) prices are determined in perfect competition
 In both consumption-leisure and consumption-savings dimensions
 Critical assumption: no firm is a price setter  no firm has any market

power

 New Keynesian theory
 Starting point: firms do wield (at least some) market power
 Critical assumption: firms do set their (nominal) prices
 Purposeful setting/re-setting of (nominal) prices may entail costs of

some sort
 “Menu costs,” but soon interpret more broadly
 Central issue in macro: how do “costs of adjusting prices” (“sticky prices”)

affect monetary policy insights and recommendations?

 Upcoming analysis
 Step 1: Develop theory in which firms are purposeful price setters, not

price takers
 Step 2: Superimpose on the theory some “costs” of setting/re-setting

nominal prices
 Step 3: Study optimal monetary policyNOW

BASICS OF OPTIMAL POLICY ANALYSIS

Introduction

 Describe the demand-side environment (i.e., consumers)
 Arguments of utility function?
 Which assets trade in private-sector financial markets?
 Derive consumer optimality conditions

 Describe the supply-side environment (i.e., firms)
 Which inputs are used in production process?
 Derive firm profit-maximizing conditions

 So far: simple factor price = marginal product conditions (i.e., wage = mpn, etc.)
 Soon: New Keynesian firm analysis more involved (price-setting decisions)

 Describe actions/role of government
 How is monetary policy conducted? How is fiscal policy conducted?
 How do government policy choices affect private sector behavior?

 Describe resource constraint

 Describe private-sector equilibrium
 For given policy choices by government, how does market equilibrium arise?
 How does price adjustment/setting affect market clearing?

 Optimal policy analysis best thought of as picking a government policy that induces the
“best” private-sector equilibrium

“CASHLESS” NK FRAMEWORK: CONSUMERS

Demand-Side Environment

 Basic NK tenet
 Money demand issues (i.e., medium-of-exchange role of money) not very

important in modern developed economies
 “Cashless” analysis

 Implications for formal NK analysis – monetary policy…
 …does not operate on/through demand-side of economy (consumers)
 …operates on/through supply-side of economy (firms)

 Recent events: monetary policy operates on/through financial sector of
economy?
 Intermediation between demand-side and supply-side…more research coming…

 Representative consumer
 Period-t utility function u(c, 1-n)
 Subjective discount factor β
 Period-t budget constraint identical to CIA or MIU model, except no money

balances

…and so on for period t+1, t+2, etc.
 No MIU component or CIA constraint

1 1( )
b

t t t t t t t t t t t t tPc P B S a P w n B S D a      

“CASHLESS” NK FRAMEWORK: CONSUMERS

Demand-Side Environment

 Lagrangian

 FOCs

ct:

nt:

Bt:

at:

 Combine into “MRS = price ratio” type of optimality condition

2
1 1 2 2

1 1

1 1 1 1 1 1 1 1 1 1 1 1

( ,1 ) ( ,1 ) ( ,1 ) …

( )

( )

….

t t t t t t

b
t t t t t t t t t t t t t t

b
t t t t t t t t t t t t t t

u c n u c n u c n

P w n B S D a Pc P B S a

P w n B S D a P c P B S a

 



   

 

           

     

        
        

λ is multiplier on budget
constraint

2

1

( ,1 )
( ,1 )

t t
t

t t

u c n
w

u c n


Consumption-leisure
optimality condition AND

1

1 1 1 1

( ,1 )
(1 )

( ,1 )
t t t

t
t t t

u c n P
i

u c n P   


 

Consumption-savings
optimality condition
(from bond first-order
condition)

KEY CONCEPTUAL
DIFFERENCE BETWEEN
NK ANALYSIS AND CIA
ANALYSIS:

Instead, nom i.r. shows
up only in
consumption-savings
optimality condition

RETAIL FIRMS

Supply-Side Environment

 Representative retail firm’s profit-maximization problem

 FOC with respect to yjt (for any j)

.

.

.

 …after several rearrangements

 IDENTICAL TO BASIC (FLEXIBLE-PRICE) DIXIT-STIGLITZ FRAMEWORK!

  0..

1 11/

0 0
max

it i
t it it it

y
P y di P y di


 

      Chooses profit-maximizing quantity of
input of each wholesale good. Focus
analysis on any arbitrary wholesale
good – call it yjt.

1
jt

jt t
t

P
y y

P


 

  
 

DEMAND
FUNCTION FOR
GOOD j

WHOLESALE FIRMS

Supply-Side Environment

 Representative wholesale firm’s profit-maximization problem

2 2

1
1 1 1 1 1 1

1 1

max 1
2 1 1 2jt

jt jt
jt jt t jt jt t jt jt t t jt tP

jt t jt

P P
P y Pmc y P P y P mc y P

P P
  


     
 

    
                   

Substitute in demand function for
wholesale good j in both period t
and t+1 (and t+2, t+3, t+4, …)

In period t, firm chooses Pjt
So FOC with respect to Pjt

  1 1
1

1 (1 ) (1 ) 0
1 t t t t t t

mc y    
  

     

Symmetric equilibrium

New Keynesian
Phillips Curve

WHOLESALE FIRMS

Supply-Side Environment

 So far haven’t considered (explicitly) the inputs to a wholesale
firm’s production process

 Very simple model of production

 Production technology in every period (for any wholesale firm j)

 Can think of Cobb-Douglas with capital share = 0

 Labor hired by wholesale firm j taking market wage wt as given

 Recall: CRS production technology  marginal cost of production
is independent of quantity produced

( )jt jt jty f n n 

“CASHLESS” NK FRAMEWORK: GOVERNMENT

Government Policy

 Money is a physical object in the “background”
 DOES exist…
 …so there IS a budget constraint for it
 But not of direct importance for (routine) monetary policy issues

 (Hence doesn’t appear in consumers’ budget constraints….where does it go?…)

 Central bank’s budget constraint – in every period t,

 gt the growth rate of money supply in period t

 Money-supply rule technically isomorphic to interest rate rule

 But interest rates explicitly the “policy tool” in New Keynesian analysis
 i.e., to implement an inflation target, what is the nominal interest rate the

central bank should set?
 Instead of focusing on what is the money growth rate the central bank should set?

1 1(1 )t t t t t tM g M g M    

NONETHELESS: g = π in long run (i.e., steady state)

Even NK theory
views basic
monetarist
quantity-theoretic
link between
money growth and
inflation as being
correct in the long
run

“CASHLESS” NK FRAMEWORK

Private-Sector Equilibrium

 Resource constraint – in every period t,

 Total output used for private-sector consumption…
 …and menu costs

 Recall: menu costs are a REAL cost – hence absorb some of the economy’s
resources

 Summarize private-sector equilibrium conditions

 Consumption-leisure optimality condition

 Consumption-savings optimality condition

 Labor-demand condition

 New Keynesian Phillips Curve

 Resource constraint

   2
2

( )t tt tc n f n

  

2

1

( ,1 )
( ,1 )

t t
t

t t

u c n
w

u c n


 2
2t t t

c n

 

1

1 1 1 1

( ,1 ) 1
( ,1 ) 1

t t t

t t t

u c n i
u c n   

 

 

Describes
demand
side

Describes
supply side   1 1

1
1 (1 ) (1 ) 0

1 t t t t t t
mc n    

  
     


Describes
market
clearing

‘( ) 1t tw f n  Note wage is LESS THAN MP of labor

“CASHLESS” NK FRAMEWORK

Private-Sector Equilibrium

 Resource constraint – in every period t,

 Total output used for private-sector consumption…
 …and menu costs

 Recall: menu costs are a REAL cost – hence absorb some of the economy’s
resources

 Summarize private-sector equilibrium conditions

 Consumption-leisure optimality condition

 Consumption-savings optimality condition

 Labor-demand condition

 New Keynesian Phillips Curve

 Resource constraint

   2
2

( )t tt tc n f n

  

2

1

( ,1 )
( ,1 )

t t
t

t t

u c n
w

u c n


 2
2t t t

c n

 

1

1 1 1 1

( ,1 ) 1
( ,1 ) 1

t t t

t t t

u c n i
u c n   

 

 

Describes
demand
side

Describes
supply side   1 1

1
1 (1 ) (1 ) 0

1 t t t t t t
mc n    

  
     


Describes
market
clearing

‘( ) 1t tmc f n  mct = wt in every period

“CASHLESS” NK FRAMEWORK

Private-Sector Equilibrium

 Condense private-sector equilibrium conditions….

 …by imposing wt = mct and everywhere

 New Keynesian Phillips Curve

 2
2t t t

n c

 

2
2

2
1

,1 ( )
2

,1 ( )
2

t

t

t t

t t t

u c c

u c c
mc



   
  
   
 

2
1

2 1
1 1 1 1

,1 ( )
12
1,1 ( )

2

t t t
t

t
t t t

u c c
i

u c c


     

      
   

 

  2 1 1
1

1 1 (1 ) (1 ) 0
1 2t t t t t tt

cmc

     
  

 
          

Consumption-leisure optimality condition Consumption-savings optimality condition

One final
substitution to
condense things….

“CASHLESS” NK FRAMEWORK

Private-Sector Equilibrium

 Condense private-sector equilibrium conditions….

 …by imposing wt = mct and everywhere

 Consumption-savings optimality condition

 New Keynesian Phillips Curve

 2
2t t t

n c

 

2
1

2 1
1 1 1 1

,1 ( )
12
1,1 ( )

2

t t t
t

t
t t t

u c c
i

u c c


     

      
   

 

2
2

2
1 1

2
1

,1 ( )
1 21 1 (1 ) (1 ) 0

1 2,1 ( )
2

t t t

t t t t t t

t t t

u c c
c

u c c


 


    

 
 

                          

“CASHLESS” NK FRAMEWORK

Private-Sector Equilibrium

 Condense private-sector equilibrium conditions….

 …by imposing wt = mct and everywhere

 Consumption-savings optimality condition in the steady state

 New Keynesian Phillips Curve in the steady state

 Limit attention to steady-state (i.e., long run) policy questions

 2
2t t t

n c

 

2
1

2
1

,1
12
1,1

2

u c c
i

u c c


  

      
   

 

2
2

2

2
1

,1
1 21 1 (1 ) (1 ) 0

1 2,1
2

u c c
c

u c c


 


    

 

                          

“CASHLESS” NK FRAMEWORK

Private-Sector Equilibrium

 Condense private-sector equilibrium conditions….

 …by imposing wt = mct and everywhere

 Consumption-savings optimality condition in the steady state

 New Keynesian Phillips Curve in the steady state

 Limit attention to steady-state (i.e., long run) policy questions
 And (finally!…) use long-run monetarist relationship g = π

 2
2t t t

n c

 

2
1

2
1

,1
12
1,1

2

u c c g
i
gu c c g


      
   

 

2
2

2

2
1

,1
1 21 1 (1 ) (1 ) 0

1 2,1
2

u c c g
c g g g g g

u c c g



 



                          

“CASHLESS” NK FRAMEWORK

Private-Sector Equilibrium

 Condense private-sector equilibrium conditions….

 …by imposing wt = mct and everywhere

 Consumption-savings optimality condition in the steady state

 New Keynesian Phillips Curve in the steady state

 Limit attention to steady-state (i.e., long run) policy questions
 And (finally!…) use long-run monetarist relationship g = π

 2
2t t t

n c

 

2
1

2
1

,1
12
1,1

2

u c c g
i
gu c c g


      
   

 

2
2

2

2
1

,1
1 21 1 (1 ) (1 ) 0

1 2,1
2

u c c g
c g g g g g

u c c g



 



                          

NK view:

Monetary policy
does not
operate through
demand side…

Monetary policy
operates
through supply
side

“CASHLESS” NK FRAMEWORK

Private-Sector Equilibrium

 Condense private-sector equilibrium conditions….

 …by imposing wt = mct and everywhere

 Consumption-savings optimality condition in the steady state

 New Keynesian Phillips Curve in the steady state

 Limit attention to steady-state (i.e., long run) policy questions
 And (finally!…) use long-run monetarist relationship g = π

 2
2t t t

n c

 

2
1

2
1

,1
12
1,1

2

u c c g
i
gu c c g


      
   

 

2
2

2

2
1

,1
1 21 1 (1 ) (1 ) 0

1 2,1
2

u c c g
c g g g g g

u c c g



 



                          

NK view:

Monetary policy
does not
operate through
demand side…

Monetary policy
operates
through supply
side

SO IGNORE C-S
CONDITION IN
ANALYSIS OF
OPTIMAL
POLICY
PROBLEM….

ONLY TAKE
INTO ACCOUNT
NKPC!

OPTIMAL POLICY ANALYSIS

Optimal Policy Analysis

 Can express entire steady-state private-sector equilibrium as

 Defines implicitly a reaction function
 A (potentially complicated..) summary description of how private-sector

equilibrium quantities depend on any given choice of government policy g

 Maintained assumption
 Central bank knows/understand perfectly the private-sector reaction function
 Realism? Impossible for a central bank to literally know this…
 …but provides a starting point for analysis

  Central bank takes into account the reaction function when setting
(optimal) policy

2
2

2

2
1

,1
1 21 1 (1 ) (1 ) 0

1 2,1
2

u c c g
c g g g g g

u c c g



 



                          

( )c g

( )c g

OPTIMAL POLICY ANALYSIS

Optimal Policy Analysis

 Goal of policy makers
 Maximize welfare (utility) of representative consumer
 In steady-state

 The formal policy problem
 Choose g that maximizes private-sector welfare
 The c(g) function summarizes the behavior of private markets

2

2

0

( ),1 ( )
2( ),1 ( )

2 1
s

s

u c g c g g
u c g c g g



           

Taking into account
private-sector reaction
function

2

2

0

,1
2,1

2 1
s

s

u c c g
u c c g



           

Recall infinite
summation formula

OPTIMAL POLICY ANALYSIS

Optimal Policy Analysis

 Optimal monetary policy problem

 FOC with respect to g
 KEY: NOW need to take into account the dependence of private-market outcomes

on the policy in place

 If policy is set optimally

2

2

0

( ),1 ( )
2( ),1 ( )

2 1
s

s

u c g c g g
u c g c g g



           

Rearrange to MRS = … form

2
2

2
1

( ),1 ( )
‘( )2

‘( )( ),1 ( )
2

u c g c g g
c g

c g gu c g c g g

 

   
  

   
 

NOTE: If ψ = 0, exactly the
same optimal-policy
condition as in flexible-price
analysis (Chapter 17) – i.e.,
RHS = 1

OPTIMAL POLICY ANALYSIS

Optimal Policy Analysis

 If policy is set optimally

 Compare with private-sector equilibrium

 QUESTION: What money growth rate g achieves this outcome?…

 Impossible to solve for g!….(in general, no g can achieve this….)

2
2

2
1

( ),1 ( )
‘( )2

‘( )( ),1 ( )
2

u c g c g g
c g

c g gu c g c g g

Economics homework help

ECON 401
Advanced Macroeconomics

Homework 1 Suggested Answers

Fabio Ghironi

University of Washington

Spring 2022

Problem 1

Consider the problem that a benevolent social planner would solve in the real
business cycle model (RBC) we have been studying. The notation below is the
same as in the slides. The planner would maximize the representative house-
hold’s expected intertemporal utility:

Et

∞∑
s=t

βs−t
C1−γs
1 −γ

where 0 < β < 1 and γ > 0, subject to the sequence of constraints:

Ct + Kt+1 = (1 − δ) Kt + Aαt K
1−α
t ,

0 < α < 1, one such constraint in each period.
Following the approach described in slides 20-23 on the RBC model,

1. set up the planner’s maximization problem,

2. obtain the Euler equation for capital accumulation,

3. explain it intuitively,

4. and explain why it coincides with the equation that would be implied by
the market outcome.

1

Part 1

Observe that the fact that the constraint holds in each period allows us to
rewrite it as:

Cs + Ks+1 = (1 −δ) Ks + Aαs K
1−α
s

for every period s. Hence:

Cs = (1 −δ) Ks + Aαs K
1−α
s −Ks+1.

Substitute this for Cs in the representative household’s expected intertem-
poral utility function to obtain:

Et

∞∑
s=t

βs−t
[
(1 − δ) Ks + Aαs K1−αs −Ks+1

]1−γ
1 −γ

.

The planner chooses the sequence {Ks+1}

s=t (the sequence of capital stocks

from t+ 1 to the infinite future) to maximize this expected intertemporal utility
function. Note that the planner’s choice begins with Kt+1 because Kt is given:
It is the capital stock with which the economy began period t, determined by
choices that happened in the past (at t− 1).

Part 2

The structure of the problem is such that we can just focus on the choice of
Kt+1, which shows up only in the first two terms of the summation above:[
(1 − δ) Kt + Aαt K

1−α
t −Kt+1

]1−γ
1 −γ

+βEt

[
(1 − δ) Kt+1 + Aαt+1K

1−α
t+1 −Kt+2

]1−γ
1 −γ

+…

Wedonotneedtheexpectationoperatorbefore thefirst termbecauseeverything
in it is known at time t, including Kt+1, which is chosen at t. If you wrote the
next term in the summation, it would contain only Kt+2 and Kt+3, but no
Kt+1, and so on.
Take the derivative with respect to Kt+1 of the expression above and set it

equal to 0:

−(1 −γ)
[
(1 − δ) Kt + Aαt K

1−α
t −Kt+1

]−γ
1 −γ

+β (1 −γ) Et

{[
1 − δ +

(
At+1
Kt+1

)α] [
(1 −δ) Kt+1 + Aαt+1K

1−α
t+1 −Kt+2

]−γ
1 −γ

}
= 0.

Note that the constraint implies

(1 − δ) Kt + Aαt K
1−α
t −Kt+1 = Ct

2

and
(1 −δ) Kt+1 + Aαt+1K

1−α
t+1 −Kt+2 = Ct+1.

Hence, the first-order condition above becomes:

−C−γt + βEt
{[

1 −δ +
(
At+1
Kt+1

)α]
C
−γ
t+1

}
= 0,

or:

C
−γ
t = βEt

{[
1 − δ +

(
At+1
Kt+1

)α]
C
−γ
t+1

}
,

which is the same Euler equation implied by the market economy. (The choices
of Kt+2, Kt+3, etc. would be governed by similar equations.)

Part 3

The Euler equation balances the cost to the household of giving up one unit of
consumption and increasing the capital stock by one unit today (the marginal
utility of today’s consumption) with the expected discounted benefit of doing so:
the expected discounted utility value of increasing consumption tomorrow by the
return the investment will generate. The return is given by the undepreciated
portion of one unit of capital and the marginal product of capital tomorrow,
and multiplying it by the marginal utility of tomorrow’s consumption gives us
the utility value of that return.

Part 4

The planner’s Euler equation coincides with the market outcome because there is
no distortion in this model: Markets are perfectly competitive, there is no issue
of asymmetric information, no rigidity in prices, etc. Therefore, the planner
cannot do better than the market.

Problem 2

Consider again the basic RBC model, but now allow for government spending
shocks as a source of fluctuations.
The representative household maximizes:

Et

∞∑
s=t

βs−t
C1−γs
1 −γ

,

where 0 < β < 1 and γ > 0, subject to the constraint:

Ct + It + Xt = r̃tKt + wt

in each period. In this constraint, Xt is exogenous lump-sum taxation, which
we assume is equal to government spending. The rest of the notation is as in
the slides.

3

The law of motion for capital is:

Kt+1 = (1 − δ) Kt + It, 0 < δ < 1,

in each period.
The production function is:

Yt = A
α
t K

1−α
t , 0 < α < 1.

(a) Set up and solve the maximization problem of the household to
obtain the Euler equation for capital accumulation. Does the presence
of government spending affect it? Why do you think that happens?

Answer:

The law of motion for capital implies:

It = Kt+1 − (1 − δ) Kt.

Substitute this in the budget constraint to obtain:

Ct + Kt+1 − (1 − δ) Kt + Xt = r̃tKt + wt.

Hence, in every period s:

Cs = r̃sKs + ws −Ks+1 + (1 −δ) Ks −Xs.

and substituting this in the expected intertemporal utility function implies that
the household will choose the sequence {Ks+1}


s=t to maximize:

Et

∞∑
s=t

βs−t
[r̃sKs + ws −Ks+1 + (1 − δ) Ks −Xs]

1−γ

1 −γ
.

Proceeding exactly as in Problem 1 or as in slides 20-23 (focusing on the
first two terms of this summation, taking the derivative with respect to Kt+1,
and setting it equal to 0) yields the Euler equation:

C
−γ
t = βEt

[
(1 − δ + r̃t+1) C−γt+1

]
.

This is exactly the same Euler equation as in the model without government
spending. Therefore, the presence of Xt does not affect it. Why? Because we
assumed that the government is financing its government spending using lump-
sum taxation. In essence, we assumed that there is a government spending
GOVt that is financed with a lump-sum tax Xt so that:

GOVt = Xt.

4

Suppose that we change this assumption, and we assume that GOVt is financed
with a proportional tax XPt on capital income:

GOVt = X
P
t r̃tKt.

The household’s budget constraint in this case is:

Ct + It =
(
1 −XPt

)
r̃tKt + wt.

If you solve the household’s optimization problem in this case, you find that the
Euler equation becomes:

C
−γ
t = βEt

{[
1 − δ +

(
1 −XPt+1

)
r̃t+1

]
C
−γ
t+1

}
.

Now the Euler equation is affected by future taxation. Why? Because taxation
now affects the net return to investment that is left to the household.
I of course did not expect you to know all this, but you should make sure

you understand this point.

(b) Show that, since factors are paid their marginal products in
this model, the following equation holds:

Ct + Kt+1 + Xt = (1 −δ) Kt + Aαt K
1−α
t . (*)

Answer

Factors being paid their marginal products implies that

r̃t =
∂Yt
∂Kt

= (1 −α)
(
At
Kt


.

Moreover, all output is exhausted in payments to factors:

Yt = r̃tKt + wt,

implying that

wt = Yt − r̃tKt = Yt − (1 −α)
(
At
Kt


Kt

= Yt − (1 −α) Aαt K
1−α
t .

Therefore, the budget constraint of the household can be rewritten as:

Ct + It + Xt = (1 −α) Aαt K
1−α
t + Yt − (1 −α) A

α
t K

1−α
t = Yt,

or:
Ct + It + Xt = Yt

5

(not surprisingly, all output is either consumed, invested, or consumed by the
government), and, by virtue of the production function:

Ct + It + Xt = A
α
t K

1−α
t .

From the law of motion for capital accumulation, we have:

It = Kt+1 − (1 − δ) Kt.

Hence, these two equations imply:

Ct + Kt+1 − (1 − δ) Kt + Xt = Aαt K
1−α
t ,

from which you have equation (*).

(c) Assume Āt+1/Āt = X̄t+1/X̄t = G and solve for the balanced
growth path. (Here, treat X̄t/Ȳt as an exogenous variable– i.e., do
not try to solve for this ratio, just treat it as exogenously given.).

Answer

Everything here is as in slides 31-32 and 35 except for the difference implied
by the presence of X̄t in the steady-state version of equation (*). This is:

C̄t + K̄t+1 + X̄t = (1 −δ) K̄t + Āαt K̄
1−α
t .

Dividing both sides of this equation by K̄t yields:

C̄t
K̄t

+
K̄t+1
K̄t

+
X̄t
K̄t

= 1 − δ +
(
Āt
K̄t


.

K̄t+1/K̄t = 1 +g (using G ≈ 1 +g and replacing ≈ with = to simplify notation),
and the expression for Āt/K̄t is in the slides. Observe that:

X̄t
K̄t

=
X̄t
Ȳt

Ȳt
K̄t

=
X̄t
Ȳt

(
Āt
K̄t


,

because of the production function. Therefore,

C̄t
K̄t

+ 1 + g +
X̄t
Ȳt

(
Āt
K̄t


= 1 −δ +

(
Āt
K̄t


,

or:
C̄t
K̄t

=

(
Āt
K̄t

)α (
1 −

X̄t
Ȳt

)
−g − δ.

Use the expression for Āt/K̄t in the slides, and you have:

C̄t
K̄t

=

(
r + δ

1 −α

)(
1 −

X̄t
Ȳt

)
−g − δ,

6

where we are treating the trend-level of the ratio between government spending
and GDP as exogenous (as per the hint I had given you). Notice that the
presence of government spending reduces the consumption that households can
obtain for given capital stock.

(d) Assume log-normality (so that log (EtXt+1) ≈ Et (log Xt+1) +
(1/2) vart (log Xt+1) for any variable X) and homoskedasticity. Log-
linearize equation (*), the Euler equation, and the expression of the
return to capital accumulation around the steady state.

Answer

The log-linearizations of the Euler equation and the return to capital accumu-
lation are identical to slides 44-50. As for equation (*), apply the differentiation
operator to obtain:

dCt + dKt+1 + dXt = (1 − δ) dKt + αdAtĀα−1t K̄
1−α
t + (1 −α) Ā

α
t dKtK̄

−α
t ,

where we used the rule for differentiation of a product and we evaluated levels
around which we are differentiating at trend. Hence,

C̄t
dCt
C̄t

+K̄t+1
dKt+1
K̄t+1

+X̄t
dXt
X̄t

= (1 − δ) K̄t
dKt
K̄t


dAt
Āt

Āαt K̄
1−α
t +(1 −α) Ā

α
t

dKt
K̄t

K̄1−αt .

Divide both sides of this equation by K̄t and recall that, for every variable X,
xt ≡ dXt/X̄t. Hence:

C̄t
K̄t

ct +
K̄t+1
K̄t

kt+1 +

K̄t
xt = (1 − δ) kt + αatĀαt K̄

−α
t + (1 −α) ktĀ

α
t K̄
−α
t ,

or:

C̄t
K̄t

ct + (1 + g) kt+1 +
X̄t
Ȳt

Ȳt
K̄t

xt = (1 − δ) kt +
(
Āt
K̄t


[αat + (1 −α) kt] ,

from which:

C̄t
K̄t

ct + (1 + g) kt+1 +
X̄t
Ȳt

(
Āt
K̄t


xt = (1 − δ) kt +

(
Āt
K̄t


[αat + (1 −α) kt] .

Substituting in this equation the expressions for C̄t/K̄t and Āt/K̄t from part
(c), rearranging and collecting terms, and defining the coeffi cients λ1, λ2, and
λ4 as in the slides (and in part (e) below for λ4) yields the equation:

kt+1 = λ1kt + λ2at + λ4xt + (1 −λ1 −λ2 −λ4) ct.

Combined with

Et (ct+1 − ct) =
λ3
γ
Et (at+1 −kt+1)

7

(which you get from combining the log-linearized Euler equation and the log-
linearized return to capital) and with the shock processes

at = φaat−1 + εa,t

and
xt = φxxt−1 + εx,t,

you have the four-equation log-linear system to which you have reduced the
model.

(e) Assume at = 0 ∀t (there are no percentage deviations of tech-
nology from the steady state). Assume xt = φxt−1 + εt, Et−1εt = 0.
Show that the model reduces to:

kt+1 = λ1kt + λ4xt + (1 −λ1 −λ2 −λ4) ct,

Et (ct+1 − ct) = −
λ3
γ
kt+1,

xt = φxt−1 + εt, Et−1εt = 0,

with:

λ1 ≡
1 + r

1 + g
, λ2 ≡

α (r + δ)

(1 −α) (1 + g)
,

λ3 ≡
α (r + δ)

1 + r
, λ4 ≡−

(r + δ) X̄t/Ȳt
(1 −α) (1 + g)

.

Answer:

This just follows from setting at+1 = at = at−1 = 0 in the system you obtained
in part (e), observing that the expectation operator before kt+1 in the log-linear
Euler equation is not necessary because kt+1 is known at time t, and noting
that xt = φxt−1 + εt is identical to xt = φxxt−1 + εx,t once you no longer need
to differentiate notation with the technology shock.

(f) The solution for consumption and capital has the form:

ct = ηckkt + ηcxxt,

kt+1 = ηkkkt + ηkxxt.

What is the intuition for this solution?

Answer:

The set of variables kt and xt is the most parsimonious description of the state
of the economy when households and firms take their decisions: kt (the endoge-
nous state) is the capital with which the agents begin the period, and xt (the
exogenous state) is the shock they observe just before taking their decisions.

8

The solution maps the description of the state into the behavior of agents with
regard to consumption and capital accumulation. The solution is linear because
the system we are solving is linear.
Extra exercise for you: How would the solution look like if we put the tech-

nology shock back in the picture alongside the government spending one? What
would be the set of variables that describes the state of the economy in this case?

(g) Briefly describe how these equations and xt = φxt−1 + εt can be
used to trace the responses of capital and consumption to a govern-
ment spending shock.

Answer

Suppose the economy was in steady state up to and including period −1. Then
there is an innovation to government spending ε0 in period 0. No other innova-
tion occurs.
All three variables (kt+1, ct, and xt) have values of 0 in period −1, because

the shock has not happened yet. The process for government spending implies
the following values for xt in periods 0 and 1: x0 = ε0 and x1 = φε0.
Capital does not move in period 0 because k0 was determined at time −1,

before the shock happened. Hence, k0 = 0 and k1 = ηkxx0 = ηkxε0.
Since k0 = 0, the initial movement of consumption depends only on gov-

ernment spending. We have c0 = ηcxx0 = ηcxε0 and c1 = ηckk1 + ηcxx1 =
ηckηkxε0 + ηcxφε0.
And so on in subsequent periods. The Excel file I posted in Canvas gives

you a numerical example of this process for the case of a technology shock.
You should practice constructing a similar file for the case of a government

spending shock.

(h) Is it desirable for government spending to exist in this model?
Why?

Answer

No. As you studied, a planner cannot do better than the market in this model.
In the specific case we are looking at, government spending is a pure waste
of resources. It is as if the government were taking a portion of output and
throwing it into the ocean. (Notice: One of the assumptions of the model is that
government spending does not enter the utility function of the representative
household, i.e., the model does not capture welfare gains that the household may
obtain from, say, provision of services like public schools or road maintenance,
etc.)

(i) Briefly: Describe the possible calibration approaches to evalu-
ate the empirical performance of models.

9

Answer

There are two basic approaches. One consists of selecting some moments of
the data (say, variances of consumption and output, their covariance, and their
first-order autocorrelations– a measure of how persistent their movements are,
like φ in the process for government spending above) and picking the values of
parameters so that the simulated model matches those data moments exactly.
If the required parameter values are reasonable given existing findings in the
literature, and if your model matches suffi ciently well moments other than those
you picked to determine the parameter values, then you have a good model (for
the purposes for which you are using it– you should never forget that models
are written to study specific questions, they may well be very inappropriate for
other uses).
The second calibration approach goes in the other direction: Suppose you set

the values of all the parameters at reasonable numbers (but you do not pick any
of them to match any feature of the data exactly). Suppose you then simulate
your model. Does it produce impulse responses and moments for the data that
are consistent with empirical evidence? If so you have a good model (again, for
the purposes for which you are using it).

10

Economics homework help

Gilligan’s Island
Worksheet

The situation:

Gilligan, the Skipper, the Professor, Ginger, Mary-Ann and Mr. and Mrs. Howell have adopted the
US dollar as their currency (each had some currency in their pockets/bags at the time of shipwreck).
They have been on the island for about a year and have each learn to produce goods/services
according to their respective comparative advantages. They each pay for the service of one another.

The island economy could be broken into seven sectors with some workers employed in multiple
sectors. Gilligan is employed in six sectors: he is unskilled labor and can easily shift production.
The Professor and the Howells are employed in only two or one sectors respectively. Their skills are
highly specialized and not easily shifted. Remember why the Production Possibilities Curve is bowed?

Suppose the initial distribution of
money:

The Howells: $10,000
Ginger: $2000
The Professor: $500
Mary-Ann: $100
The Skipper: $50
Gilligan: $20

1. Who initially has the most buying
power?______________________

2. What is the money supply?________
Which measure is that?_____

3. On the island, what determines the long-run potential output of the economy?________________
_________________________________________________________________________________

a. What will happen to GDP in period 2, if the Professor learns how to conduct electricity
through a vine and the Skipper learns how to spearfish? Would this be a long-run change or a short-
run change? ________________________________________________________
________________________________________________________________________

b. What does 3a imply about AS-AD? Sketch changes.

c. Can you explain this function: Y= Tƒ(L,K,N,H)?_________________________________
___________________________________________________________________________
___________________________________________________________________________

4. At the beginning of period 3, the professor, being absent minded, goes for a swim in the lagoon
with 75% of his wealth in his shorts pocket. The money, now $500, is forever lost in the water.

a. What does that mean for the Professor’s consumption?_____________________________
___________________________________________________________________________

b. What does this mean for the island’s money supply?_________________

c. Are there any implications for AS-AD? Sketch changes.

d. Does this event affect the long-run ability of the economy to produce? Why? Why not?
___________________________________________________________________________
___________________________________________________________________________

e. Thanks to the Professor, in the long-run the island economy now has more the same
amount fewer dollars chasing more the same amount fewer goods (circle the correct answers). What
should happen to the price level?_________________________________

f. Are the remaining dollars valued more or less?
________________________________________________________

5. At the beginning or period 4, a single propeller plane is seen crashing on the horizon. The next
day, the Skipper finds a box labeled, “FedEx” on the beach. When he opens the box, he finds a pair
of ice skates. Fortunately, he has seen the movie Castaway and he knows how to use these skates to
cut trees and vines.

a. How would an economist view the skates in this situation?________________________

b. Will the Skipper be able to make more housing and communication equipment with the aid
of the skates? ______

c. Sketch this change in the AS-AD model.

d. What is likely to happen to GDP on the island? Is this a real change or a nominal change?
_______________________________________________________________________

e. Since the Skipper owns the skates and knows how to use them, is his labor more or less
valuable? What might happen to his wages?____________________________________

6. At the beginning of period 5, Mary-Ann finds another item presumably lost from the plane. She
finds a zip-lock bag containing $1000 cash.

a. What does that mean for Mary-Ann’s buying power and consumption?________________
___________________________________________________________________________

b. Sketch this result in the AS-AD model.

c. Does real output increase in the short-run?_______

d. Does Mary-Ann’s new found wealth, itself, affect the ability of the economy to produce?
_______

Economics homework help

Econometrics ECON 625

Final Project

Your final project, worth 15% of your grade, will be to perform your own education research project which is due during the last official class period (when the final is normally scheduled). This project will be submitted in the form of a paper which uses some technique outlined in this class.

Your project must present or test some economic theory. Presenting a theory would involve describing your theory and explaining why it is interesting. Testing an existing theory is most easily done using statistical methods. You may use any data that you can collect or create for this purpose. These are primary data. In most of the official websites have many sets of data, for example if you will visit the site of SAMA or PENN World Table you can find a reasonable set of data. These are secondary data.

A quality research paper takes time and structure. The format that I look for in these papers is:

1. An introduction describing the question/issue you are addressing.

2. A discussion of the relevant literature that has been written on the ideas you are addressing

3. A description of the theory you are testing as well as a description of how this theory fits in with the findings of the research described in part 2.

4. A description of your data (this includes a verbal description and a statistical description). This section should tie in with your theory; that is you should answer why this data is appropriate to use in measuring your data.

5. Your findings.

6. A conclusion that reviews your theory in light of your findings.

Good economic writing is good writing in general. Thus be concerned with issues such as sentence structure and grammar. Further, most students papers tend to focus on the technical aspects of the paper while paying short attention to the theories under consideration. Although this course will focus on many technical aspects, good economic writing never stresses the technical aspect at the expense of the theory being tested. For good examples of this, I refer the student to “The Deadweight Loss of Christmas,” by Joel Waldfogel. In short, remembering who your audience is will always improve your paper.

You will be graded on the quality of your writing, the quality of your regressions, and your application of those regressions to the research question your paper addresses.

Finally, some words of advice. Invariably I have students spend too much time looking for the “right” data set or question. Although the right data is important to long term research, finding a perfect data set rarely happens nor is it good policy to for students to spend precious weeks throughout the short quarter looking for data. Rather, I would have you choose a research question early and then apply what we learn throughout the course to your question. When it comes time to compile your results for your paper, you will find much of your work to be finished already.

Economics homework help

EVOLUTION of ECONOMIC THOUGHT

Reading Requirements:

The majority of our readings are online either on www.jstor.org or http://oll.libertyfund.org (please use the facsimile pdf)

Even if the texts are online, I would encourage the purchase of the following from www.libertyfund.org:

SMITH, Adam. [1776] 1981. An Inquiry onto the Nature and Causes of the Wealth of Nations. Indianapolis: Liberty Fund.

SMITH, Adam. [1759] 1984. The Theory of Moral Sentiments. Indianapolis: Liberty Fund. Other materials are available on the course site.

Course Objective: This course addresses vital micro- and macro-economic questions that concern us today and examines how economic thinking has evolved over time to answer them. The course complements the mechanical problem solving skills that students have. It allows students to develop a broader perspective based on the wide-ranging background and views of the economists of past ages. The course will benefit students who want to have a better understanding of modern economics and economic problems. Some of the questions we will look at are: How does an economist distinguish a man from a rat, given that they are both maximizers? Are our preferences fixed or does exchange change our preferences? Under what conditions is paper money preferred to commodity money? Under what condition is public debt the preferred form of public financing? Why do we observe differences in wage rates? Why is economics dismal? The course is topical, not chronological.

1

page1image3744272
page1image3738864

Grading:

The class aims at a dialogue. You are expected to have done the readings for that day and to contribute actively to the discussion. Before every class, you are expected to write one or two pages with your thoughts on the material for that class. A research paper on a topic of your choice is due at the end of the semester.

Your total grade will be based on the following: Class participation 33%
1-2 page paper 33%
Research paper 34%

I will use the standard grading scale (A>90%, B>80%, C>70% …) and I do not intend to curve the grading.

2

Tentative Schedule

What is economics?

Groenewegen, Peter. 2002. Eighteenth-Century Economics: Turgot, Beccaria and Smith and their Contemporaries. New York and London. Routledge. Handout.

INFLUENCE OF COMMERCE

·  Ensminger, Jean. 2004. “Market Integration and Fairness: Evidence from Ultimatum, Dictator, and Public Goods Experiments in East Africa” in Foundation of Human Sociality: Economic Experiments and Ethnographic Evidence from Fifteen Small-Scale Societies. Eds. Henrich, Joseph, Robert Boyd, Samuel Bowels, Colin Camerer, Ernst Fehr, Herbert Gintis. On class site. Or at : http://www.people.virginia.edu/~cah2k/bush.pdf

·  Henrich, Joseph, et al. 2010. “Markets, Religion, Community Size, and the Evolution of Fairness and Punishment.” Science. Vol. 327, No. 5972 (Mar. 19, 2010), pp. 1480-1484

·  Hume, David. [1752] 1987. “Refinements of the Arts”. in Essays, Moral, Political, and Literary. Ed. Eugene F. Miller. Indianapolis: Liberty Press. At: http://oll.libertyfund.org

·  Smith, Adam. (1762), “Lecture on the Influence of Commerce on Manners” in Lectures on Jurisprudence. Report dated 1766. 326-333. Pages 538-541.

·  Marx, Karl. “The Power of Money in Bourgeois Society” in Economic and Philosophic Manuscripts of1844. PP.59-62 (on class site)

Aristotle. Politics. Book 1
At: http://oll.libertyfund.org

Suggested readings:

·  Mandeville. [1732] 1988. The Fable of the Bees. Indianapolis: Liberty Fund. At http://oll.libertyfund.org/

·  Cowen, Tyler. 2000. What Price Fame? Harvard University Press.

3

Thorstein Veblen. 1899. The Theory of the Leisure Class. Chap. 4 “Conspicuous Consumption” At http://socserv2.socsci.mcmaster.ca/~econ/ugcm/3ll3/

HOW DOES COOPERATION MATTER?

·  Greif, Avner. 2006. “History Lessons: The Birth of Impersonal Exchange: The Community Responsibility System and Impartial Justice” Journal of Economic Perspectives. 20.2: 221-236.

·  Brosnan, S.F. and de Waal F.B.M., 2014, Evolution of responses to (un)fairness. Science, 17 Oct 2014, 346: 6207, 314

o de Waal, F.B.M. and Berger, M. L. 2000, Payment for labour in Monkeys. Nature 404:563.

o Brosnan, S.F. and de Waal F.B.M. 2003, Monkeys reject unequal pay. Nature, 425, 297-299.

o Keith Jensen, et al. 2007. Chimpanzees Are Rational Maximizers in an Ultimatum Game, Science 318, 107

o Clutton-Brock, Tim. 2009. “Cooperation Between Non-Kin in Animal Societies”. Nature. 462. 51-57.

·  Smith, Adam. [1776] 1981. An Inquiry into the Nature and Causes of the Wealth of Nations. Glasgow edition. Liberty Fund. I.ii (p. 25-30)

·  Smith, Adam. [1759] 1984. The Theory of Moral Sentiments. Indianapolis: Liberty Fund.I.i.1 and I.i.2 (p. 9-16)

·  Smith, Adam. [1759] 1984. The Theory of Moral Sentiments. Indianapolis: Liberty Fund. II.ii.2-3 (p. 82-91)

·  Smith, Adam. [1759] 1984. The Theory of Moral Sentiments. Indianapolis: Liberty Fund. III.1-2.3 (p. 109-114)

4

·  Smith, Adam. [1759] 1984. The Theory of Moral Sentiments. Indianapolis: Liberty Fund. III.3.1-6 (p. 134-138)

·  Smith, Adam. [1759] 1984. The Theory of Moral Sentiments. Indianapolis: Liberty Fund. III.3.4 (p. 156-161)

·  Mauss, Marcel. The Gift. [1950] 2002. New York: Routledge. PP. 10-59 (on class site)

·  Suggested readings:

·  de Waal, F.B.M. 2003 On the Possibility of Animal Empathy. In Feelings and Emotions: The Amsterdam Symposium, T. Manstead, N. Frijda & A Fisher (eds), pp. 279-299. Cambridge : Cambridge University Press.

·  Iacoboni, Marco. 2008. Mirroring People: the new science of how we connect with others. New York: Farrar, Straus and Giroux.

5

WHO IS THIS ADAM SMITH?

·  Montes, Leonidas. 2004. “Das Adam Smith Problem: its origins and the debate” in Adam Smith in Context: a Critical Reassessment of some Central Components of his Thought. Palgrave. On class site.

·  Coase, Ronald. 1976. “Adam Smith’s View of Man.” Journal of Law and Economics, Vol. 19, No. 3, pp. 529-546.

What do we do with Adam Smith today?

·  Smith, Vernon. 1998. “The Two Faces of Adam Smith” Southern Economic Journal. Vol. 65. No. 1. pp. 1-19.

·  Ashraf, Nava, Colin F. Camerer and George Loewenstein. 2005. “Adam Smith Behavioral Economist” Journal of Economic Perspectives, Vol. 19, No. , pp. 131– 145

·  Smith, Vernon. 2010. “What Would Adam Smith Think?” Journal of Economic Behavior & Organization, 73: 83-86.

·  Smith, Vernon. 2015. Adam Smith: Homo Socialis, yes; Social Preferences, No; Reciprocity Was to Be Explained. Journal of Economic Behavior & Organization, 2: 183-193.

Additional reading:

Bittermann, Henry J. 1940. “Adam Smith’s Empiricism and the Law of Nature.” The Journal of Political Economy, Vol. 48, No. 4, pp. 487-520, and The Journal of Political Economy, Vol. 48, 5, pp. 703-734.

6

MONEY

·  Friedman, Milton. 1987. “Quantity Theory of Money” in The New Palgrave: a dictionary of economics, edited by John Eatwell, Murray Milgate, Peter Newman, New York : Stockton Press. (On class site).

·  Lucas, Robert. 1996. “Nobel Lecture: Monetary Neutrality.” The Journal of Political Economy, Vol. 104, No. 4, pp. 661-682.

·  Aristotle. Nicomachean Ethics. Book V. At http://oll.libertyfund.org

·  David Hume. [1752] 1987. “On Money” AND “On the balance of trade” in Essays, Moral, Political, and Literary. Ed. Eugene F. Miller. Indianapolis: Liberty Press. At http://oll.libertyfund.org

·  Smith, Adam. [1776] 1981. An Inquiry into the Nature and Causes of the Wealth of Nations. Glasgow edition. Liberty Fund, WN. I.iv, I.v and II.ii 1-36 85-106 (to better understand this chapters I would encourage the reading of all WN II.ii and of WN II.i)

Suggested readings:

·  Simmel, Georg. [1900] 1990. The Philosophy of Money. London and New York: Routledge.

·  Galiani, Ferdinando. [1751] 1977. On Money: a translation of Della moneta. Ann Arbor: Published for Dept. of Economics of the University of Chicago.

7

LABOR: human homogeneity and heterogeneity

·  Stigler, George J., and Gary S. Becker. 1977. “De Gustibus non est disputandum”. The American Economic Review, Vol. 67, No. 2., pp. 76-90.

·  “LOGOS” in Henry George Liddell, Robert Scott, A Greek-English lexicon. At http://www.perseus.tufts.edu (go to Classics, then to secondary sources, or directly to http://www.perseus.tufts.edu/cache/perscoll_Greco-Roman.html or http://www.perseus.tufts.edu/hopper/text?doc=Perseus:text:1999.04.0058 or http://www.perseus.tufts.edu/hopper/text?doc=Perseus%3Atext%3A1999.04.0057%3 Aentry%3Dlo%2Fgos

or google it

and in Catholic Encyclopedia at http://www.newadvent.org/cathen/09328a.htm or google it

·  Smith Adam. [1776] 1981. An Inquiry into the Nature and Causes of the Wealth of Nations. Glasgow edition. Liberty Fund. WN. Book 1 chap. 1, 2, 3,

·  Smith, Adam. [1776] 1981. An Inquiry into the Nature and Causes of the Wealth of Nations. Glasgow edition. Liberty Fund. Book 1 chap. 10

·  Plato. The Republic. Especially Book II §367-376d, Book V § 427d-434d, § 458-460. At http://oll.libertyfund.org/Home3/Author.php?recordID=0204

·  Leonard, Thomas C. 2003. “More Merciful and Not Less Effective: Eugenics and American Economics in the Progressive Era” History of Political Economy 35(4): 709-734. At http://www.princeton.edu/~tleonard/papers/Eugenics.pdf

·  “Dismal” on the OED. At http://dictionary.oed.com

8

Carlyle, Thomas. 1849. “Occasional Discourse on the Negro Question” Fraser’s Magazine http://cruel.org/econthought/texts/carlyle/negroquest.html

Or google it.

Mill, John Stuart Mill. 1850. “The Negro Question” Fraser’s Magazine At http://cruel.org/econthought/texts/carlyle/negroquest.html

Or google it.

“Am I Not a Man and a Brother?” (picture) http://www.pbs.org/wgbh/aia/part2/2h67.html http://www.picturehistory.com/find/p/632/mcms.html http://www.yale.edu/glc/archive/928.htm

Additional readings:

·  Carlyle, Thomas. 1851. “The Present Time” in The Latter-day Pamphlets At http://cepa.newschool.edu/het/

Or google it.

The wrong dismal story…

·  David Levy. 1991. “Some normative aspects of the Mathusian Controversy” in The Economic Ideas of Ordinary People. Rutledge. On class site.

9

PUBLIC CREDIT

·  Barro, Robert. 1974. “Are Government Bonds Net Wealth?” Journal of Political Economy 82, 1095-1117.

·  Buchanan, James, 1976, “Barro on the Ricardian Equivalence Theorem” Journal of Political Economy 84, 337-343.

·  David Ricardo. 1821. On the Principles of Political Economy and Taxation. Chapter 29 http://www.econlib.org/library/Ricardo/ricP7.html#Ch.29

·  Hume, David. [1752] 1987. “Of Public Credit” in Essays, Moral, Political, and Literary. Ed. Eugene F. Miller. Indianapolis: Liberty Press. http://oll.libertyfund.org/

·  Smith, Adam. [1776] 1981. An Inquiry into the Nature and Causes of the Wealth of Nations. Glasgow edition. Liberty Fund. WN. V.iii

10

GROWTH

·  Hansen G. and Prescott E., 2002. Malthus to Solow; The American Economic Review, 92.4: 1205-1217

o Solow, Robert. 1956. A Contribution to the Theory of Growth. The Quarterly Journal of Economics 70.1: 65-94

·  Smith, Adam. [1776] 1981. An Inquiry into the Nature and Causes of the Wealth of Nations. Glasgow edition. Liberty Fund. WN. III

TRADE/MERCANTILISM

·  Viner, Jacob. 1930. “English Theories of Foreign Trade Before Adam Smith” The Journal of Political Economy. Vol. 38, No. 3, pp. 249-301.

·  Hume, David. [1752] 1987. “Of the balance of trade” in Essays, Moral, Political, and Literary. Ed. Eugene F. Miller. Indianapolis: Liberty Press. At http://oll.libertyfund.org

·  Bastiat, Frederic. [1845-1850] 1997. “Abundance and Scarcity”, “The Balance of Trade”, “Theory and Practice”, “Conflict of principles” in Economic Sophisms. At http://oll.libertyfund.org

·  Smith, Adam. [1776] 1981. An Inquiry into the Nature and Causes of the Wealth of Nations. Glasgow edition. Liberty Fund. WN IV.i-ii.

11

KNOWLEDGE and PERCEPTION

·  Kahneman, Daniel. 2003. Prize Lecture: Maps of Bounded Rationality. The American Economic Review. Vol. 93, No. 5, pp. 1449-1475

·  F. A. Hayek. 1943. “The Facts of the Social Sciences” Ethics. Vol. 54, No. 1, pp. 1-13

·  Smith, Adam. [1776] 1981. An Inquiry into the Nature and Causes of the Wealth of Nations.

Glasgow edition. Liberty Fund. Book 1 chap. 1, 2, 3, 10

·  Smith, Adam. [1759] 1984. The Theory of Moral Sentiments. Indianapolis: Liberty Fund. I.1, III.3-4, and IV.1

·  Plato. The Republic. Book VI § 514a-521b At: http://oll.libertyfund.org Additional readings:

Rizzo, Mario and Gerald O’Driscoll. 1985. The economics of time and ignorance. Oxford, UK ; New York, NY, USA : B. Blackwell.

12

APPLICATIONS
The lottery puzzle: Milton Friedman v. Adam Smith

·  Friedman, Milton, and L. J. Savage. 1948. “The Utility Analysis of Choices Involving Risk” in The Journal of Political Economy, Vol. 56, No. 4, pp. 279-304.

·  Smith, Adam. [1776] 1981. An Inquiry into the Nature and Causes of the Wealth of Nations. Glasgow edition. Liberty Fund. WN. I.10.

·  + search Liberty Fund electronic edition for lottery.
The usury problem: Stiglitz and Wiess v. Adam Smith v. Jeremy Bentham

·  Stiglitz and Wiess. 1981. “Credit Rationing in Markets with Imperfect Information” AER. vol. 71, no. 3. p. 393-410.

·  Smith, Adam. [1776] 1981. An Inquiry into the Nature and Causes of the Wealth of Nations. Glasgow edition. Liberty Fund. WN. II.4

·  Bentham, Jeremy. “LETTER XIII. To Dr. Smith, on Projects in Arts, &c.” in Defence of Usury.

·  Hollander, Samuel. 1999. “Jeremy Bentham and Adam Smith on the Usury Laws: a Smithian reply to Bentham and a new problem” in The European Journal of History of Economic Thought. 6:4 523-551. On class site.

Disperse knowledge.

·  Hayek F.A. 1945. “The Use of Knowledge in Society” The American Economic Review. Vol. 35, No. 4, pp. 519-530

·  Boettke, Peter. 1998. “Economic Calculation: the Austrian contribution to political economy” in Advances in Austrian Economics, Vol. 5, p. 131-158 On class site.

Smith. Search Liberty Fund electronic edition for “invisible hand”

13

Economics homework help

IT for Management: On-Demand Strategies for Performance, Growth, and Sustainability

Twelfth Edition

Turban, Pollard, Wood

Chapter 11

Artificial Intelligence, Robotics, and Quantum Computing Technology

Learning Objectives (1 of 5)

2

Copyright ©2021 John Wiley & Sons, Inc.

How AI Works

AI and Society (Ethics)

Robotics

Quantum Computing (QC)

AI Applications in Business and Society

Artificial intelligence

“The theory and development of computer systems able to perform tasks normally requiring human intelligence, such as visual perception, speech recognition, decision-making, and translation between languages.”

Copyright ©2021 John Wiley & Sons, Inc.

3

Stages of Artificial Intelligence Development

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4

Stage 1

Artificial narrow intelligence (ANI) also known as “weak” AI, essentially current applications

Stage 2

Artificial general intelligence (AGI), also known as “strong” AI, essentially future applications that will be on par with human capabilities

Stage 3

Artificial super intelligence (ASI) essentially, future applications with capabilities that surpass what humans are capable of.

Types of Artificial Intelligence Machines

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5

The Six Branches of Artificial Intelligence

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6

1. Machine learning—machines that can learn.

2. Deep learning—sophisticated learning machines that use neural networks.

3. Natural language processing (NLP)—machines that can communicate like humans.

4. Expert systems—machines that solve complex problems.

5. Fuzzy logic—machines that replicate the fuzzy logic reasoning abilities of humans.

6. Robotics—robots that use AI to learn, solve problems, and communicate.

Machine Learning

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7

Machine learning (ML) applications use statistical algorithms to find patterns in large data sets (including “Big Data”).

Three different approaches to machine learning:

Supervised learning

Unsupervised learning

Reinforcement learning

Deep Learning

Deep learning (DL) applications are believed to approximate human learning processes and are capable of much more complex and sophisticated learning challenges

Copyright ©2021 John Wiley & Sons, Inc.

8

Natural Language Processing (NLP)

Some AI applications use natural language processing (NLP) that allows them to interact with people using human language

NLP programs have two basic components:

Natural language understanding (NLU)

Natural language generation (NLG).

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9

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10

Expert Systems

An expert system (ES) is a branch of AI that has been developed to solve complex problems in a specific discipline with greater speed and information processing capabilities than a human expert.

ES applications typically have three components:

knowledge base,

inference engine, and

user interface

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11

Fuzzy Logic

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12

Computers, and the software programs that run on them, typically require binary inputs—yes–no, true–false, 0–1, and so on.

This creates a dilemma of sorts for AI programs that attempt to replicate human intelligence

Many of the things we experience everyday fall into the “maybe zone”

Fuzzy logic AI attempts to replicate the fuzzy logic reasoning abilities of humans

Robotics

Copyright ©2021 John Wiley & Sons, Inc.

13

Robot: A machine capable of carrying out a complex series of actions automatically, especially one programmable by a computer

The field of robotics draws on knowledge from mechanical and electrical engineering, computer science, and other disciplines, to create robots.

Workers in the field of robotics design computer systems responsible for robot control, sensory feedback, and information processing.

How AI Works: Questions

Why have experts had trouble over the years coming up with a comprehensive definition of artificial intelligence?

Describe the three different levels of AI development. Which one describes most of the AI applications in use today?

What are the four different types of AI machines or applications? How do they differ?

Briefly describe the six different branches of AI technology.

What is the essential difference between machine learning and deep learning applications?

14

Copyright ©2021 John Wiley & Sons, Inc.

Learning Objectives (2 of 5)

15

Copyright ©2021 John Wiley & Sons, Inc.

How AI Works

AI and Society (Ethics)

Robotics

Quantum Computing (QC)

AI Applications in Business and Society

Adoption of AI Business Applications

Copyright ©2021 John Wiley & Sons, Inc.

16

According to a report, 48% of global companies are expected to implement AI applications before the end of 2020.

Work automation is the term used to describe replacing a human worker with machines or computer technology

AI can help human workers identify points in a company’s customer interactions that are critical or add value

Only using AI to automate work represents a tremendous under-utilization of this powerful technology

Copyright ©2021 John Wiley & Sons, Inc.

17

Current AI Use in Business and Society

AI technology is being used by businesses, nongovernmental organizations (NGOs), and government agencies

Important aspects of AI that are contributing to organizational efficiency and effectiveness are the use of AI in:

Predictive analytics

Sentiment analysis: a widely used approach to understanding consumer attitudes and emotions in the era of social media.

Content management systems: software programs used to curate a collection of digital content in a variety of formats.

Copyright ©2021 John Wiley & Sons, Inc.

18

AI Use in the Public Sector

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19

Law Enforcement and Public Safety

Enhanced image and video search

Facial recognition systems

Detecting and preventing crime with data analysis

Healthcare and Medicine

Radiology

Electronic Medical Records

Diagnosis

Medication Errors

Improved Care

Telemedicine

Administration Issues

Barriers to AI Adoption and Use

Copyright ©2021 John Wiley & Sons, Inc.

20

Skills: New AI applications in companies will require a shift in worker skillsets. Demand for workers with AI skills is greater than supply.

Fear of the Unknown: Understanding both the risks and the benefits can be more challenging.

Concerns about the Full Data Scope or Data Quality Derived from AI: Without the infrastructure or without an understanding of the kind of data required, new AI projects will likely fail.

Learning Objectives (3 of 5)

21

Copyright ©2021 John Wiley & Sons, Inc.

How AI Works

AI and Society (Ethics)

Robotics

Quantum Computing (QC)

AI Applications in Business and Society

AI and Society (Ethics)

Most common concerns:

Fear of job loss and financial ruin by AI work automation

Privacy and civil rights violations caused by government and law enforcement AI applications

Systematic bias resulting from ML algorithms and data

22

Copyright ©2021 John Wiley & Sons, Inc.

Work Automation and Job Loss

Copyright ©2021 John Wiley & Sons, Inc.

23

Blue-collar: Work that is routine, and done the same way repeatedly, is more likely to be automated.

White-collar: Jobs that deal primarily with numbers and data are quite vulnerable to automation.

It’s hard to say exactly what percentage of jobs will eventually be automated, but some estimates suggest it could be close to 40%.

Privacy, Civil Rights, and Government Use of Artificial Intelligence

One application of AI that probably inspires just as much concern as work automation is facial recognition technology

Other surveillance technologies in use around the world today including robotic birds and drones, and smart glasses equipped with facial recognition technology

Copyright ©2021 John Wiley & Sons, Inc.

24

Unexpected Results When Bias Creeps
into the Learning Process

A concern that can negatively impact people is when some kinds of machine learning programs develop a bias in their decision-making ability

Example of bias in machine learning:

The COMPAS system used in Broward County, Florida

AI programs designed to identify loan applicants

that are supposedly good risks for paying back their loans

Whether social services should remove children from their parents

25

Copyright ©2021 John Wiley & Sons, Inc.

AI and Society (Ethics): Questions

Is the use of AI technology for work automation unethical? Why or why not?

What steps should workers take to determine if their jobs or intended career path has a higher risk of being automated?

Why should businesses and governments find ways of supporting workers that lose their jobs because of work automation?

Why are technologies like facial recognition and AI programs that monitor a large volume of phone calls and e-mail messages a concern for American citizens?

Give an example of how bias can creep into the training of a machine learning application, resulting in unintended but negative consequences.

26

Copyright ©2021 John Wiley & Sons, Inc.

Learning Objectives (4 of 5)

27

Copyright ©2021 John Wiley & Sons, Inc.

How AI Works

AI and Society (Ethics)

Robotics

Quantum Computing (QC)

AI Applications in Business and Society

Robotics

Copyright ©2021 John Wiley & Sons, Inc.

28

Robotics: Branch of technology that deals with the design, construction, operation, and application of robots.

The use of robotics is common in:

Industry (production, assembly and packing, and warehousing)

Military (combat and drone machines)

Medicine

Transportation (autonomous vehicles),

Law enforcement (bomb disposal), and

Entertainment

Types of Robotic Machines: Robotics and Work Automation

Cartesian—these robots are also called rectilinear or gantry robots and have a rectangular configuration that allows for precise location of the arm by moving in three dimensions

Cylindrical—this type of robot has an arm that rotates around its base creating what is referred to as a donut-shaped work envelope, and another extendable arm that shifts back and forth as well as rotated

SCARA—Selective Compliance Assembly Robot Arm or SCARA robots have two connected arms that can rotate around a fixed base

Delta—these types of industrial robots get their spider-like look from three sets of parallel fore-arms whose movement can be coordinated for precision and connect to a common effector

Polar—these types of robots are another configuration of two robotic arms attached to a fixed base

Articulated—one of the most common types of industrial robot, configured like a big arm, with anywhere between two and ten rotary joints

29

Copyright ©2021 John Wiley & Sons, Inc.

Types of Robotic Machines: Collaborative Robots

Collaborative robots also known as Cobots, work together with human workers to accomplish a task or set of tasks.

One of the goals for collaborative robots production systems is safety:

heavy lifting

repetitive or routine movements, or

other steps in the processes that might be potentially unsafe to human workers

30

Copyright ©2021 John Wiley & Sons, Inc.

Types of Robotic Machines: Medical/Surgical Robots

Medical robots are designed to augment a surgeon’s skill, knowledge, and expertise, by taking on surgical tasks that require extremely high levels of precision and stability over long periods of time

Most medical robots draw on multiple artificial intelligence technologies to develop and carry out their surgical functions including using machine learning to achieve submillimeter precision and expand dexterity to reach more areas of the body

31

Copyright ©2021 John Wiley & Sons, Inc.

Types of Robotic Machines: Service Robots

Professional service robots are designed to perform tasks that are repetitive, possibly boring, or may represent a potential risk to the health and safety of humans

Examples of professional service robots include:

agricultural robots

customer service robots

construction robots

demolition robots

inspection robots

32

Copyright ©2021 John Wiley & Sons, Inc.

Types of Robotic Machines: Drones

A drone is a flying robot that can be remotely controlled or fly autonomously through software-controlled flight plans working with onboard sensors and GPS.

In the military, drones are known as UAVs (unmanned aerial vehicles) or RPAS (remotely piloted aerial systems) and are used for surveillance and in offensive operations where manned flight is considered too risky or difficult.

33

Copyright ©2021 John Wiley & Sons, Inc.

Types of Robotic Machines: Autonomous Robots

Autonomous robots operate without a great deal of external control.

They can be as simple as a Roomba or they may be larger, much more sophisticated machines.

An autonomous vehicle (AV) such as a passenger car, delivery van or a semi-trailer truck for transporting freight over long distances

A robotic picking machine

An autonomous forklift in warehouses

Copyright ©2021 John Wiley & Sons, Inc.

34

Robotics: Questions

How do industrial robots benefit companies that use them for production and manufacturing?

What has been the effect of advances in artificial intelligence on the field of robotics?

How are collaborative robots different from industrial robots that work without direct interaction with humans during the production process?

What advantages do surgeons and patients experience when medical robots are used during surgical procedures?

Describe some examples of autonomous robots.

35

Copyright ©2021 John Wiley & Sons, Inc.

Learning Objectives (5 of 5)

36

Copyright ©2021 John Wiley & Sons, Inc.

How AI Works

AI and Society (Ethics)

Robotics

Quantum Computing (QC)

AI Applications in Business and Society

What Is Quantum Mechanics?

Quantum mechanics is a branch of physics that describes the behavior or movement of microscopic objects.

Quantum physics is used to explain the behavior of things like atoms, electrons, and light.

Superposition: Electron property – the ability to be in two places at once.

Entanglement: two things are connected

Interference: something can increase (constructive interference) or decrease (destructive interference) the behavior of another thing

Copyright ©2021 John Wiley & Sons, Inc.

37

Quantum Computers

Instead of the bits used in computers today, quantum computers use another kind of switch called a qubit.

Qubits can hold a value of 0, 1, as well as values between 0 and 1.

This third value represents the concept of superposition.

Some examples of new advances include: Artificial Intelligence; Cybersecurity; Product Innovation; Business, Market, and Financial Modeling; and Weather Forecasting and Climate Change

38

Copyright ©2021 John Wiley & Sons, Inc.

Challenges in Quantum Computing

39

Copyright ©2021 John Wiley & Sons, Inc.

Current quantum machines are prone to errors resulting from noise, faults, and loss of coherence, a property critical to the operation of quantum computers.

Fault tolerance is the ability of a computer or a network to keep working despite the failure of one of its components. Current quantum computers have extremely low fault tolerance.

Coherence is the ability of a quantum computer to maintain information in qubits that are in a state of superposition

Loss of coherence, or decoherence, is caused by things like vibrations, temperature changes, and electromagnetic waves, to which current quantum computers are extremely sensitive.

Quantum Computing: Questions

How would you explain the quantum mechanics concept of superposition to a friend?

In quantum mechanics, what does it mean for two things to be in a state of entanglement?

In quantum mechanics, what is the difference between positive and negative interference?

Describe some of the fields or disciplines that are expected to be influenced by the development of workable and widely available quantum computers.

What is the difference between bits that are used in computers today, and qubits that are used in quantum computers?

What are three quantum states that can be replicated by qubits.

Why can’t traditional bits perform operations similar to qubits?

What are the key obstacles facing computer engineers regarding the development of quantum computers?

40

Copyright ©2021 John Wiley & Sons, Inc.

Copyright

Copyright © 2021 John Wiley & Sons, Inc.

All rights reserved. Reproduction or translation of this work beyond that permitted in Section 117 of the 1976 United States Act without the express written permission of the copyright owner is unlawful. Request for further information should be addressed to the Permissions Department, John Wiley & Sons, Inc. The purchaser may make back-up copies for his/her own use only and not for distribution or resale. The Publisher assumes no responsibility for errors, omissions, or damages, caused by the use of these programs or from the use of the information contained herein.

41

Copyright ©2021 John Wiley & Sons, Inc.

41

Economics homework help

The first assignment is to write a specific thank you letter for a real occasion that would preferably be a business occasion, such as an interview, plant tour, classroom visit, etc.. Still, it can be a personal occasion if you are unable to think of a business situation. The letter must address a real person with a real situation (i.e., not directed to a fictional person or company). You can find a supporting website in D2L in this Module’s content. Feel free to use any template you desire that has the essential elements of a professional thank you letter: date, “Dear Line,” content, Sincerely/Thank You, and signature. Keep your letter business professional, however.

The supporting website provides several examples. Do not copy one of the examples verbatim (exactly). You are required to write the content of your letter.

Please submit your professional letter to the appropriate dropbox by the deadline.


Grading
: Assignment is worth 20 points as follows (see Grading Rubric below for details):

· Date and “Dear” Line 4 points

· Content 4 points

· Signature 4 points

· Mechanics 4 points

· Presentation 4 points


Grading Rubric:

Criteria

Exemplary (4)

Proficient (3)

Marginal (2)

Unacceptable (0-1)

Rating

Date and “Dear” Line

The valid date is written in the form: Month, DD, CCYY.

The “Dear” line is present with a professional and appropriate reference to an individual.

The date is incomplete or “Dear” line does not address an appropriate, professional reference to an individual.

The date is incomplete, and the “Dear” line does not address an appropriate, professional reference to an individual.

Or either the date or “Dear” line is missing

The letter does not include a date or “Dear” line.

Content

The letter is arranged logically to support the purpose or idea. It flows smoothly from one paragraph to another. The letter includes sufficient information about why the writer is grateful and enough details of support.

The letter serves a purpose or idea and displays evidence of a basic thank you letter. The letter is somewhat specific and appreciative

The writing has no logical arrangement Frequently; ideas fail to make sense together. The reader can determine that the writer is attempting to be appreciative but can only find minimal specifics.

The writing lacks any semblance of logical organization. The reader cannot identify that the letter is appreciative or any specifics.

Signature

The letter includes sincerely/thank you, name, and adequate space for a written signature.

Signature is incomplete (missing one of the following: sincerely/thank you, name, and adequate space for a written signature).

Signature is not professional: (i.e., “peace out” or “goodbye.” Or missing more than one of the required elements.

The letter does not include sincerely/thank you, name, and adequate space for a written signature.

Mechanics (word choice, sentence variety, grammar, punctuation, spelling, paragraphing)

The writer’s control of mechanics is precise and purposeful. Demonstrates the ability to communicate purpose.

The writer’s control of mechanics has occasional errors that do not interfere with the writer’s ability to communicate purpose.

The writer’s control of mechanics has errors that interfere with the writer’s ability to communicate purpose.

The writer’s control of mechanics has errors that not only interfere with the writer’s ability to communicate purpose consistently, but they also obscure meaning.

Presentation (professional appearance)

The letter is written in an application such as Microsoft Word with no errors. Design is vibrant, detailed, and organized, enhancing the message. Professional appearance with structured paragraphs and professional verbiage

The letter is less organized. Design is aesthetically pleasing. Verbiage is less professional and more informal.

The letter is somewhat challenging to read.

The design shows modest effort or too overly informal.

The letter is messy. The letter is produced in something other than a word processing application. The design is sloppy or nonexistent. The letter has a nonprofessional appearance.

Total 20

1

Economics homework help

4/25/22, 7:19 AM Topic: Week 13 Discussion: The question of a balanced budget – Canvas – CSU

https://colostate.instructure.com/courses/138100/discussion_topics/1321513 1/4

This is a graded discussion: 15 points possible
due Apr 25

83 83

For this week’s discussion post, we are going to debate the U.S. federal budget and the different opinions regarding the need (or
not) for a balanced budget.

The comic below exhibits a satire about people’s feelings regarding the federal budget: regardless of the result, they are never
happy with it. In 1995, a proposed constitutional amendment that would require a balanced budget passed the U.S. House of
Representatives by a wide margin, and failed in the U.S. Senate by only one vote. As a result, the U.S. federal government doesn’t
have to run on a balanced budget by law, but a number of economists argue it should. In the comic, you can see some of the
arguments used by the general public to claim that a balanced budget is not a good end goal, but what are some of the arguments
that economists use to claim that it is a good idea? On the other hand, what are the economic arguments presented by balanced
budget opponents? Do you agree with the complaints made by the comic characters about deficits or with the complaints regarding
surpluses? (Or Both? Or Neither?) Justify your answers.

13 Week 13 Discussion: The question of a balanced budget

Logout Close your browser to end your session. (http://www.acns.colostate.edu/single-sign-on-using-shibboleth/#1471272725675-5603b487-
ebab)

Faisal Alzneidi

4/25/22, 7:19 AM Topic: Week 13 Discussion: The question of a balanced budget – Canvas – CSU

https://colostate.instructure.com/courses/138100/discussion_topics/1321513 2/4

4/25/22, 7:19 AM Topic: Week 13 Discussion: The question of a balanced budget – Canvas – CSU

https://colostate.instructure.com/courses/138100/discussion_topics/1321513 3/4

You are then free to comment/agree/disagree with fellow classmates’ posts. If you do disagree, please make sure to clearly explain
why, and provide all resources at the bottom of the post in APA/MLA formatting.

Important
Read the prompt above carefully.
Click on “Reply” to write or paste your answer. Longer answers may be easier to write and spellcheck in a Word document first.
Your post should be at least 4 sentences long
When you have finished entering your answer click on the “Submit” button.
You should participate in the discussion board every week.
Minimum requirement: You are expected to make your own post and comment on at least one other student’s post.

In your communication with other students, please:
Expand on or clarify an important point.
Offer an additional argument to support a position taken in an answer.
Suggest ways in which an idea could be more clearly expressed.
Identify passages where you think the writer misunderstood a concept or applied it incorrectly.
Disagree with a point or position made in an answer.

If you disagree with the views of another student, please:
Be constructive and respectful.
Politely critique a position on an issue, but not the person.
Avoid sarcasm, swearing, or language that would be considered rude or argumentative.
State precisely the point you disagree with.
Offer reasons why you think their view is incorrect and support your position by citing the text or other sources.

4/25/22, 7:19 AM Topic: Week 13 Discussion: The question of a balanced budget – Canvas – CSU

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Economics homework help

1a – US model

United States
delta 0.1 To fill: kss 1st year kt within 1% of kss:
alpha 0.33333 To fill: yss
savings rate 0.2
pop growth n 0.012
tech growth x 0.035
Initial Condtions
L0 170 (US pop in millions)
K0 600000
A0 100
Model Deduced Variables
Units Million Normalization Millions of Dollars Millions of Real Dollars Millions of Real Dollars
Year Population TFP Capital Output Investment Output per Efficiency Unit Output/Capita Capital/Capita Labor Share Real Wages GDP Per Capita Growth Real Rental Rate
1955 170 100 600000 258823.9964 51764.79928
1956 172.04 103.5 591764.7993 268780.584 53756.11681
1957 174.10448 107.1225 586344.4362 279550.2225 55910.04449
1958 176.1937338 110.8717875 583620.037 291192.1655 58238.4331
1959 178.3080586 114.7523001 583496.4664 303768.736 60753.74719
1960 180.4477553 118.7686306 585900.567 317345.4964 63469.09928
1961 182.6131283 122.9255326 590779.6096 331991.4475 66398.28949
1962 184.8044859 127.2279263 598099.9381 347779.2555 69555.8511
1963 187.0221397 131.6809037 607845.7954 364785.5097 72957.10194
1964 189.2664054 136.2897353 620018.3178 383091.0094 76618.20187
1965 191.5376022 141.0598761 634634.6879 402781.0812 80556.21624
1966 193.8360535 145.9969717 651727.4353 423945.9259 84789.18518
1967 196.1620861 151.1068657 671343.877 446680.9949 89336.19898
1968 198.5160311 156.395606 693545.6883 471087.3955 94217.47911
1969 200.8982235 161.8694522 718408.5985 497272.3259 99454.46518
1970 203.3090022 167.5348831 746022.2039 525349.5389 105069.9078
1971 205.7487102 173.398604 776489.8913 555439.8356 111087.9671
1972 208.2176947 179.4675551 809928.8693 587671.5897 117534.3179
1973 210.7163071 185.7489196 846470.3003 622181.3026 124436.2605
1974 213.2449028 192.2501317 886259.5308 659114.1915 131822.8383
1975 215.8038416 198.9788863 929456.416 698624.8126 139724.9625
1976 218.3934877 205.9431474 976235.7369 740877.7197 148175.5439
1977 221.0142096 213.1511575 1026787.707 786048.1618 157209.6324
1978 223.6663801 220.611448 1081318.569 834322.8225 166864.5645
1979 226.3503766 228.3328487 1140051.276 885900.6029 177180.1206
1980 229.0665812 236.3244984 1203226.269 940993.4517 188198.6903
1981 231.8153801 244.5958559 1271102.333 999827.246 199965.4492
1982 234.5971647 253.1567108 1343957.549 1062642.726 212528.5453
1983 237.4123307 262.0171957 1422090.339 1129696.489 225939.2979
1984 240.2612786 271.1877976 1505820.603 1201262.043 240252.4086
1985 243.144414 280.6793705 1595490.951 1277630.928 255526.1857
1986 246.0621469 290.5031484 1691468.042 1359113.911 271822.7823
1987 249.0148927 300.6707586 1794144.02 1446042.252 289208.4505
1988 252.0030714 311.1942352 1903938.068 1538769.056 307753.8112
1989 255.0271083 322.0860334 2021298.073 1637670.708 327534.1416
1990 258.0874336 333.3590446 2146702.407 1743148.406 348629.6812
1991 261.1844828 345.0266111 2280661.848 1855629.789 371125.9577
1992 264.3186966 357.1025425 2423721.621 1975570.668 395114.1337
1993 267.4905209 369.6011315 2576463.592 2103456.882 420691.3764
1994 270.7004072 382.5371711 2739508.609 2239806.259 447961.2517
1995 273.9488121 395.9259721 2913519 2385170.715 477034.143
1996 277.2361978 409.7833811 3099201.243 2540138.491 508027.6981
1997 280.5630322 424.1257995 3297308.817 2705336.528 541067.3056
1998 283.9297886 438.9702025 3508645.241 2881433.009 576286.6018
1999 287.336946 454.3341595 3734067.319 3069140.054 613828.0108
2000 290.7849894 470.2358551 3974488.598 3269216.605 653843.321
2001 294.2744093 486.6941101 4230883.059 3482471.491 696494.2982
2002 297.8057022 503.7284039 4504289.051 3709766.697 741953.3393
2003 301.3793706 521.3588981 4795813.485 3952020.847 790404.1693
2004 304.995923 539.6064595 5106636.306 4210212.916 842042.5833
2005 308.6558741 558.4926856 5438015.259 4485386.188 897077.2377
2006 312.3597446 578.0399296 5791290.971 4778652.466 955730.4931
2007 316.1080615 598.2713271 6167892.367 5091196.563 1018239.313
2008 319.9013583 619.2108235 6569342.443 5424281.093 1084856.219
2009 323.7401746 640.8832024 6997264.417 5779251.565 1155850.313
2010 327.6250567 663.3141145 7453388.288 6157541.823 1231508.365
2011 331.5565574 686.5301085 7939557.824 6560679.828 1312135.966
2012 335.535236 710.5586623 8457738.007 6990293.84 1398058.768
2013 339.5616589 735.4282154 9010022.974 7448118.983 1489623.797
2014 343.6363988 761.168203 9598644.474 7936004.258 1587200.852
2015 347.7600356 787.8090901 10225980.88 8455920.009 1691184.002
2016 351.933156 815.3824082 10894566.79 9009965.877 1801993.175
2017 356.1563539 843.9207925 11607103.29 9600379.281 1920075.856
2018 360.4302301 873.4580203 12366468.82 10229544.45 2045908.89
2019 364.7553929 904.029051 13175730.82 10900002.06 2180000.411
2020 369.1324576 935.6700677 14038158.15 11614459.46 2322891.892
2021 373.5620471 968.4185201 14957234.23 12375801.66 2475160.333
2022 378.0447916 1002.313168 15936671.14 13187102.94 2637420.588
2023 382.5813291 1037.394129 16980424.61 14051639.25 2810327.85
2024 387.1723051 1073.702924 18092710 14972901.49 2994580.298
2025 391.8183728 1111.282526 19278019.3 15954609.55 3190921.909
2026 396.5201932 1150.177414 20541139.28 17000727.36 3400145.472
2027 401.2784356 1190.433624 21887170.82 18115478.9 3623095.78
2028 406.0937768 1232.098801 23321549.52 19303365.24 3860673.047
2029 410.9669021 1275.222259 24850067.62 20569182.7 4113836.539
2030 415.8985049 1319.855038 26478897.39 21918042.25 4383608.45
2031 420.889287 1366.049964 28214616.1 23355390.13 4671078.026
2032 425.9399584 1413.861713 30064232.52 24887029.83 4977405.966
2033 431.0512379 1463.346873 32035215.23 26519145.54 5303829.107
2034 436.2238528 1514.564013 34135522.82 28258327.09 5651665.417
2035 441.458539 1567.573754 36373635.95 30111596.59 6022319.319
2036 446.7560415 1622.438835 38758591.68 32086436.78 6417287.356
2037 452.117114 1679.224195 41300019.87 34190821.21 6838164.242
2038 457.5425194 1737.997041 44008182.12 36433246.46 7286649.292
2039 463.0330296 1798.826938 46894013.2 38822766.44 7764553.288
2040 468.5894259 1861.785881 49969165.17 41369028.94 8273805.788
2041 474.212499 1926.948387 53246054.44 44082314.59 8816462.918
2042 479.903049 1994.39158 56737911.91 46973578.37 9394715.674
2043 485.6618856 2064.195285 60458836.4 50054493.83 10010898.77
2044 491.4898283 2136.44212 64423851.52 53337500.22 10667500.04
2045 497.3877062 2211.217595 68648966.41 56835852.74 11367170.55
2046 503.3563587 2288.61021 73151240.32 60563676.02 12112735.2
2047 509.396635 2368.711568 77948851.49 64536021.18 12907204.24
2048 515.5093946 2451.616473 83061170.58 68768926.58 13753785.32
2049 521.6955073 2537.423049 88508838.84 73279482.59 14655896.52
2050 527.9558534 2626.232856 94313851.47 78085900.56 15617180.11

1b – US modeldata

United States
delta 0.1
alpha 0.33333
savings rate 0.2
pop growth n 0.012
tech growth x 0.035
Initial Condtions
L0 170 (US pop in millions)
K0 600000
A0 100
Model Data
Units Million Normalization Millions of Dollars Millions of Real Dollars Millions of Real Dollars
Year Population TFP Capital Output Investment Real GDP (PPP) Population Growth of Real GDP per capita
1955 170 100 600000 258823.9964 51764.79928
1956 172.04 103.5 591764.7993 268780.584 53756.11681
1957 174.10448 107.1225 586344.4362 279550.2225 55910.04449
1958 176.1937338 110.8717875 583620.037 291192.1655 58238.4331
1959 178.3080586 114.7523001 583496.4664 303768.736 60753.74719
1960 180.4477553 118.7686306 585900.567 317345.4964 63469.09928
1961 182.6131283 122.9255326 590779.6096 331991.4475 66398.28949
1962 184.8044859 127.2279263 598099.9381 347779.2555 69555.8511
1963 187.0221397 131.6809037 607845.7954 364785.5097 72957.10194
1964 189.2664054 136.2897353 620018.3178 383091.0094 76618.20187
1965 191.5376022 141.0598761 634634.6879 402781.0812 80556.21624
1966 193.8360535 145.9969717 651727.4353 423945.9259 84789.18518
1967 196.1620861 151.1068657 671343.877 446680.9949 89336.19898
1968 198.5160311 156.395606 693545.6883 471087.3955 94217.47911
1969 200.8982235 161.8694522 718408.5985 497272.3259 99454.46518
1970 203.3090022 167.5348831 746022.2039 525349.5389 105069.9078
1971 205.7487102 173.398604 776489.8913 555439.8356 111087.9671
1972 208.2176947 179.4675551 809928.8693 587671.5897 117534.3179
1973 210.7163071 185.7489196 846470.3003 622181.3026 124436.2605
1974 213.2449028 192.2501317 886259.5308 659114.1915 131822.8383
1975 215.8038416 198.9788863 929456.416 698624.8126 139724.9625
1976 218.3934877 205.9431474 976235.7369 740877.7197 148175.5439
1977 221.0142096 213.1511575 1026787.707 786048.1618 157209.6324
1978 223.6663801 220.611448 1081318.569 834322.8225 166864.5645
1979 226.3503766 228.3328487 1140051.276 885900.6029 177180.1206
1980 229.0665812 236.3244984 1203226.269 940993.4517 188198.6903
1981 231.8153801 244.5958559 1271102.333 999827.246 199965.4492
1982 234.5971647 253.1567108 1343957.549 1062642.726 212528.5453
1983 237.4123307 262.0171957 1422090.339 1129696.489 225939.2979
1984 240.2612786 271.1877976 1505820.603 1201262.043 240252.4086
1985 243.144414 280.6793705 1595490.951 1277630.928 255526.1857
1986 246.0621469 290.5031484 1691468.042 1359113.911 271822.7823
1987 249.0148927 300.6707586 1794144.02 1446042.252 289208.4505
1988 252.0030714 311.1942352 1903938.068 1538769.056 307753.8112
1989 255.0271083 322.0860334 2021298.073 1637670.708 327534.1416
1990 258.0874336 333.3590446 2146702.407 1743148.406 348629.6812
1991 261.1844828 345.0266111 2280661.848 1855629.789 371125.9577
1992 264.3186966 357.1025425 2423721.621 1975570.668 395114.1337
1993 267.4905209 369.6011315 2576463.592 2103456.882 420691.3764
1994 270.7004072 382.5371711 2739508.609 2239806.259 447961.2517
1995 273.9488121 395.9259721 2913519 2385170.715 477034.143
1996 277.2361978 409.7833811 3099201.243 2540138.491 508027.6981
1997 280.5630322 424.1257995 3297308.817 2705336.528 541067.3056
1998 283.9297886 438.9702025 3508645.241 2881433.009 576286.6018
1999 287.336946 454.3341595 3734067.319 3069140.054 613828.0108
2000 290.7849894 470.2358551 3974488.598 3269216.605 653843.321
2001 294.2744093 486.6941101 4230883.059 3482471.491 696494.2982
2002 297.8057022 503.7284039 4504289.051 3709766.697 741953.3393
2003 301.3793706 521.3588981 4795813.485 3952020.847 790404.1693
2004 304.995923 539.6064595 5106636.306 4210212.916 842042.5833
2005 308.6558741 558.4926856 5438015.259 4485386.188 897077.2377
2006 312.3597446 578.0399296 5791290.971 4778652.466 955730.4931
2007 316.1080615 598.2713271 6167892.367 5091196.563 1018239.313
2008 319.9013583 619.2108235 6569342.443 5424281.093 1084856.219
2009 323.7401746 640.8832024 6997264.417 5779251.565 1155850.313
2010 327.6250567 663.3141145 7453388.288 6157541.823 1231508.365
2011 331.5565574 686.5301085 7939557.824 6560679.828 1312135.966
2012 335.535236 710.5586623 8457738.007 6990293.84 1398058.768
2013 339.5616589 735.4282154 9010022.974 7448118.983 1489623.797
2014 343.6363988 761.168203 9598644.474 7936004.258 1587200.852
2015 347.7600356 787.8090901 10225980.88 8455920.009 1691184.002
2016 351.933156 815.3824082 10894566.79 9009965.877 1801993.175
2017 356.1563539 843.9207925 11607103.29 9600379.281 1920075.856
2018 360.4302301 873.4580203 12366468.82 10229544.45 2045908.89
2019 364.7553929 904.029051 13175730.82 10900002.06 2180000.411
2020 369.1324576 935.6700677 14038158.15 11614459.46 2322891.892
2021 373.5620471 968.4185201 14957234.23 12375801.66 2475160.333
2022 378.0447916 1002.313168 15936671.14 13187102.94 2637420.588
2023 382.5813291 1037.394129 16980424.61 14051639.25 2810327.85
2024 387.1723051 1073.702924 18092710 14972901.49 2994580.298
2025 391.8183728 1111.282526 19278019.3 15954609.55 3190921.909
2026 396.5201932 1150.177414 20541139.28 17000727.36 3400145.472
2027 401.2784356 1190.433624 21887170.82 18115478.9 3623095.78
2028 406.0937768 1232.098801 23321549.52 19303365.24 3860673.047
2029 410.9669021 1275.222259 24850067.62 20569182.7 4113836.539
2030 415.8985049 1319.855038 26478897.39 21918042.25 4383608.45
2031 420.889287 1366.049964 28214616.1 23355390.13 4671078.026
2032 425.9399584 1413.861713 30064232.52 24887029.83 4977405.966
2033 431.0512379 1463.346873 32035215.23 26519145.54 5303829.107
2034 436.2238528 1514.564013 34135522.82 28258327.09 5651665.417
2035 441.458539 1567.573754 36373635.95 30111596.59 6022319.319
2036 446.7560415 1622.438835 38758591.68 32086436.78 6417287.356
2037 452.117114 1679.224195 41300019.87 34190821.21 6838164.242
2038 457.5425194 1737.997041 44008182.12 36433246.46 7286649.292
2039 463.0330296 1798.826938 46894013.2 38822766.44 7764553.288
2040 468.5894259 1861.785881 49969165.17 41369028.94 8273805.788
2041 474.212499 1926.948387 53246054.44 44082314.59 8816462.918
2042 479.903049 1994.39158 56737911.91 46973578.37 9394715.674
2043 485.6618856 2064.195285 60458836.4 50054493.83 10010898.77
2044 491.4898283 2136.44212 64423851.52 53337500.22 10667500.04
2045 497.3877062 2211.217595 68648966.41 56835852.74 11367170.55
2046 503.3563587 2288.61021 73151240.32 60563676.02 12112735.2
2047 509.396635 2368.711568 77948851.49 64536021.18 12907204.24
2048 515.5093946 2451.616473 83061170.58 68768926.58 13753785.32
2049 521.6955073 2537.423049 88508838.84 73279482.59 14655896.52
2050 527.9558534 2626.232856 94313851.47 78085900.56 15617180.11
2051 534.2913237 2718.151006 100499646.4 83207586.4 16641517.28
2052 540.7028195 2813.286291 107091199.1 88665218.88 17733043.78
2053 547.1912534 2911.751311 114115122.9 94480833.16 18896166.63
2054 553.7575484 3013.662607 121599777.3 100677909.7 20135581.94
2055 560.402639 3119.140798 129575381.5 107281469.2 21456293.84

2a – China model

China
delta 0.1 kss (tech growth) kss (no tech growth)
alpha 0.33333 yss (tech growth) yss (no tech growth)
savings 0.2
pop growth n 0.025
tech growth x 0.035
Initial Condtions
L0 600 (China pop in millions)
K0 100000
A0 —> 20 years behind US
Model Deduced Variables Growth Accounting (real GDP)
Units Million Normalization Millions of Dollars Millions of Real Dollars Millions of Real Dollars
Year Population TFP Capital Output Investment Output per Efficiency Unit Output/Capita Capital/Capita Labor Share Real Wages GDP Per Capita Growth Real Rental Rate TFP Contribution Capital Contribution Labor Contribution
1955 600 100 100000 330187.0941 66037.41881
1956 615 100 156037.4188 389330.3993 77866.07986
1957 630.375 100 218299.7568 442665.0897 88533.01795
1958 646.134375 100 285002.7991 491838.8055 98367.7611
1959 662.2877344 100 354870.2803 537912.8524 107582.5705
1960 678.8449277 100 426965.8227 581614.7702 116322.954
1961 695.8160509 100 500592.1945 623468.9023 124693.7805
1962 713.2114522 100 575226.7555 663868.725 132773.745
1963 731.0417385 100 650477.8249 703119.458 140623.8916
1964 749.317782 100 726053.934 741464.5056 148292.9011
1965 768.0507265 100 801741.4418 779102.5963 155820.5193
1966 787.2519947 100 877387.8168 816199.309 163239.8618
1967 806.9332945 100 952888.897 852895.0717 170579.0143
1968 827.1066269 100 1028179.022 889310.8647 177862.1729
1969 847.7842926 100 1103223.292 925552.3834 185110.4767
1970 868.9788999 100 1178011.44 961713.1395 192342.6279
1971 890.7033724 100 1252552.924 997876.8159 199575.3632
1972 912.9709567 100 1326872.995 1034119.082 206823.8163
1973 935.7952306 100 1401009.511 1070509.014 214101.8029
1974 959.1901114 100 1475010.363 1107110.227 221422.0455
1975 983.1698642 100 1548931.372 1143981.776 228796.3553
1976 1007.749111 103.5 1622834.59 1222520.155 244504.031
1977 1032.942839 107.1225 1705055.162 1307676.476 261535.2953
1978 1058.76641 110.8717875 1796084.941 1399971.983 279994.3966
1979 1085.23557 114.7523001 1896470.844 1499968.001 299993.6003
1980 1112.366459 118.7686306 2006817.36 1608269.286 321653.8571
1981 1140.17562 122.9255326 2127789.481 1725527.619 345105.5239
1982 1168.680011 127.2279263 2260116.057 1852445.692 370489.1384
1983 1197.897011 131.6809037 2404593.589 1989781.271 397956.2543
1984 1227.844437 136.2897353 2562090.485 2138351.697 427670.3394
1985 1258.5405

Economics homework help

Discussion: Elections and the Economy

As you heard in the debates and town hall meetings during the last election, the candidates often differed on the state of the economy. With that in mind, what are two macroeconomic indicators that you would use to assess the economy’s condition over the next six months? Please indicate why you selected them.

In each discussion forum, students are expected to respond to the prompt by providing an informed, rigorous, and professional post. The initial post should be at least 150 words. In addition, students are required to respond at least 2 times to their classmates’ posts in a similarly informed, rigorous, and professional manner. Peer replies should be at least 100 words in order to qualify as substantive. Refer to the discussion rubric for more details.

Economics homework help

Banking Project
There are 3 parts to this project for a total of 105 points. First, select an

institution by deadline. Second, participate in peer review by deadline. Lastly,

the presentation. Students should be prepared to answer questions

about their project. Listed below are general education outcomes and the specific tasks
students perform to achieve that outcome.

SELECT FINANCIAL INSTITUTION
Student will select a primary financial institution, intermediary or fringe banking

service.

Worth 5 points

Critical Analysis and Reasoning & Local and Global
Diversity
Student clearly present

-brief history using a timeline;

-purpose/why was it created;

-advertisement examples including commercials;

-list competition along with assets, including at least one minority institution;

See resources below

Minority Depository Institutions Advisory Committee | OCC

FDIC: Minority Depository Institutions Program

Women-owned banks in the U.S. | Mighty Deposits

Banking Black: List of Black-owned banks, credit unions, and other ways to

support Black communities through banking | Mighty Deposits

-audience.

The information provided is supported with ample applicable data/evidence.

Worth 30 points.

Scientific, Quantitative, or Logical Reasoning &
Personal and Professional Ethics
Student can analyze historical and current policy of the institution in reference to

the Great Recession or the Coronavirus Epidemic. Worth 15 points.

How was your institution affected by the Great Recession? Did your bank

receive TARP or Coronavirus stimulus? What are some policies implemented after the Financial

Meltdown or the Epidemic?

Below are a few helpful links

https://projects.propublica.org/bailout/list

https://www.sigtarp.gov/Audit%20Reports/SIGTARP_CDCI_Report.pdf

https://www.fdic.gov/coronavirus/

https://www.businessinsider.com/how-government-stimulus-package-could-impact-
banks-2020-3

Critical Analysis and Reasoning
Student will use data.census.gov to research find the following for the student’s zip code:

Population

Income

Education

Race

U.S. Bureau of Labor Statistics (bls.gov)

State employment by major industry sector

Unemployment rate

Poverty rate

This can be a text box inserted any where in the banking project.

Worth 5 points.

Critical Analysis and Reasoning
Include in your project the current economy as it relates to banks; the passing of

the CARES Act, the second and third stimulus package. Remember we are

looking at how banks are being used to assist businesses. Think about the short

and long term effects of banks assisting the federal government by making loans

to businesses.

Worth 10 points.

I’m adding this link to assist you in your discovery as well as those below:

What Is in the $900 Billion COVID Second Stimulus Package? (nymag.com)

and Trump Signs Stimulus Package—Here’s What It Means For You

(forbes.com).

Also consider monetary policy; what tool/tools were used and do you agree or

disagree with the use of the tools. Explain your response.

Additional links are below to assist in your project as a whole.

https://www.dllr.state.md.us/finance/consumers/cusc.shtml

https://www.dllr.state.md.us/finance/consumers/banksc.shtml

https://www.dllr.state.md.us/finance/

Worth 10 points.

Scientific, Quantitative, or Logical Reasoning &
Personal and Professional Ethics & Technological
Competence
Agency can be defined as the capacity of individuals to act independently and

to make their own free choices. Agency and freedom have meant different

things at different points in history, from the abolitionist movement to the

women’s movement to the civil rights movement to occupy Wall Street

movement to the Black Lives Matter movement.

The student will interview someone at least 20 years older than you.
-What were this circumstances surrounding opening their first bank account?

Explain. What has been their overall banking experience? Explain

-Does having a bank account aid with upward mobility? Explain

-Does having a bank account grant or reduce agency? Explain

Students should ask (create) follow up and or additional questions. Also, think

how you would answer these interview questions.

Written and Oral Communications

Students should use PowerPoint, Keynote, Heganoo, Prezi or other presentation tools
with a minimum of 6 slides note including the title or work cited page.

Worth 20 points.

Information Literacy
The student used scholarly resources from the library and/or industry websites.

Minimum of four original sources will be highlighted in your work cited page. For your citations,
use APA or MLA style citations. The library provides information on how to do these. I good
idea is to use a web search to learn which style is used in your intended major. An additional
good reference source is Purdue University’s OWL: APA, MLA.

Worth 10 points.

Critical Analysis and Reasoning- Peer review
Respond to at least two classmates. You are to use at least 3 of the

discussion prompts in responding to your classmates.

Worth 15 points.

  • Critical Analysis and Reasoning & Local and Global Diversity
  • Scientific, Quantitative, or Logical Reasoning & Personal and Professional Ethics
  • Critical Analysis and Reasoning
  • Critical Analysis and Reasoning
  • Scientific, Quantitative, or Logical Reasoning & Personal and Professional Ethics & Technological Competence
  • Information Literacy
  • Critical Analysis and Reasoning- Peer review

Economics homework help

Format:

· Length of the Paper : 5 -6 pages – including all graphs and tables

· Font: Times New Roman 12

· Spacing: 1.5

Title of the paper and names of authors

Example : The Future of Democracy in USA

by John Hannity and Wolf Carpenter

Introduction

Clearly state the current economic situation of the country. State if it is a low income country or a high income country. Use the following World Bank criteria.

https://blogs.worldbank.org/opendata/new-world-bank-country-classifications-income-level-2021-2022

Path to Current Economic Status

Explain if the country has gone through an industrial revolution.

If so, what was the role of the government?

What was the role of private enterprises and markets?

Quote References where necessary and use them to highlight your statements.

If not, explain why.

References:

· Use the MLA style given in the following link or any other professional style.


https://owl.english.purdue.edu/owl/resource/717/01/

Criteria of Grading the Paper

1. Relevance of cited research papers to the developments in the country

2. Quality of explanation of the economic developments of the country

3. Analysis of the causes of industrialization or lack of it

4. Quality of Conclusion

5. Extent of own writing: – DO NOT COPY AND PASTE, if you have to quote others’ work provide them within inverted commas, with an acknowledgement and the source.

6. Do not post papers you have submitted to any other classes

7. We will be checking plagiarism using Turnitin Software

8. Correct way of quoting references

9. Correct format

Economics homework help

Chapter 18

Global Marketing and R&D

©McGraw-Hill Education. All rights reserved. Authorized only for instructor use in the classroom.  No reproduction or further distribution permitted without the prior written consent of McGraw-Hill Education.

1

Learning Objectives 1 of 2

LO 18-1 Explain why it might make sense to vary the attributes of a product from country to country.

LO 18-2 Recognize why and how a firm’s distribution strategy might vary among countries.

LO 18-3 Identify why and how advertising and promotional strategies might vary among countries. 

LO 18-4 Explain why and how a firm’s pricing strategy might vary among countries.

©McGraw-Hill Education.

2

Learning Objectives 2 of 2

LO 18-5 Understand how to configure the marketing mix globally.

LO 18-6 Understand the importance of international market research.

LO 18-7 Describe how globalization is affecting product development.

©McGraw-Hill Education.

3

Introduction

Mass producing a standardized output:

Allows a firm to realize substantial unit cost reductions from experience curve effects and other economies of scale

However:

Ignoring country differences in consumer tastes and preferences can lead to failure

There is a link between marketing and R&D

Marketing mix – product, price, promotion, and place

©McGraw-Hill Education.

Marketing mix is the choices about product attributes, distribution strategy, communication strategy, and pricing strategy that a firm offers to its targeted markets.

4

Globalization of Markets and Brands

Theodore Levitt’s HBR article

Importance of technology in globalization

Fewer differences in national and regional preferences

Global corporations sell the same things the same way.

Leads to standardization of products, manufacturing, trade and commerce

Is Levitt right?

©McGraw-Hill Education.

5

Market Segmentation 1 of 2

Markets are segmented by:

Geography

Demography

Sociocultural factors

Psychological factors

©McGraw-Hill Education.

Market segmentation involves identifying groups of consumers whose purchasing behavior differs from others in important ways.

6

Market Segmentation 2 of 2

Issues for marketing managers:

Differences between countries in the structure of market segments

Existence of segments that transcend national borders

Intermarket segment

Enhances the ability of an international business to view the global marketplace as a single entity and pursue a global strategy

©McGraw-Hill Education.

Intermarket segment is a segment of customers that spans multiple countries, transcending national borders.

7

Product Attributes 1 of 3

Learning Objective 18-1 Explain why it might make sense to vary the attributes of a product from country to country.

Cultural Differences

Social structure, language, religion, education, others

Tastes and preferences are becoming more cosmopolitan.

©McGraw-Hill Education.

8

Product Attributes 2 of 3

Economic Development

Consumer behavior is influenced by the level of economic development of a country.

Consumers in the most developed countries are often not willing to sacrifice their preferred attributes for lower prices.

Consumers in the most advanced countries are willing to pay more for products that have additional features and attributes customized to their tastes and preferences.

©McGraw-Hill Education.

9

Product Attributes 3 of 3

Product and Technical Standards

Regional trade agreements may influence certain regional markets to become more globalized.

Differing government-mandated product standards can often result in companies ruling out mass production and marketing of a fully global and standardized product.

Differences in technical standards also constrain the globalization of markets.

©McGraw-Hill Education.

10

Distribution Strategy 1 of 5

Learning Objective 18-2 Recognize why and how a firm’s distribution strategy might vary among countries.

Typical Distribution System

Channel with a wholesale distributor and a retailer

Firm may also sell directly to the consumer, to the retailer, or to the wholesaler

Firm may sell to an import agent who then deals with the wholesale distributor, the retailer, or the consumer

©McGraw-Hill Education.

11

Figure 18.1 A typical distribution system

Jump to long description in appendix

Source: C. W. L. Hill and G. T. M. Hult, Global Business Today (New York: McGraw-Hill Education, 2018)

©McGraw-Hill Education.

12

Distribution Strategy 2 of 5

Differences between Countries

Retail Concentration

Concentrated retail system

Greater in developed countries because of car ownership, number of households with refrigerators and freezers, and number of two-income households

Fragmented retail system

More common in developing countries because of geography and road conditions

©McGraw-Hill Education.

Concentrated retail system is a retail system in which a few retailers supply most of the market.

Fragmented retail system is a retail system in which there are many retailers, none of which has a major share of the market.

13

Distribution Strategy 3 of 5

Differences between Countries continued

Channel length

Producer to consumer = short channel

Producer sells through import agent, wholesaler, and retailer = long channel

Countries with fragmented retail systems also tend to have long channels of distribution.

Large discount superstores shorten channel length.

©McGraw-Hill Education.

Channel length refers to the number of intermediaries between the producer (or manufacturer) and the consumer.

14

Distribution Strategy 4 of 5

Differences between Countries continued

Channel exclusivity

Varies among countries (ex. Japan is very exclusive)

Channel quality

Not consistent in emerging markets and less developed nations

May impede market entry

©McGraw-Hill Education.

Exclusive distribution channel is a distribution channel that is difficult for outsiders to access.

Channel quality refers to the expertise, competencies, and skills of established retailers in a nation and their ability to sell and support the products of international businesses.

15

Distribution Strategy 5 of 5

Choosing a Distribution Strategy

Determined by relative costs and benefits of retail concentration, channel length, channel exclusivity, and channel quality

Link between channel length, final selling price, and profit margin

A longer channel cuts selling costs when the retail sector is very fragmented and provides access to an exclusive channel.

©McGraw-Hill Education.

16

Communication Strategy 1 of 10

Learning Objective 18-3 Identify why and how advertising and promotional strategies might vary among countries.

Barriers to International Communication

Cultural barriers

Make it difficult to communicate messages

Need to develop cross-cultural literacy

Use local input in developing the marketing message

©McGraw-Hill Education.

17

Communication Strategy 2 of 10

Barriers to International Communication continued

Source and country of origin effects

Source effects can be damaging when there is bias against foreign firms.

Country of origin effects

Consumer may use country of origin as a cue when evaluating a product

Use promotional messages that stress the positive performance attributes of the product

Not always negative

©McGraw-Hill Education.

Source effects occur when the receiver of the message (the potential consumer in this case) evaluates the message on the basis of status or image of the sender.

Country of origin effects refer to the extent to which the place of manufacturing influences product evaluations.

18

Communication Strategy 3 of 10

Barriers to International Communication continued

Noise levels

High in highly developed countries

Lower in developing countries because there are fewer firms competing for attention

©McGraw-Hill Education.

Noise refers to the number of other messages competing for a potential consumer’s attention, and this too varies across countries.

19

Communication Strategy 4 of 10

Push versus Pull Strategies

Push strategy emphasizes personal selling.

Costly

Pull strategy depends more on mass media advertising.

Choice is determined by:

Consumer sophistication

Channel length

Media availability

©McGraw-Hill Education.

Push strategy emphasizes personal selling rather than mass media advertising in the promotional mix.

Pull strategy depends more on mass media advertising to communicate the marketing message to potential consumers.

20

Communication Strategy 5 of 10

Push versus Pull Strategies continued

Product Type and Consumer Sophistication

Consumer goods usually use pull strategy, except in nations with poor literacy rates.

Industrial products or complex products favor a push strategy.

©McGraw-Hill Education.

21

Communication Strategy 6 of 10

Push versus Pull Strategies continued

Channel Length

The longer the distribution channel, the more intermediaries.

Can lead to inertia in the channel

Direct selling can be expensive.

©McGraw-Hill Education.

22

Communication Strategy 7 of 10

Push versus Pull Strategies continued

Media Availability

A pull strategy relies on access to advertising media.

In developed countries, advertising is focused.

In developing countries, there are fewer forms of mass media.

Use of pull strategy is limited

Media availability may be limited by law.

©McGraw-Hill Education.

23

Communication Strategy 8 of 10

Push versus Pull Strategies continued

The Push-Pull Mix

Push strategies

For industrial products or complex new products

When distribution channels are short

When few print or electronic media are available

Pull strategies

For consumer goods

When distribution channels are long

When sufficient print and electronic media are available to carry the marketing message

©McGraw-Hill Education.

24

Communication Strategy 9 of 10

Global Advertising

For standardized advertising

Economic advantages

Shortage of creative talent

Global brand names

Against standardized advertising

Cultural differences

Advertising regulations

©McGraw-Hill Education.

25

Communication Strategy 10 of 10

Global Advertising continued

Dealing with country differences

A firm may select some features to include in all its advertising campaigns and localize other features.

©McGraw-Hill Education.

26

Pricing Strategy 1 of 5

Learning Objective 18-4 Explain why and how a firm’s pricing strategy might vary among countries.

Price Discrimination

Charging what the market will bear

Helps maximize profits

National markets must be kept separate.

Price elasticity of demand

Elasticity is greater in countries with low income levels and where there is more competition.

Inelastic demand

©McGraw-Hill Education.

Price elasticity of demand is a measure of the responsiveness of demand for a product to change in price. Demand is said to be elastic when a small change in price produces a large change in demand; it is said to be inelastic when a large change in price produces only a small change in demand.

27

Figure 18.2 Elastic and inelastic demand curves

Source: C. W. L. Hill and G. T. M. Hult, Global Business Today (New York: McGraw-Hill Education, 2018).

©McGraw-Hill Education.

28

Pricing Strategy 2 of 5

Strategic Pricing

Predatory pricing

Use aggressive pricing to drive out competitors and then raise prices and operate in a monopoly position

Requires the firms to have a profitable position in another market to subsidize the aggressive pricing process

Multipoint pricing strategy

Two or more international businesses compete against each other in two or more national markets 

Pricing can be aggressive, eliciting a competitive response

©McGraw-Hill Education.

Strategic pricing has three aspects: predatory pricing, multipoint pricing, and experience curve pricing.

Predatory pricing is the use of price as a competitive weapon to drive weaker competitors out of a national market. 

Multipoint pricing refers to the fact that a firm’s pricing strategy in one market may have an impact on its rivals’ pricing strategy in another market.

29

Pricing Strategy 3 of 5

Strategic Pricing continued

Experience curve pricing

Price low worldwide in attempt to build global sales volume as rapidly as possible, even at a loss

Take profits later after moving down the experience curve

©McGraw-Hill Education.

Experience curve pricing is aggressive pricing designed to increase volume and help the firm realize experience curve economies.

30

Pricing Strategy 4 of 5

Regulatory Influences on Prices

Antidumping regulations

Ambiguity in definition of dumping

Set a floor under export prices and limit firms’ ability to pursue strategic pricing

©McGraw-Hill Education.

31

Pricing Strategy 5 of 5

Regulatory Influences on Prices continued

Competition policy

Designed to promote competition and to restrict monopoly practices

Can be used to limit the prices a firm can charge in a given country

©McGraw-Hill Education.

32

Configuring the Marketing Mix

Learning Objective 18-5 Understand how to configure the marketing mix globally.

Marketing mix may vary according to:

Local differences in culture

Economic conditions

Competitive conditions

Product and technical standards

Distribution systems

Government regulations

Etc.

©McGraw-Hill Education.

33

Table 18.1 Questions to Address to Configure the Marketing Mix 1 of 6

Sample Questions to Address

Product strategy

Product core: Do the customers have similar product needs across international market segments?

Product adoption: How is the product bought by customers in the international market segments targeted?

Product management: How are established products versus new products managed for customers in the international market segments?

Product branding: What is the perception of the product brand by customers in the international market segments?

©McGraw-Hill Education.

34

Table 18.1 Questions to Address to Configure the Marketing Mix 2 of 6

Sample Questions to Address continued

Distribution strategy

Distribution channels: Where is the product typically bought by customers in the international market segments?

Wholesale distribution: What is the role of wholesalers for the international market segments targeted?

Retail distribution: What is the availability of different types of retail stores in the international markets for the customer segments targeted?

©McGraw-Hill Education.

35

Table 18.1 Questions to Address to Configure the Marketing Mix 3 of 6

Sample Questions to Address continued

Communication strategy

Advertising: How is product awareness created for a product to reach customers in the international market segments targeted?

Publicity: What role does publicity (e.g., public relations) play among customers in the international market segments targeted?

Mass media: What role do various media (e.g., TV, radio, newspapers, magazines, billboards) have in reaching customers in the international market segments targeted?

©McGraw-Hill Education.

36

Table 18.1 Questions to Address to Configure the Marketing Mix 4 of 6

Sample Questions to Address continued

Communication strategy continued

Social media: What role do various social media (e.g., Facebook, Twitter, blogs, virtual communities), mainly focused on user-generated content, have in communicating with customers in the international market segments targeted?

Sales promotion: Are rebates, coupons, and other sale offers a widespread activity to motivate customers in the international market segments targeted to buy a company’s products?

©McGraw-Hill Education.

37

Table 18.1 Questions to Address to Configure the Marketing Mix 5 of 6

Sample Questions to Address continued

Pricing strategy

Value: Is the price of a product critical to the customer’s understanding (or perception) of the value of the product itself among customers in the international market segments?

Demand: Is the demand for the product among customers in the international market segments targeted similar to domestic demands?

©McGraw-Hill Education.

38

Table 18.1 Questions to Address to Configure the Marketing Mix 6 of 6

Sample Questions to Address continued

Pricing strategy continued

Costs: Are the fixed and variable costs of the product the same when targeting customers in the international market segments (e.g., are there variable costs that change significantly when going international)?

Retail price: Are there trade tariffs, nontariff barriers, and/or other regulatory influences on price that will influence the pricing equation used to determine the retail price to customers in the international market segments?

©McGraw-Hill Education.

39

International Market Research 1 of 7

Learning Objective 18-6 Understand the importance of international market research.

International Marketing Research

Involves:

All the issues of domestic marketing research

Translation of questionnaires and reports into appropriate foreign languages

Accounting for cultural and environmental differences in data collection

Global companies often have an in-house department

©McGraw-Hill Education.

International market research refers to the systematic collection, recording, analysis, and interpretation of data to provide knowledge that is useful for decision making in a global company.

40

International Market Research 2 of 7

Customer-Satisfaction Companies

J.D. Power

CFI Group

International Market Research Firms

Nielsen

Kantar

Ipsos

NPD Group

©McGraw-Hill Education.

41

International Market Research 3 of 7

Data Collected

Data on the country and potential market segments (geography, demography, sociocultural factors, and psychological factors)

Data to forecast customer demands within specific country or world region (social, economic, consumer, and industry trends)

Data to make marketing mix decisions (product, distribution, communication, and price)

©McGraw-Hill Education.

42

International Market Research 4 of 7

The Process

Defining the research objectives

Determining the data sources

Assessing the costs and benefits of the research

Collecting the data

Analyzing and interpreting the research

Reporting the research findings

©McGraw-Hill Education.

43

Figure 18.3 International market research steps

Source: C. W. L. Hill and G. T. M. Hult, Global Business Today (New York: McGraw-Hill Education, 2018)

©McGraw-Hill Education.

44

International Market Research 5 of 7

Defining the Research Objectives

Defining the research problem

Setting objectives for the international market research

Determining the Data Sources

Primary data

Secondary data

Assessing Costs and Benefits

Primary data is more costly.

Survey development and sampling frame issues

©McGraw-Hill Education.

45

International Market Research 6 of 7

Collecting the Data

Gathering the primary or secondary data

Quantitative

Experiments, clinical trials, observing and recording events, and administering surveys with closed-end questions

Qualitative

In-depth interviews, observation methods, and document reviews

©McGraw-Hill Education.

46

International Market Research 7 of 7

Analyzing and Interpreting the Research

Requires statistical and cultural knowledge

Software for quantitative analysis

Understanding of values, beliefs, norms, and artifacts of the respondent

Reporting the Research Findings

May include information on customers, competitors, countries, the industry, and the environment

©McGraw-Hill Education.

47

Product Development 1 of 5

Learning Objective 18-7 Describe how globalization is affecting product development.

New product success is a product of:

International marketing

R&D

Manufacturing

Technological innovation

Creative destruction

©McGraw-Hill Education.

48

Product Development 2 of 5

The Location of R&D

Rate of new-product development is greatest in countries where:

More money is spent on basic and applied research and development

Underlying demand is strong

Consumers are affluent

Competition is intense

U.S. is no longer the lead market.

©McGraw-Hill Education.

49

Product Development 3 of 5

Integrating R&D, Marketing, and Production

New-product development has a high failure rate.

Development of a technology for which demand is limited

Failure to adequately commercialize promising technology

Inability to manufacture a new product cost effectively

Integrating R&D, production, and marketing can help a company ensure that:

Product development projects are driven by customer needs.

New products are designed for ease of manufacture.

Development costs are kept in check.

Time to market is minimized.

©McGraw-Hill Education.

50

Product Development 4 of 5

Cross-Functional Teams

Objective: take a product development project from the initial concept development to market introduction

Project manager

At least one member from each key function

Physically in one location if possible

Clear plan and goals

Processes for communication and conflict resolution

©McGraw-Hill Education.

51

Product Development 5 of 5

Building Global R&D Capabilities

Commercialization may require different versions of a new product to be produced for various countries.

Global networks of R&D centers

©McGraw-Hill Education.

52

Appendix of Image Long Descriptions

©McGraw-Hill Education.

53

Appendix 1 Figure 18.1 A typical distribution system

From a manufacturer inside the country, goods flow to a wholesale distributor, a retail distributor, and the final customer.

From a manufacturer outside the country, goods flow to a retail distributor and the final customer; but they may also go first to an import agent who sends them to a wholesale distributor, a retail distributor, and the final customer.

Return to original slide

©McGraw-Hill Education.

54

Economics homework help

Stock Journal Assignment

Finance 100
Weeks 3 and 8 and 10 – Stock Journal Assignment ***ONLY light blue fields may be edited.
Student’s Name:
Instructions:
Week 3 Week 3
Three U.S. Companies Ticker Amount Invested Share Price Number of Shares 1. Under Column (B), enter the 3 U.S. Companies you chose in rows 6, 7, and 8.
2. Under Column (C), enter the three ticker symbols (rows 6, 7, and 8).
3. Under Column (D), enter the three amounts (totaling $25,000) you would like to invest in each company.
4. Under Column (E), enter the share price for each of your three chosen companies. You will need to look the share prices up online.
Total Investment $0 5. The number of shares will automatically populate in Column (F).
6. Using the Word document template provided, please discuss why you chose the 3 companies you chose.
Week 8
The difference between weeks 3 and 8 Week 8
U.S. Companies Ticker Share Price Increase/Decrease Per share Total Gain/Loss % Change 1. Enter the updated share price in Column (D). You will need to look the share prices up online.
2. The difference in value of new shares prices and initial purchase share prices will populate in Column (E).
3 The change in the dollar value of your investment will populate in Column (F).
4. The investment percentage change will populate in Column (G).
$0 5. Using the Word document template provided, please discuss any gains or losses experienced. Which stocks changed in value and by how much?
Week 10
The difference between weeks 3 and 10 Week 10
U.S. Companies Ticker Share Price Increase/Decrease Per share Total Gain/Loss % Change 1. Enter the updated share price in Column (D).
2. The difference in value of new shares prices and initially purchase share prices will populate in Column (E).
3 The change in the dollar value of your investment will populate in Column (F).
4. The investment percentage change will populate in Column (G).
$0 5. Using the Word document template provided, please discuss any gains or losses experienced. Which stocks changed in value and how?
Legend: ONLY Light blue fields can be edited

Economics homework help

GUIDELINES FOR JOURNAL ARTICLE CRITIQUE

You must read and critique the article listed below:

· Rewriting Monetary Policy 101: What’s the Fed’s Preferred Post-Crisis Approach to Raising Interest Rates? Author(s): Jane E. Ihrig, Ellen E. Meade, and Gretchen C. Weinbach Source: Journal of Economic Perspectives, Vol. 29, No. 4 (Fall 2015), pp. 177-198

Your written critique should be
no more than
three pages long (typed, double-spaced, one-inch

margins, 12-point Times New Roman font). Please include a
complete
APA-formatted citation for the paper you are critiquing: title, author, journal, and publication date. The citation may be included as a footnote.

Typically, 1.5 – 2 pages of the journal article critique will summarize the article. To fit your summary in 1.5 – 2 pages, you will have to be concise.

The 1.5 – 2 pages of summary will be followed by 1 – 1.5 pages of critique. Questions you must answer include:

(1) Is the title of the article appropriate and clear?

(2) Is the purpose of the article made clear in the introduction?

(3) Has the author been objective in his or her discussion of the topic?

(4) Is the objective of the experiment or of the observations important for the field? How so?

Economics homework help

Homework on Schooling Data

Fig. 4.2 from Easterly (2001, Ch. 4 page 76) shown below presents data on diverse growth outcomes from educational expansion in Africa (1965- 1985).

Select one country and write a 5 page report presenting relevant evidence and critical explanations of what happened to GDP per capita and schooling (levels and growth rates) during these years.

Requirement

1. You need to use/cite at least three sources and present quantitative evidence (Tables/Figures).


2. Your writing should be clear, and your Figures/tables should support your arguments.

3. You need to present relevant evidence and critical explanations of what happened to GDP per capita and schooling during the years 1965-1985

4. You need to choose one country from the ones mentioned in the Figure: Senegal, Botswana, Madagascar, Ghana, or Lesotho

Suggested Resourses

1. General brief orientation about a country: CIA country reports 

2. Data Resource: World Development Indicators (Links to an external site.)
  (make sure you use data on constant dollars/currency when relevant) ; Penn World Tables available in the Data Homework


References
:

Easterly, William, The Elusive Questfor Growth: Economists’ Adventures and Misadventures in the Tropics, MIT Press, Cambridge,

2001.

Economics homework help

1. Explain the following.

a. Commercial consideration vs scientific judgement in approving drugs by FDA

b. Public-interest Theory vs Private-interest Theory of regulation

c. Regular monopoly vs. natural monopoly

d. Economic Regulation vs Social Regulation

2.

a. What are the features Glass-Steagall Banking Act.

b. Which parts were repealed subsequently?

c. How did that lead to 2008 Financial Crisis?

3.

a. What are the criticisms of regulation?

b. Explain deregulation.

c. Explain the impact of deregulation.

Economics homework help

ECON 333 – DEVELOPMENT ECONOMICS
WRITE A PAPER

PAPER TOPIC

Each student will act as a policy advisor to a developing country that is categorized as a low-income country. The instructor will assign you to one of the low-income countries. You cannot change the country that you have been assigned without the prior consent of the instructor.

Country: Mozambique

Using indicators from datasets, such as the Human Development Report and the World Development Indicators (links are below), you can assess the factors that caused this country to be underdeveloped. You need to argue that one factor in specific is more critical than the others. You need to support your argument with evidence from the data, and other information that you can gain from your background reading about your country. You also need to suggest practical and sensible solutions to this critical problem. Your grade will depend on how logical, consistent and convincing your arguments are.

Therefore, you can divide your paper into three parts. In the first section, you will attempt to address all the factors that caused your country to be underdeveloped, and support your argument with indicators. In this section, you have to refer to the indicators of economic development, productivity, absolute poverty, income inequality, population, urbanization, education, health, the sectoral structure of the economy, environmental quality, international trade, foreign finance, political conditions, and any other pertinent indicators discussed in class. You are required to use only the links in the web page to get the indicators you need for your analysis. Do not use any other source of data unless there is an indicator, that you need to support and strengthen your argument, which is not available in these links. In the second section, you will determine which factor amongst all other factors is the most critical. You also have to discuss why you consider this factor more important than the others. In the third section, you will provide suggestions that this country can adopt to solve the one critical problem that you emphasized in the second section in order to get out of the poverty trap. The solutions you suggest have to be creative, practical and implementable.

DATA World Development Indicators:

https://data.worldbank.org/indicator

Human Development Report:

http://hdr.undp.org/

FORMAT The paper needs to be typewritten. The first page is a cover page that includes your name, your ID and the name of the country you are analyzing. The paper should be in a maximum of 4 pages. Any bibliography or other material should be included afterwards in an appendix. The font should be no less than 12, and the format is single spacing.

This is the link to PAPER INSTRUCTION DETAILS. PLEASE WATCH IT



https://www.dropbox.com/s/q6cg4xt3lhodswv/ECON%20Paper%20Instruction.mp4?dl=0

Economics homework help

1. We have discussed how signals can be used to solve adverse selection problems.

Adverse Selection: One party cannot observe certain characteristics of the informed party, and as a result a disproportionate share of people with less desirable characteristics enter the market. For example, if I offer bike insurance, I cannot observe which individuals are more or less likely to ruin their bikes, as a result I will get a disproportionate share of high risk insurers.

Provide a unique and personal example of adverse selection and discuss the possible signals that could be used to identify low and high quality types. Which signal would be most effective and why?

2. In class we have discussed extensively the notion of moral hazard.

Moral Hazard: One party cannot observe the behavior of the informed party, and as a result the informed party will be more likely to act in a way that harms the uniformed party. For example, if I offer bike insurance, I cannot observe how people will behave one they buy my insurance. They are likely to behave in more risky (and hence costly) ways.

You may have heard of the economic problem of “free riding.”

How can moral hazard be thought of as a type of free riding?

Please explain fully and provide an example to illustrate your answer.

Economics homework help

1. Explain the differences between the following.

a. Government regulation vs. Corporate Governance

b. Stockholders vs. Stakeholders

2. Explain the following terms, and provide one example each.

a. Asymmetric Information

b. Moral Hazard

c. Principal-Agent Problem

3. Identify failures in

a. corporate governance and

b. government regulation

in the cases of Enron and Sub-Prime Mortgage Crisis

Economics homework help

***This is a template. Please type over/delete all items in red prior to submitting your assignment.

Week XX (Enter Week) Stock Journal

By Type Your Name Here

FIN100: Principles of Finance

Enter the Name of Your Instructor Here

Type the Date Here (ex. February 10, 2020)

Week XX (Enter Week) Stock Journal

Week 3 Instructions: You do not have to provide any analysis to justify your decisions. You must only provide some reason for picking that company. For example, you might invest in Ford because that company gets a lot of your money and you hear that Ford is doing well, and will continue to do well. Insert your rationale here. One paragraph is more than adequate to provide a reason why you have selected the 3 companies you have chosen.

Week 8 Instructions: Evaluate the results of your current investment. Are you happy with the result and the trend? Are you upset because you’re investment is worth less than $25,000. Feel free to speculate / guess at why you believe the stock increased, decreased, or remained static. Insert your update here. One paragraph is more than adequate to provide and update concerning the 3 companies you have chosen.

Week 10 Instructions: Provide your final opinion / assessment of your investments. Did you make money or lose money? Discuss your results and, based on hindsight, describe what you would do differently. Discuss what you learned from this assignment. Do you believe this assignment will help you in the future in any way? Insert your update here. One paragraph is more than adequate to provide and update concerning the 3 companies you have chosen.

*Use black, size 12, Times New Roman, Arial, Courier, or Calibri fonts. Double-space your paragraph. See the formatting instructions under the Strayer Writing Standards link in the Course Shell.


*AFTER COMPLETING YOUR WORK, DELETE ALL ITEMS IN RED. Your font must be black.

Sources

Sample formatting for an online source:

1. Anya Kamenetz. July 10, 2015. The Writing Assignment That Changes Lives. https://www.npr.org/sections/ed/2015/07/10/419202925/the-writing-assignment-that-changes-lives

You found the share prices for your three companies on websites. Please indicate where you found them here.

1. Website 1

2. Website 2

3. Website 3

PAGE

2

Economics homework help

Reflection Essay

Please read “We Have Record Profits, But We Still Need to Raise Prices” written by Veronica Horton and found here: https://econeveryday.com/we-have-record-profits-but-we-still-need-to-raise-prices/.

What is inflation? How is it linked to price?

Discuss the 2020 decision by the Fed to buy debt from larger firms. What was the goal of this policy? What were the unintended consequences of the policy?

Since the start of the pandemic, many large companies like P&G and Unilever have posted record profits. Now, many of those same companies are warning of future price hikes. Why do these companies keep raising prices if they are earning record profits? How high can companies push prices before it affects demand?

For full credit, you will include a well-reasoned and well-written defense of all your answers. Your reflection essay will be approximately 2-3 paragraphs in length and will be devoid of typographical and grammatical errors.

Grading Rubric for Reflection Essays

Content

Low Scores (0-3)

Average Scores (4-5)

High Score (6-7)

The reflection essay is missing content, i.e., a significant number of questions are left unanswered or are answered in a cursory manner.

The reflection essay contains adequate content, but a few questions are left unanswered or are answered in a cursory manner.

The reflection essay addresses all questions in a thoughtful and substantive manner.

Sentence-level Conventions

Low Scores (0-1)

Average Scores (2)

High Scores (3)

There are 8 or more errors in spelling, grammar, and punctuation.

There are 6-7 errors in spelling, grammar, and punctuation.

There are 5 or fewer errors in spelling, grammar, and punctuation.

Economics homework help

Econ 202: Principles of Microeconomics

Spring 2022

Instructor: Mona Ray

Topics for Term Paper

Paper Due: April 25th, 2022, Monday

Pick any one topic for your paper. This term paper covers 15% of your course

grade.

The paper should be 6 pages long (including Title page, bibliography, graphs,

tables etc.). It should be typed double-spaced in Times New Roman, font size 12

following the APA style with 1-inch margin on all sides. Don’t forget to include a

title page at the beginning and a bibliography at the end of your paper. Discuss the

issue in your paper as an economist. Upload your paper as MS Word document on

Blackboard.

Grading Rubric:

Title 5 points

Page numbering 5 points

Correct labeling of Figures, Tables

(Including source) 5 points

Content 20 points

Bibliography 5 points

APA style: https://apastyle.apa.org/style-grammar-guidelines/paper-format

Topic 1:
How America’s talent wars are reshaping business – the labour
shortages are forcing firms to get creative

The Economist | Feb 5, 2022, edition

Summary: Dcl logistics, like so many American firms, had a problem last year. Its

business, fulfilling orders of goods sold online, faced surging demand. But competition

for warehouse workers was fierce, wages were rising and staff turnover was high. So Dcl

made two changes. It bought robots to pick items off shelves and place them in boxes.

And it reduced its reliance on part-time workers by hiring more full-time staff. “What we

save in having temp employees, we lose in productivity,” explains Dave Tu, Dcl’s

president. Full-time payroll has doubled in the past year, to 280. Paycheques of

everyone from McDonald’s burger-flippers to Citi group bankers are growing fatter. This

goes some way to explaining why profit margins in the S & P 500 index of large

companies, which have defied gravity in the pandemic, are starting to decline.

Explain how this tug-of-war between the employers and employees is affecting the US

labor market in terms of elasticity of supply and demand of skilled labors and their

wages and changing the way of doing business in this country. Are we seeing similar

trends in the European, Asian or South American labor markets?

Topic 2:
Oil Tops $130 a Barrel as Russian Attacks Escalate

WSJ | By Ryan Dezember | March 6, 2022

Summary: The biggest premiums on record are being paid for barrels of oil to be

delivered now rather than later. Prices for April delivery of crude oil have shot up since

Ukraine was invaded by Russia and buyers began to shun Russian oil exports. The main

U.S. crude oil price recently exceeded $110 a barrel for the first time in more than a

decade.

Because the supply for many products is relatively inelastic in the short run, an increase

in demand will result in a greater increase in price and a lower increase in quantity than

over a longer time period. Holding other factors constant, the demand for a product will

be more inelastic when there are no good substitutes for the product. With this simple

theory in hand, discuss how consumer behavior, labor market, and the inflation in the

US will be affected due to the escalating Russia-Ukraine war.

Topic 3:
The New Sticker Shock

WSJ | By Mike Colias Nora Eckert | February 26, 2022

Summary: As supply chain problems prolong a shortage of new automobiles for a

second year, customers face near-empty dealer lots, high prices and long waits to buy

new cars. Although automobile manufacturers discourage dealers from charging more

than their cars’ sticker prices, many dealers say they have to be realistic about what the

market will bear. In extreme cases, dealerships have charged as much as $40,000 above

the manufacturer’s suggested retail price (MSRP) for some luxury cars.

Product shortages cause prices to rise and product surpluses cause prices to fall in the

free market. Under the current scenario of supply-chain crisis in the US, discuss the

general production and consumption opportunity cost (highest-valued alternative given

up to engage in an activity) likely to have an impact on the US GDP for the coming years.

Topic 4:
Shoppers Are Caught Off Guard as Prices Change More Often

WSJ | By Charity L. Scott | February 4, 2022

Summary: More everyday items are being priced like airline tickets where sticker prices

are changed within hours or days. Retailers say this is a reaction to changes in costs and

continuing product shortages caused by the Covid-19 pandemic. The changes occur

online as well as offline.

Menu costs are costs firms incur when they change their prices. Menu costs may cause

some prices to be “sticky.” In the article Brian Elliott, a partner at the management

consulting firm McKinsey & Co. stated: “As a retailer, what I really care about is

loyalty…If the customer feels ripped off, they’re not going to come back to my store.”

Briefly explain why a market shortage may be allowed to persist because a retailer places

a priority on maintaining the loyalty of its customers. Which would benefit consumers

more: (a) a retailer allows a product shortage to persist, or (b) the retailer increases the

price of a product to eliminate the shortage? Discuss how rising prices are hurting the

consumers’ purse and cost of living.

Topic 5:
Taking stock as America moves into a new phase of the pandemic
The Economist | March 12th 2022 edition

Summary: Two years ago on March 11th, the World Health Organization declared

covid-19 a pandemic. Americans are eager to leave the wretchedness behind them. Polls

suggest concern about covid is declining. Mask-wearing has waned. On March 26th,

Hawaii will become the final state to drop its indoor mask mandate, and the Centres for

Disease Control and Prevention (cdc) now recommends masks only for the 7% of

Americans living in high-risk counties.

The introduction of vaccines and now booster shots is reviving the economic activities in

every country. Which industries will thrive, and which ones are likely to perish under

the new norm of doing business in the post-pandemic era?

Economics homework help

Homework 2

April 20, 2022

Overview
Due date: Friday, April 29

In this exercise, you will make use of the spreadsheet provided on the class website.

The spreadsheet features data with different tabs, corresponding to different exercises in the homework.
We have constructed some simulated data by choosing parameter values and following the Solow model
structure. At the top of tabs 1a and 2a we have specified parameters of the Solow model: depreciation (δ),
the Cobb-Douglas technology parameter (α), the savings rate (s) along with exogenous growth rates for TFP
(x) and population (n). In addition, we have specified initial conditions for the level of technology (A0),
population (L0), and capital (K0) in the initial period (the year 1955). For tabs 1b and 2b you are invited to
adjust the parameter values and compare the model-simulated growth to real life data (which you will find
online). For tabs 3 and 4 we supply growth rate patterns for population and technology that don’t follow the
simple constant growth rate structure, while the other aspects of the Solow model are left unchanged.

Recall that the Solow model specifies a production function of the form:

Yt = AtKαt L
1−α
t

where t indexes the time period in which production takes place.

When asked to fill in values for real wages, rental rates, and income shares you may assume that these values
are pinned down by cost minimization behavior and that all available inputs (labor and capital) are fully
utilized.

Question 1 – Solow Model for US (25 points)
For this questions please use sheets 1a and 1b.

(a) (10 points) In sheet 1a in columns G through M, please construct spreadsheet formulas to calculate
the requested values using the Solow model. Specifically, please calculate: output per efficiency units
(ŷ = Y/ÃL), output per capita, capital-labor ratio, the labor share of income, real wages, the growth
rate of GDP per capita, and the real rental rate of capital.

(b) (10 points) In sheet 1a in cells E2 and E3, please calculate the long-run stable level of capital per
effective worker (k̂ = K/ÃL) and output per effective worker (ŷ = Y/ÃL). In cell H2 enter the first
year in our simulated data when the capital per effective worker is within 1% of its long-run stable
level. For the year in cell H2, how large is the gap between the growth of output per worker in the
simulated data and the growth rate that would prevail on the balanced growth path?

(c) (5 points) Download data on US real GDP based from the Penn World Tables at the link here. Enter
US real GDP (PPP), series rgdpe, into column G of sheet 1b and population, series pop, into column
H, and calculate real GDP per capita growth in column I. How does the simulated data in sheet 1a
compare to this data? Try adjusting any model parameters or initial conditions to better match the
simulated and observed data.

1

Question 2 – Solow Model for China (35 points)
For this question, please use sheets 2a and 2b. Relative to the scenario for the US (on sheet 1a) we allow for
faster population growth, a larger initial population, and a smaller initial capital stock. In addition, we freeze
China’s TFP growth for the first 20 years (1955-1975) and then have China’s TFP match the US level from
20 years prior (e.g. Chinese TFP in 2020 equals the US level in 2000).

(a) (10 points) In sheet 2a in columns G through M, please construct spreadsheet formulas to calculate the
requested values using the Solow model using the given data and parameters for the China model.

(b) (10 points) In sheet 2a in cells E2 and E3, please calculate the long-run stable level of capital per
effective worker (k̂ = K/ÃL) and output per effective worker (ŷ = Y/ÃL) for the China model. Are
these values higher or lower than the corresponding values for the US? Explain why the two values
differ. In cells H2 and H3, calculate the long-run stable level of capital per effective worker and output
per effective worker if there is no TFP growth (as we assumed for 1955-1975). Are these values higher
or lower than the values for the scenario with TFP growth? Explain your answer.

(c) (10 points) Given the assumptions in sheet 2a, what is the long-run growth rate of GDP per capita
in China? In our model, is growth in China increasing or decreasing over time? How does growth
change between 1974 and 1976? How does growth evolve after 1976? Explain why the model and other
assumptions generate this pattern.

(d) (5 points) Download data on Chinese real GDP based from the Penn World Tables at the link here.
Enter Chinese real GDP (PPP), series rgdpe, into column G of sheet 2b and population, series pop,
into column H, and calculate real GDP per capita growth in column I. How does the simulated data
in sheet 2a compare to this data? Try adjusting any model parameters or initial conditions to better
match the simulated and observed data.

Question 3 – One Child Policy (20 points)
For this question, please use sheet 3. In addition to liberalizing its economy under the Reform and Opening
Up policies of Deng Xiaoping, China also experienced a profound change in its demographic patterns in part
driven by the imposition of the One Child policy. In this section, we adjust the model from question 2 to
account for these demographic changes.

(a) (5 points) In sheet 3, construct an alternative path for Chinese population (column B, rows 15 to 110)
as follows. For 1955 to 2019, use the population growth data from Penn World tables. Then, from 2019
to 2050, assume a constant growth rate of -1% (n = -0.01). Based on the Penn World tables data what
was the average growth rate of China’s population each of the 20-year periods 1955-1975, 1975-1995,
and 1995-2015? (Note: columns C, D, E, and F should update automatically when you fill in column
B).

(b) (5 points) Construct the deduced variables in columns G through M using the new path for population
growth. How does the new path for population growth affect the growth rate of total output? What
about the growth rate of output per worker? For both variables, is there a permanent (i.e. on the
balanced growth path) effect to the growth rate from this change in population growth?

(c) (10 points) Using the growth accounting procedure, what is the contribution of capital, labor, and
technology growth to Chinese growth in questions 2 and 3. Please fill in these values in columns O, P,
and Q for sheets 2a and 3. Explain the differences.

Question 4 – Technology Catch-Up (20 points)
For this question, please use sheet 4. In addition to China beginning a period of TFP growth, we might
expect that China begins to close the gap in technology relative to the US. In this question we construct an

2

alternative path for TFP that allows for a non-constant growth rate of TFP over time in China. Note that
this sheet will automatically pull in the population path you built in sheet 3.

(a) (5 points) Inspect the formula in column C for years 1976 onward (row 36 on). Describe in words what
you think this formula is doing. In questions 2 and 3 what happened to the relative level (ratio) of
TFP in the US and China over time? With this new formula what happens to the relative level of TFP
over time? Will this ratio tend to a particular value in the long run?

(b) (5 points) Construct the deduced variables in columns G through M. How does Chinese growth in this
scenario compare to what you saw in questions 2 and 3? Does this do a better or worse job of matching
the observed data?

(c) (10 points) Given the new path for TFP, in the long-run (e.g. 2100 onward) will Chinese living standards
grow faster, slower, or at the same rate as in the US? Will the level of Chinese living standards be
higher, lower, or the same as in the US? Explain your answer.

3

  • Overview
  • Question 1 – Solow Model for US (25 points)
  • Question 2 – Solow Model for China (35 points)
  • Question 3 – One Child Policy (20 points)
  • Question 4 – Technology Catch-Up (20 points)

Economics homework help

Chapter 8 The Price Level and
Inflation

Review:
• Unemployment rate

• Percentage of the labor force that would like to work
who are unemployed

• Labor for participation rate
• Percent of overall population in the labor force
• Additional labor market indicator

• Gross domestic product
• To get real GDP, we adjust nominal GDP for

inflation.

Question and
Definition

1. What is inflation?
Inflation: The growth in the overall level of prices in
an economy.

2. How is inflation measured?
3. What problems does inflation bring?
4. What is the cause of inflation?

How inflation affect our life?

• If inflation rate is 100% each year, will you change your shopping and
saving habits?

• What if prices double each day?
• Zimbabwe

Inflation

• Inflation: The growth in the overall level of prices in an
economy.
• A continual rise in the general price level (the price of all goods)
• not the price of a certain good going up due to a shift in demand or

supply for that good
• By itself, will decrease the purchasing power of your dollars
• Creates uncertainty, a problem for firms and workers
• May cause consumers to change buying patterns due to

uncertainty

• Hyperinflation: An extremely high rate of inflation.
• Deflation: Occurs when overall prices fall.

• It is the opposite of inflation. The price level falls or there
is a negative percentage change in the price level

Bureau of
Labor

Statistics

Bureau of Labor Statistics (BLS): Measures and reports
inflation.

Its goals are:
• Determine the prices of all the goods and services a

typical consumer buys.
• Identify how much of a typical consumer’s budget is

spent on these particular items.

• Each month, the BLS collects price
information
• on over 8,000 goods and services each month
• in 211 categories
• for 38 geographic locations.

Question and
Definition

1. What is CPI?
Consumer Price Index (CPI): A measure of the price
level based on the consumption pattern of a typical
consumer.

2. How to calculate it?
3. The concerns that are caused by it?

Consumer
Price Index

• Consumer Price Index (CPI): A measure of the price level based on the
consumption pattern of a typical consumer.

• Goal: Measure the cost of living.

• Calculated by the Bureau of Labor Statistics (BLS).

• The weights are based on the spending patterns of a typical consumer
in the United States.

Computing the
CPI

• Calculating the price index:

• Using the price levels, we can find inflation with the
percentage change formula:

𝑝𝑟𝑖𝑐𝑒 𝑖𝑛𝑑𝑒𝑥 =  
𝑏𝑎𝑠𝑘𝑒𝑡 𝑝𝑟𝑖𝑐𝑒

𝑏𝑎𝑠𝑘𝑒𝑡 𝑝𝑟𝑖𝑐𝑒 𝑖𝑛 𝑏𝑎𝑠𝑒 𝑦𝑒𝑎𝑟
× 100

𝑖𝑛𝑓𝑙𝑎𝑡𝑖𝑜𝑛 =  
𝑝𝑟𝑖𝑐𝑒 𝑖𝑛𝑑𝑒𝑥1 − 𝑝𝑟𝑖𝑐𝑒 𝑖𝑛𝑑𝑒𝑥0

𝑝𝑟𝑖𝑐𝑒 𝑖𝑛𝑑𝑒𝑥0

Computing the CPI

Computing the CPI
Consider the previous figure. There are three goods, each given a price and
quantity.
• Cost in this case is the total amount of money expended on the item.

Given a base year of 2016, we purchased some goods and spent $40.
• We purchased the same goods in 2017, and we spent a total of $44 for the same goods.
• To create an index, we use our base year and give it an index of 100 as a figure to compare other years to.
• To get the index for the other years, we divide the basket price in the new year divided by the basket price in

the base year.

When we multiply by 100 here this does not convert the number to a
percentage; it simply indexes the price level.
• Inflation is equal to 10%.

CPI and Inflation in the Long Run (1965–2018)

Price Movements

• Clearly, most prices rise over time (see the
previous figure)
• Travel
• Education
• Health care

• However, some prices fall over time
• Consumer electronics
• Usually due to a result of great

technological advancements
• Tube TV 1997: $7,000

• Flat panel TV 2012: $500

Using the CPI to
Compare Dollar

Values across Time

• Prices from different time periods can be
misleading.
• In 1924, you could buy a fully constructed

house for $1,969.
• To compare prices over time, we can

transform past prices into a price in today’s
dollars.

𝑃 𝑟𝑖𝑐𝑒 𝑇𝑜𝑑𝑎𝑦 = 𝑃 𝑟𝑖𝑐𝑒 𝐸𝑎𝑟𝑙𝑖𝑒𝑟 ×
𝑃 𝑟𝑖𝑐𝑒 𝐿𝑒𝑣𝑒𝑙 𝑇𝑜𝑑𝑎𝑦

𝑃 𝑟𝑖𝑐𝑒 𝐿𝑒𝑣𝑒𝑙 𝐸𝑎𝑟𝑙𝑖𝑒𝑟

Costs of Inflation

1. Shoe-leather costs
2. Money illusion
3. Menu costs
4. Uncertainty over future price levels
5. Wealth redistribution
6. Price confusion
7. Tax distortions

Costs of Inflation

• As prices go up, it becomes more costly to
hold money.

• Shoe-leather costs: Resources are wasted
when people change behavior to avoid
holding money.

• People bear time, effort, and fuel costs
when they try to use more money.

Costs of
Inflation

Money illusion: People interpret nominal wage or price changes as
real changes.

If prices and wages all go up by 2%, there is no real change in
purchasing power. People with money illusion think they are richer in
this case.

Nominal wage: The wage in current dollars.
Real wage: Nominal wage adjusted for inflation.

Another money illusion example:
• Suppose nominal wages increase by 3% and prices go up by 5%.
• Money illusion may cause you to think of yourself as wealthier, but

your real wages have actually decreased!

Costs of
Inflation

• Menu costs: The costs of changing prices.
• Wage and other input contracts often have

long-term commitments.
• Example: Would you be willing to sign a contract

and be paid the same for the next five years?
• Uncertainty about prices may make borrowing

riskier.

Costs of
Inflation

• Wealth redistribution: Inflation can redistribute
wealth between borrowers and lenders.

• Example: Suppose you borrow $50,000 and
expect to pay back $60,000 in five years.
• If unexpected inflation occurs, you are better off,

bank is worse off.
• If the inflation was expected the bank would have

required more in return for the loan (i.e., you’d
have to repay $75,000 in five years).

• If unexpected deflation occurs, you are worse off,
bank is better off.

Costs of
Inflation

• Prices act as signals for producers.
• Higher prices signal producers to produce more, but

what if that is caused by inflation?

• If prices go up because of inflation but producers
misinterpret this, their businesses can fail.

Price
increase

No change in output
All prices affected

Buy new resources
Build factories
Hire workers

Increase
output

Increase in
demand?

Inflation?

Costs of
Inflation

Capital gains taxes are taxes on the gains realized by selling an
asset for more than its purchase price.

Problem: often, the price rises due to inflation rather than an
increase in the value of the good.

Example: If you buy a house in 1980 for $80,000 and sell the
house in 2012 for $230,000:

• Capital gains = $150,000.
• You have to pay taxes on this $150,000.
• However, CPI rose from 80 to 230 in those years, so the

real value of the house is the same!

Costs of Inflation Summary

Cause of
Inflation

• No debate on the cause of inflation.

• Inflation is caused by expansions in the nation’s
money supply.

• Milton Friedman:“Inflation is always and
everywhere a monetary phenomenon.”

Equation of Exchange

• Equation of exchange: Specifies the long-run relationship between
the money supply, the price level, real GDP, and the velocity of
money.

M: quantity of money
V: velocity of money

P: price level
Y: real GDP

𝑀 × 𝑉 = 𝑃 × 𝑌

Equation of Exchange

• In growth rates:

• If we assume that the velocity of money is constant:
• %ΔP > 0 if %ΔM > %ΔY
• %ΔP < 0 if %ΔY > %ΔM
• %ΔP = 0 if %ΔM = %ΔY

• Conclusions:
• Inflation (the percent change in the price level) is > 0 if the growth rate of the money

supply is greater than the growth rate of real GDP.
• Inflation is < 0 if the growth rate of the money supply is less than the growth rate of real

GDP.

• Inflation is = 0 if the growth rate of the money supply is equal to the growth rate of real
GDP.

%ΔM + %ΔV =%ΔP + %ΔY

Governments
Inflate the

Money Supply

• Inflation can have significant costs but there are
two reasons why governments inflate their
money supply:

1. Large government debts often spur governments
to choose to increase the money supply rapidly
so they can pay off the debts.

2. Surprise increases in the money supply can
temporarily stimulate an economy toward more
rapid growth rates.

Conclusion

• CPI is the primary measure of the general price level
• CPI uses prices from a basket of goods formed by the spending habits

of the typical consumer.
• The inflation rate is the growth rate of the CPI, expressed in

percentage terms.

• CPI is also useful for equating monetary values (or prices) over
time.

• There are several macroeconomic costs from inflation,
including:

• signal extraction costs
• future price level uncertainty
• menu costs
• money illusion

• Inflation is caused and controlled by expansions of a nation’s
money supply.

Economics homework help

Writing Assignments


Please select only 1 of the following options and answer each of the questions related to that option. Your responses should be thorough and well supported. You are encouraged to use our textbook and the online book for this class, which is called Popular Economyths.

A good, well-reasoned, detailed answer should be at least 1.5 to 2 pages (total) in length (and please do NOT rewrite the questions). You need to answer each of the questions for the option you select.

 

OPTION 1 – The Minimum Wage

 

Since 2009, the national minimum wage has been $7.25 per hour for most occupations in the private sector. Many of those who support an increase in the minimum wage believe this is one way the government could possibly reduce poverty, while its opponents believe that it creates unemployment and hurts low-skilled workers. The following items address the idea of raising the minimum wage from the current federal minimum of $7.25 per hour.

1) Describe who the suppliers and demanders are in the labor market. Is a government-mandated minimum wage a price floor or ceiling? Discuss the effect of raising the minimum wage from a supply and demand standpoint, making sure to address the concept of surplus or shortage, and specify what that shortage or surplus is most commonly called in economic terms.

2) Raising the minimum wage will also affect the labor costs of businesses. What is going to happen to the prices these businesses charge for their products? And who is going to be most affected by these price changes, those with low incomes or those with high incomes?

3) Discuss any potential changes in the incentives for low-skilled workers – those who keep their jobs and their hours – to increase their human capital when the minimum wage increases. What about those who lose their jobs or never get hired? Discuss the incentives for employers to substitute capital inputs (technology and automation) for labor.

4) What might be an unintended impact on government spending on entitlements such as welfare, food stamps, and unemployment compensation because of the changes in the minimum wage and its impact on unemployment and underemployment?

5) Do advocates of a minimum wage law believe that workers should be paid based on their output (i.e., performance) or on their level of need? What do opponents of the minimum wage law believe workers’ wages should be based on? Which one is sustainable and why?

For the sake of comparison, how should students be graded in class, based on their performance or level of need?

 

6) Advocates of a minimum wage often believe that employers would “exploit” or “take advantage” of their workers if there were no minimum wage. How would you know if employers are “taking advantage” of their workers if there were no minimum wage? What simple thing could the employee do if they believed they were being exploited?

7) What percentage of American workers get paid

above

minimum wage? In general, why do such workers get paid
more
than the government-mandated minimum wage if employers are supposedly so greedy?

8) Compare and contrast some of the information contained in the three videos:


Obama: “Raise Minimum Wage to $9 an Hour” – SOTU 2013 

How the Minimum Wage Creates Unemployment – Note: this video uses an example of a $5 minimum wage as an illustration only. The same exact point could be made with a minimum wage of $7.25, $9, $12.37, or any other amount, so please do not get hung up on the $5 amount. The point is whether or not the government ought to dictate the wages of a private transaction between a willing employee and employer.

We the Internet TV: Pledge for $15

Describe the main points of each video. Which one or two videos do you agree with more from an economic perspective and why? Be specific!

9) Based on your previous responses, do you believe that the minimum wage should be raised, lowered, remain as it currently is, or be altogether eliminated? If you think there should be a minimum wage, how would you arrive at the specific wage? You need to give a thorough reason for your answer.

10) Who should get to decide how much a worker gets paid, the worker and their employer or a politician? WHY?

  

OPTION 2 – Outsourcing

There has been much talk in recent time about outsourcing and “sweatshops.” Outsourcing is usually defined as occurring when a company chooses to export some of its production to foreign countries. Jobs in which foreign workers work in “sub-standard” conditions and are paid lower wages (than their American counterparts) are typically referred to as “sweatshops.”

1) What are some of the economic reasons why some firms choose to relocate some of their productive facilities to foreign countries?

2) With regards to low- and high-skill laborers, which domestic (American) workers may gain from outsourcing, and which domestic workers might lose? Why is this the case?

3) With respect to the types of products produced by companies that outsource, what effect may outsourcing have on domestic prices of these products?

4) If the US government wanted to reduce outsourcing, what changes in policy could it make to do so?

5) Please watch the following 2 videos regarding “sweatshops.”

Inside Look at Apple’s Chinese Sweatshops!

John Stossel – Sweatshops

Describe the main points of EACH video. What evidence do they present to reach their overall conclusions?

6) After watching the videos, please tell me if “sweatshops” are a good or bad thing for foreign workers? WHY? You need to thoroughly explain your answer.

 

OPTION 3 – “Buy American” Provisions

The American Recovery and Reinvestment Act of 2009 (ARRA) was passed by President Obama and Congress in response to the recession of 2007-2009. The primary components of this bill included tax cuts and increased government spending, with an emphasis on infrastructure spending such as roads and bridges. Included in the bill was a “Buy American” provision which required all manufactured goods (a few exceptions did apply) purchased with ARRA funds to be made in the United States. The intention of this provision was to increase jobs in the United States by preventing foreign companies from reaping the rewards of the new spending projects.

1) Are attempts to protect U.S. firms from foreign competition, such as the Buy American provision, good ideas? Explain.

2) Explain why some American companies might be opposed to this provision.

3) Explain whether or not you believe the Buy American provision would create jobs in the United States.

4) What do you think will be the economic consequences of a Buy American provision?

5) Do you believe the government should get involved in this aspect of private business, even when the available funds are coming from the government? If so, why? If not, why not?

6) Watch the following 2 videos:

Why Buying American Made Matters

John Stossel – Buy American

Describe the main points of EACH video. What evidence do they present to reach their overall conclusions?

Which of these videos make more economic sense than the other? BE SPECIFIC! What points does the better video make that the other fails to adequately address?

OPTION 4 – “Worker-owned” Businesses

 

Some politicians have recently proposed ideas that would encourage or require more businesses to operate as “co-ops” or “worker-owned” businesses. In such businesses, the workers and the bosses get paid the same amount of money and have an equal say in the management of the business.

1) Do you believe that more businesses should be run in such a manner, as cooperatives in which the owner and employees make roughly the same amount of money?

2) What are the potential drawbacks to the owners of such an idea? What about drawbacks to the workers?

3) If you like the idea of “worker-owned” businesses, should the government require businesses to operate in such a manner? Why or why not?

4) Why do you think some politicians may want to pass laws that would require more businesses to become cooperatives?

5) Please watch the following two videos and answer the following questions.

Capitalism: A Love Story – Workplace Democracy and Cooperatives

Why Capitalism Works

Describe the main points of EACH video. What evidence do they present to reach their overall conclusions?

Which of these two videos makes the most sensible economic conclusions? WHY? Be specific.

OPTION 5 – Race- and Sex-Based Preferences

Some people argue that colleges and employers should give preferences to women and racial/ethnic minorities due to discrimination in the past (and maybe even now, as well). Others disagree and believe that such preferences unfairly hurt not only men and white people directly, but also indirectly hurt women and minorities.

1) Recently, California became the first state to pass a law requiring a gender quota for corporate boards. California SB 826 requires boards to have a minimum number of females. Please watch the following two videos:

CNBC: How a California law is changing boardrooms all over the country

Anastasia Explains: Race and Gender Quotas

Does this law help or hurt females? Explain in detail

Does this law help or hurt males? Explain in detail

2) Please watch the following two videos:

Pink tax: Why do women pay more for goods and services?

The Daily Show’s Pink Tax Segment: DEBUNKED

Which video makes more economic sense? Utilizing economic principles, is the “pink tax” real? Explain in detail

3) Watch the following videos regarding the concepts of “diversity, equity, and inclusion” (DEI) and “meritocracy.”

Why Diversity Is More Important Than Meritocracy: Quotas, Talent, Wall Street | Sallie Krawcheck

Campus Reform: Students Support Diversity Quotas…Until It Comes to Football

Which concept is based on a person’s identity/immutable characteristics such as gender and race? Which concept is based on a person’s performance, experience, or skills?

4) Who benefits and who is harmed when governments or private businesses make hiring decisions based on “DEI”?

5) Who benefits and who is harmed when governments or private businesses make hiring decisions based on “meritocracy”?

6) Which concept, DEI or meritocracy, is most economically sustainable or feasible?

7) Which concept is most conducive to capitalism and which is most conducive to socialism?

8) Which of the above concepts would you like to be graded on in academia? In sports? In applying for a job? WHY? Explain in detail

Economics homework help

Student Guide for Research Proposal

You are working as a senior researcher for a company (of your own choice, private or
public, domestic or international) to conduct business research in order to solve an
issue/situation. The issue/situation the company is facing could be a problem, such as
declined revenue, or a potential opportunity, such as the introduction of a new product
or the exploration of new market. The issue that the company is facing requires rigorous
business research. It is not a problem that can be resolved through simple thinking or
discussion.

The research proposal is the research plan that you, as the senior researcher, submit to
the management for approval before conducting the research. It is a contract between
you and management in terms of the steps of the business research, budget and
timeline. In a research proposal–a plan to do research–you do everything except for
collect and analyze the data. Keep in mind that you are hired by the company to
conduct the proposed research in order to help the management make informed
decisions

Steps

1. Select a company and a research problem that you want to study. The
research problem could either be an opportunity that the company intends to
explore or an issue the company is facing.

2. Write an abbreviated research proposal indicating the background of the

problem, literature review, the purpose of the study, the research and sample
design, and the budget and times schedule. You can use page 124 in the
textbook (page 124) as an example. Note that not all required sections are
included in the textbook example. You need to follow the layout include in this
guideline.

3. The file should be named as lastname1_lastname2_lastname3. You can replace

“_” with other symbols as you like. Failure to do so will result in penalty in
grading.

Formatting
The proposal should be double-spaced using Times New Roman 12 font and should not
exceed 1000 words, including references and appendix, if any. You are required to
follow APA style when writing the proposal.

Here is a tutorial on APA style:
https://owl.purdue.edu/owl/research_and_citation/apa_style/apa_formatting
_and_style_guide/general_format.html

Specific Information
Note 1: Even though you will NOT be implementing the research plan you design in the
proposal prior to writing your paper, your plan must be a realistic plan that you
personally have the knowledge and resources to implement upon request.

Note 2: Your paper must be your own original work! Be sure to give proper credit when
you borrow or use someone else’s words and ideas, including your own previously
written works. See the 6th edition of the Publication Manual of the American
Psychological Association pages 15-16 for specific information on Plagiarism and Self-
Plagiarism. Failure to follow this requirement will result in a grade of 0.

Note 3: Write your paper in third person. Scholarly works generally are written in third
person to avoid reader concern about bias in an empirical study. A research proposal
should be concise. If you find yourself using phrases like “As mentioned previously…”
then you are repeating yourself without providing new information.

Note 4: You should use a neutral tone while stating the issues. Use simple, descriptive
adjectives and plain language that does not risk confusing your meaning. Avoid using
poetic expressions or figurative language such as metaphors and analogies unless they
are helpful in conveying a complex idea. Such linguistic devices can detract from
conveying your information clearly and may come across to readers as forced when it is
inappropriately used to explain an issue.

Note 5: There is no need to provide textbook type of information. You can assume that I
have sufficient knowledge of SWOT, 4P, etc. The management won’t be impressed with
your knowledge in describing the theoretical models or explaining how well the model
works. They are more interested in how you can apply your knowledge in theoretical
model to their specific issue. Your discussion should be relevant to their specific issue.
Your job is not to teach the management to learn such theories. Your job is to provide a
research plan.

Note 6: There is no need to provide detailed company information or the history of the
company.

Note 7: You are proposing to conduct business research to help a company to solve an
issue. So there will be no conclusion or any conclusive suggestions, such as “The
company should….”

Note 8: No pictures, graphs, cartoons, or figures should be included.

Grading
Your paper will be graded based on the formatting with a small weight. However, keep
in mind that the senior VP of the company is NOT impressed by APA style as the major
outcome of your work. The grade for the paper will be based on content, organization,
and format. Although the entire paper will be graded, the major focus of grading will be
on content.

Required layout
You need to follow the layout listed below, not the one in your textbook!

Cover Page
Include a title of the research proposal, course number, course name, and the author’s
name

Background/current situation

What led you to address this problem? What are the symptoms that led you to believe
this problem needs to be addressed by business research? Be specific and support
your discussion with numbers/statistics. You should not discuss the history of the
company or state how great the business was/is. In general, if you are investigating
a current issue, anything happened years ago is irrelevant.

Make sure you include problem statement—What is the problem of your proposed
study? By very specific in stating the problem. When you address a “problem” in
research, it does not necessarily mean that you are addressing something that is
“wrong.” For example, your “problem” might be that you do not know the attitudes of
your consumers about a specific product.

Special notes for business opportunity: you background discussion should include both
the benefit and cost/difficulties of the opportunity. If you only discuss the benefit, then 1.
your discussion is biased; 2. You imply that the opportunity should be adopted without
question.

Literature Review

Include a synthesis of scholarly and peer-reviewed literature on your topic. It should
provide evidence as to what types of studies have been conducted in relation to your
research problem and further confirm the need for you to conduct your proposed study
– meaning, this is not a problem that has already been solved, but one needing more
research and/or ideas for research.

A review of the literature should incorporate several studies summarized in your own
words. For example–A study conducted by Woodstock and Brown (2006) determined
that dog owners are extremely appreciative of the loyalty displayed by canines. Other
studies, (Scooby, 2005; Yogi, 2006) concluded similar findings.

All studies that are cited within the text of your literature review should be on your
reference list at the end of the document.

A minimum of two references are required.

Purpose of the Research
What is the purpose of your research? Be very specific in stating the purpose. For
example, your “purpose” might be that you want to investigate the attitudes of
consumers about a specific product and their decisions to purchase that product.

Research design and sample design
You should discuss how the study will be conducted, including the source of data, how
they are going to be collected, and the type of research, exploratory, descriptive, or
causal research. If data are collected through surveys, you need to discuss what the
target population is and how the sample will be determined.

Also, you should provide general research questions to indicate what results the
management can expect after you conduct the proposed research. Do not provide
survey questions. They do not count.

Budget and time schedule

Any complete research proposal should include a schedule of how long it will take to
conduct each stage of the research and a statement of itemized costs. Although you
may not have a very good idea about the budget and time schedule, you are supposed
to provide such information to your best knowledge. Note that the budget and time
schedule is not for carrying out whatever solution or business plan you are suggesting.
The example in the textbook does not provide any specific budget or timeline. However,
you are required to provide itemized costs and detailed timeline for each step of the

research process. When discussion the budget and timeline, avoid using uncertain
terms like “up to,” “no more than,” “less than” or similar descriptions.

References
References cited should come from reliable business sources. Website like Wikipedia or
other non-business sources are considered unreliable and invalid source, and thus will
affect the credibility of your proposal.
If you cite any sources in your short paper, you need to put them in the references.
Failure to cite the sources appropriately may result in plagiarism and is subject to
consequences listed in the Academic Honesty Policy.

Economics homework help

Running head: VALUE OF SECONDARY MARKETS IN REVERSE LOGISTICS SYSTEMS 1

VALUE OF SECONDARY MARKETS IN REVERSE LOGISTICS SYSTEMS 6

Value of Secondary Markets in Reverse Logistics

Fredrick D. Alen

American Military University

Dr. Richard Sarabia

January 23, 2022

Outline

Topic: Value of Secondary Markets in Reverse Logistics

General Purpose: Research on the value of secondary markets in the reverse logistics system

Specific Purpose: Eventually, I will inform my audience about the value that secondary markets confer to companies that have implemented a well-designed reverse logistics system.

Introduction

I. Attention Getter: Hello everyone! It is of great privilege to study and understand the role of the secondary market on reverse logistics in the business world.

II. Thesis Statement: Secondary markets in the current business world offers considerable value to the products returned from the customers and saves companies’ colossal sum of money. The markets provide a channel that helps protect the environment and encourage sustainable consumption.

III. Credibility: The information is obtained from credible evidence-based current and reliable sources.

IV. Preview of main points

Secondary markets give the reverse logistics system in companies that receive goods from their customers’ incredible economic value and environmental compliance to environmental protection laws. In recent times, natural resource exploitation is rapid. Resource protection from depletion must be enforced. Companies should also establish systems that will ensure that products returned from consumers receive value addition and sent back to the secondary market to increase productivity and enhance sustainable consumption. I will discuss the value secondary markets on companies implementing reverse logistics system and identify potential areas for further research.

Body

I. Secondary markets are an innovative way of cutting the cost of returned goods.

A. Most companies do not operate reverse logistics due to lack of awareness and assumption of idol asset that it is.

1. After the energy crisis in the 1970s, the adoption of programs that would enhance company sustainable production and consumptions begun.

2. Large corporations established a system that would monitor their products from the consumer point of view and take back products that did not meet consumer expectation, wrong orders, and expired or obsolete products.

B. Establishment of reverse logistics involves planning, implementing and controlling products from the consumer back to the manufacture with the ultimate aim of gaining economic value from the products or according to the proper disposal.

1. Many companies began refurbishing, rebranding, recycling, and value addition for resale in the market.

2. Resale in secondary markets is coordinated in a manner to reduce environmental hazards and increase economic gains. Eventually, the process gives the consumers’ desired products and help companies control environmental degradation. This policy enhances the environmental friendly industrial process.

Next, I will focus on the value of secondary markets on companies that have fully implemented the reverse logistics process.

II. Companies like Haier Co and McNeil Laboratories Johnson & Johnson division are typical examples of companies that have benefited from secondary markets due to implementing reverse logistics system.

A. Most companies receive positive public image and goodwill from consumers due to implementing reverse logistics and releasing the products into the secondary markets.

1. Complying with reverse logistics and innovatively value addition to returned products increases consumers loyalty to the company. Consumers develop a sense of belonging and positive responsiveness thus increasing the company market value.

2. Collecting returned good and attending to the consumers’ needs increases the company competitive advantage and relevance.

3. Secondary markets add to the company unplanned profits and reduce the cost of production.

4. Secondary markets are good platforms for conducting cost-effective research and development for improving the product and meeting diverse customers’ needs.

B. Secondary markets promote companies compliance with environmental protection laws in the world.

1. Secondary markets remove obsolete products from the environment and extract valuable accessories that customers need, and properly disposing of the hazardous remains.

2. Secondary markets improve the company reverse logistics process, which improves interaction with its consumers thus uplifting its services in the protection of the environment for sustainable consumption.



Conclusion

I. Reverse logistics are necessary for companies to meet sustainable consumption and environmental protection. Secondary markets offer companies operating reverse logistics benefits that increase their productivity and competitiveness in the market.

II. More studies on the possible innovative ways to link secondary markets to production designs and hindrances to the marketability of secondary markets will be important in informing business world to embrace reverse logistics with the ultimate intent of meeting diverse consumer needs in the secondary market.

References:

Add the ones that are used in research paper














Economics homework help

94.2%
Results of plagiarism analysis from 2022-03-02 00:18 UTC

Unnamed

Date: 2022-03-02 00:18 UTC

 All sources 1  Own documents 1

[0]
 “Unnamed” dated 2022-03-02

94.2% 15 matches

1 pages, 332 words

PlagLevel: 94.2% selected / 94.2% overall

15 matches from 1 sources, of which 0 are online sources.

Settings

Data policy: Compare with web sources, Check against my documents

Sensitivity: Medium

Bibliography: Consider text

Citation detection: Reduce PlagLevel

Whitelist: —

Question 1
[0]

As outlined in the discussion overview, culture shock refers to a specific
condition or circumstances where experiences the ultimate feeling of anxiety and
frustration caused by the change in culture and closely associated environment.
This Factor is associated with several characteristics that include the feeling of
[0]

uncertainty, confusion, and anxiety. This may lead to an adjustment environment,
[0]

and letters adjust to the unfamiliar environment.
[0]

Question 2
The shock culture process has four main stages that come along with it. The first

[0]

one is the honeymoon, and it is typically used to Usher in various personnel have
changed their culture. Stay in hotels and other lodges at the appropriate time to

[0]

learn about the new culture. The second scope includes frustrations caused by being
[0]

new in the environment. The adjustment process follows if we are an individual must
[0]

adjust to the given sets of conditions and circumstances and the particular area of
the dwelling. The last characteristic adaptation is where an individual adjusts

[0]

to the new environment despite the characteristics.
Question 3
[0]

The art of culture shock was written in the 1960s and had been outlined more than
4400 times, and it is available in various databases that document data. In this

[0]

regard, migration and immigration actions include various activities done in the
recent past where people are forced to adapt to the new environment because of the
prevailing circumstances.
Response grip
[0]

Procedural dynamic and changes
Procedural evolvement and change of status

Honeymoon This is where an individual move from one place and settles in another
region.

Frustration It comes along after reception comes alongside the nature of
[0]

one’s expectation.
Adjustment This is a set of activities that one carried out to ensure that he fits

[0]

in the outlined new environment.
Adaptation Adapting to the new culture and taking all the corresponding action

[0]

ensures that one makes the right judgment and adapt to the new environment.

Reference
Oberg, K. (1960). Cultural shock: Adjustment to new cultural environments.
Practical anthropology, (4), 177-182.

Economics homework help

Overview
Economic development projects often hinge on the availability of financing and funding. Myriad resources, programs and tools exist to address this access to capital challenge. The goal of financing is to remove barriers to project completion. This individual assignment will help students develop the skills to effectively assess potential financing sources for economic development goals and projects. 

The Project
The City of Lexington, KY is working diligently to diversify its economy and usher in a new era of revitalization, job creation, investment and affordable housing development. The city has identified a 600-acre, 75 parcel area in the central city for driving this development. The targeted redevelopment area has the following demographics:

· 75 parcels owned by 60 different property owners

· Two property owners own larger portions – Diversified Developers Inc. owns a 300-acre tract zoned light industrial. Lex Hospital owns a 150-acre tract zoned commercial/retail.

· Little employment – just 100 jobs within the district

· Lack of housing but very adjacent to the University of Kentucky main campus

· Low property values due to 25 years of disinvestment, generally blighted, potential land contamination

· Mixed income demographics but very little upper income individuals

· Crumbling infrastructure – old sidewalks, overhead utilities, poor water drainage

· Three main areas – 300 acres zoned as light industrial, 300 acres zoned commercial/retail and the remaining 100 acres zoned residential

· This area of Lexington is a designated food desert

Lexington is a unified city/county government with Fayette County. The unified government has the full complement of financing resources available including:

· City/county bond programs

· Tax increment (TIF) and special assessment (business improvement district)

· City revolving loan fund focused on minority business

· County revolving loan fund focused on energy efficiency

· Access to $60M in federal new markets tax credits

· Access to the Kentucky Bond Corporation (state bond issuer)

· Access to the Kentucky Cabinet for Economic Development programming

Lexington has identified the following development goals:

· Mixed rate housing – 50% affordable, 50% market rate. The city would like 1,500 units of housing including single family, condo, apartment, etc.

· Density is important and this is in an urban area of the city.

· Retail – large shopping and retail emphasis including an anchor grocery store and/or commercial center (i.e. Target, Home Depot, etc.)

· Healthcare & Community – large community center with an urgent care facility attached

· Office – 10 class-A office buildings to attract 10,000 high earning workers. 

The project is estimated to cost $150 million including:

· Housing – $40M

· Retail – $20M

· Healthcare & Community – $16M

· Office – $22M

· Parking Garage – $25M

· Infrastructure (roads, sewer, water, utilities, land clearing, etc.) – $27M

Assignment
Produce a five-page, single spaced, comprehensive approach recommending three potential financing tools and comprehensive solution that Lexington could use to achieve their goals.  The report should cover a wide range of topics and include the following:

1. Project & Program Overview – Provide an overview of how you see this project materializing with a discussion on the best use of the land and how to meet the needs and objective of Lexington through your approach. Provide an in-depth overview on how the three recommended financing tools work. Provide a review of the mechanics of the tools selected, partners involved and the timing of each tool. Provide references to examples of how the tools works in other communities and it can be applied to the current opportunity in Lexington, KY. 

2. Pros & Cons – Discuss the effectiveness of these programs including the pros and cons of using each tool. Be detailed. Discuss the structures of these tools and how they impact the community. What roadblocks and/or obstacles stand in the way of the programming working? Do these tools drive a sustainable approach to achieving project success and community mission?

3. Pro Forma – Prepare a basic project pro forma which includes both the sources and uses of funds. What does the project cost and what sources of financings will address these needs? What is the gap that the programs are trying to address? 

Written assignments must be well crafted and properly written. Special attention should be given to grammar, punctuation and sentence structure. In addition, students should focus on incorporating proper content within the assignment. Arguments and discussions should be fact based and address the questions asked in depth. Superficial or common place content shows a lack of proper assessment and critical thinking. The goal for all assignments is for the writing to be both well written and contextually compelling. Failure to address the key elements of the assignment will result in a lower score.  The goal for all assignments is for the writing to be both well written and contextually compelling. 

All sources should be cited. The source page does not count as part of your five pages. 

Economics homework help

2

ENG1272 Writing a Position Paper

A position paper presents an arguable opinion about an issue. The goal of a position paper is to convince the audience that your opinion is valid and worth listening to. Ideas that you are considering about your writing theory need to be carefully examined when choosing your position, developing your argument, and organizing your paper. It is very important to ensure that you are addressing numerous sides of the issue and presenting it in a manner that is easy for your audience to understand. Your job is to take one side of the argument and persuade your audience that you have well-founded knowledge of the topic being presented. It is important to support your argument with evidence (from your sources) to ensure the validity of your claims, as well as to address the counterclaims to show that you are well informed about both sides.

Issue Criteria

To take a side on a subject of writing, you should first establish the argument that interests you. Ask yourself the following questions to ensure that you will be able to present a strong argument:

Is it a real issue, with genuine controversy and uncertainty?

Can you distinctly identify two positions?

Is the issue narrow enough to be manageable?

Analyzing an Issue and Developing an Argument

Do some research on writing theories (it is highly recommended you use the sources in Chapter 14 of our textbook). While you may already have an opinion and an idea about which side of the argument you want to take, you need to ensure that your position is well supported. Listing out the pro and con sides of the topic will help you examine your ability to support your counterclaims, along with a list of supporting evidence for both sides. Supporting evidence includes the following:

Factual Knowledge – information that is verifiable and agreed upon by almost everyone

Statistical Inferences – interpretation or examples of an accumulation of facts

Informed Opinion – opinion developed through research and/or expertise of the claim

Personal Testimony – your personal experience or one related by a knowledgeable party

Once you have made your pro and con lists, compare the information side by side. Considering your audience, as well as your own viewpoint, choose the position you will take.

In considering the audience, ask yourself the following questions:

· Who is your audience?

· What do they believe?

· Where do they stand on the issue?

· How are their interests involved?

· What evidence is likely to be effective with them?

In determining your viewpoint, ask yourself the following questions:

· Is your topic interesting?

· Can you manage the material within the specifications set by the instructor?

· Does your topic assert something specific and propose a plan of action?

· Do you have enough material to support your opinion?

Ideas to consider:

· Previous experiences with academic writing: assignments, instructors, results

· What did you think about writing when the class began and what you do you think now?

· What is most important or significant for any writer to know?

· How would you describe your writing process? Think back and project forward to conceptualize your knowledge of writing.

· How does reading and writing contribute to a life of significance and worth?

Organization

Your introduction should lead up to a thesis that organizes the rest of your paper. There are three advantages to leading with the thesis:

1. The audience knows where you stand.

2. The thesis is located in the two strongest places, first and last.

3. It is the most common form of academic argument used.

Below is a generic sample outline for a position paper: (this is not a required format, just an example)

I. Introduction

___A. Introduce the topic

___B. Provide background on the topic

___C. Assert the thesis (your view of the issue)

II. Counter Argument (this could also be placed after your argument or woven within each argument)

___A. Summarize the counterclaims

___B. Provide supporting information for counterclaims

___C. Refute the counterclaims

___D. Give evidence for argument

III. Your Argument

___A. Assert point #1 of your claims

_____1. Give your opinion

_____2. Provide support

___B. Assert point #2 of your claims

_____1. Give your opinion

_____2. Provide support

___C. Assert point #3 of your claims

_____1. Give your opinion

_____2. Provide support

IV. Conclusion

___A. Restate your argument

___B. Provide a plan of action

Modified from the UHWO Writing Center, University of Hawaii

Overall, will this paper convince or change your audience’s mind about this issue?

If yes, why and how? If no, why not?

Economics homework help

Intro Micro Your Name(s):__________________________________________

Professor Kane


Problem Set 1


For graphs, it is often best to use Excel or draw your graph and print the picture

Total 15 points.

1. (5 points) Made the right way duck a l’orange is the most delicious thing ever. Your friend Beyoncé has abandoned her music career to open an Tab Cat Bistro, which specializes in French cuisine. She has done some market research and finds that your neighbors value duck according to the following schedule:

serving

MU Duck

1

$45.00

2

$42.75

3

$40.61

4

$38.58

5

$36.65

6

$34.82

7

$33.08

8

$31.43

9

$29.85

10

$28.36

Image result for Beyoncé cooking

https://www.phaidon.com/resource/duck-a-lorange.jpg

a. (2 points) Graph the demand curve for duck. Does the demand curve have a positive or negative slope? Why?

b. (2 points) How many servings will Beyoncé sell at $38.58? How many at $40.61? At $29.85?

c. (1 point) What will happen to the demand curve if a new study comes out showing duck increases the risk of heart disease? What will happen to the demand curve if instead a study comes out showing they reduce the risk of dementia?

2. (5 points) Production. Beyoncé uses equipment that she rents for $1000 and ingredients that cost $9.95 a serving for the first 6 servings; for additional servings, she can buy the ingredients at a discount for $8.95. (She does any discount on the first five servings!) (Note that she signed a lease and pays the rent regardless of how many dinners she serves; note that regardless of how much ingredients she buys for additional servings, she pays $9.95 for the ingredients for the first 6.) She hires workers at $13 each and finds that they produce servings according to the following schedule:

A picture containing food  Description automatically generated

Servings

Total Worker Hours

1

0.75

2

1.58

3

2.48

4

3.48

5

4.58

6

5.79

7

7.12

8

8.58

9

10.18

10

11.95

a. (1 point) Calculate and graph the additional worker hours needed for each serving. (Use a spreadsheet!) What is happening to the marginal productivity of labor as more is produced and more workers are hired?

b. (2 points) Calculate and and graph the marginal cost of each serving. (Use a spreadsheet and show your calculations!) Why does the MC curve have the slope (up, down, or flat) that it does? What happens to the slope of the MC curve as Beyonce produces more and more servings? Why?

c. (2 points) Calculate and graph the marginal cost of each serving if workers get a raise to $16.25/hour, with the old productivity. What happens if they also become more productive so each serving can be made with only 80% as much labor. Show your calculations! Compare the results of high wages and high productivity with the initial situation. Which would you prefer as an employer? Which would you prefer as worker? Which is better for society?

3. (5 points) Perfect competition and equilibrium.

a. (1 point) Put the demand and supply curves together (at the original productivity and wages). Beyoncé is a musician and never took Economics so she naively assumes that she is in a perfectly competitive market. How many servings will she sell? At what price?

b. (2 points) Draw the graph again and shade in the entire area of consumer surplus. Shade in the entire area of producer surplus.

c. (2 points) Calculate consumer surplus as the sum of the difference between the marginal utility and the price for each serving up to the last sold. Calculate producer surplus as the sum of the difference between price and marginal cost for each serving. What is the dollar value of consumer surplus? What is the dollar value of the producer surplus? What is the dollar value of the total social surplus?

2

Economics homework help

1. A leading agricultural company must maintain strict control over the size, weight, and number of seeds they package for sale to customers. An SRS of 81 one-pound scoops of seeds was collected as part of a Six Sigma quality improvement effort within the company. The number of seeds in each scoop is given in the excel file “seedcount”.

a) Find the mean, the standard deviation, and the standard error of the mean for this sample.

Mean: 128055/81=1850.925926

Standard deviation: 154.62

Standard error of the mean: standard deviation/ n= 154.62/81=1.9089

b) Calculate the 90% confidence intervals for the mean number of seeds in a one-pound scoop.

90% confidence interval: x±1.645*154.62/9= (1552.335, 1609.516)

c) Calculate the 95% confidence intervals for the mean number of seeds in a one-pound scoop.

95% confidence interval: x±1.96*154.62/9= (1546.736, 1615.115)

d) Do these data provide evidence that the average number of seeds in a one-pound scoop is greater than 1550? Using a significance level of 5%, state your hypotheses, the test statistic, the P-value, and your conclusion.

Hypotheses: H0: μ≤1550 Ha:μ> 1550

Z- test: 1850.92-μ0 / 154.62/9 =1.80

P- value: P (z>1.80)=1-(z<1.80)=1-0.9641=0.0359 <significance level of 5%

Conclusion: At the significance level of 5%, the average number of seeds in a one-pound scoop is greater than 1550.

2. In a city (outside North America) a traffic officer knows from experience that 30% of drivers do not have a driver’s license or have an expired one. This officer stops 10 cars looking to obtain bribes to pay for his lunch.

a) Given that the officer needs at least one bribe to have enough money for his lunch, what is the probability that the officer cannot get money for his lunch (i.e., all the drivers have a legal driver’s license)?

N=10

P(x=0)=10C0 *p0 *(1-p)10-0

=0.710

=0.0282

b) What is the probability that 4 or less than 4 of the drivers do not have a driver’s license or have an expired one?

p=p(x=0)+p(x=1)+p(x=2)+p(x=3)+p(x=4)

=0.849

c) What are the mean (i.e., expected value) and the standard deviation of the random variable? In one sentence, explain how to interpret the value of the mean.

Mean:10*0.3=3

Standard deviation: 10*0.3*0.710-5 =1.449

Normally, there are three drivers have no license or have an expired one in average 10 drivers.

d) What is the probability that the number of drivers that do not have a driver’s license (or have an expired one) is more than the mean?

P=P(x=4)+….+p(x=10)

=0.3504

3. Let X be a random variable distributed as Normal [mean=m=5, Var(X)=s2=4]. Find the probabilities of the following events:

Text  Description automatically generated

Note that |X-5| is the absolute value.

ⅰ:P (X ≤6)= P (6-m / s)= p (Z<1/2)=0.6915

ⅱ: P (X>4)=1-P(X≤4)=1-P (4-m / s)=1- p(z<-0.5)=1-0.3085=0.6915

ⅲ P( ∣X-5∣>1)=1-( p(-1≤x-5≤1))=1-(p(x≤6)-p(x≤4))=1-(0.6915-0.3085)

=1-0.383

=0.617

4. Scores on the SAT Math Reasoning test are approximately Normal with mean 515 points and standard deviation 116 points. The scores on the Verbal Reasoning test are also approximately Normal but with mean 502 and standard deviation 112. The correlation between Math Reasoning and Verbal Reasoning scores is about ρ = 0.70. Define the random variable X as Math Reasoning score and the random variable Y as Verbal Reasoning score.

(a) Determine the mean and standard deviation for the combined score (X + Y).

Mean for (X+Y)=515+502=1017

Standard deviation for (X+Y)= √1162+1122+0.7*116*112 =210.21

(b) Given that the Math and Verbal scores are approximately Normal, the combined score will also be approximately Normal. Determine the probability that a randomly chosen student will have a combined score of at least 1250.

m= 1017 s= 210.21

Z= 1250-1017/ 210.21= 1.1084

P(x>1250)= P(Z>1.1084)=1- P(z<1.1084)= 0.1338

5. When trying to start a new relationship, people want to make a favorable impression. Sometimes they will even stretch the truth a bit when disclosing information about themselves. A study of deception in online dating studied the accuracy of the information given in their online dating profiles by 110 online daters. The study found that 35 of 55 men and 40 of 55 women lied about their weight. Construct a two-way table. The data is in the Excel file “Assig 1 Q5”.

Applying the chi-square analysis, test whether the variables “Gender” and “Lying” are independent. State null and alternative hypotheses, report the test statistic, the P-value and summarize the results of your hypothesis test.

6. It is common for governments to gather data on family structure in the population. Information on family structure distribution is important because of the known associations between family structure and child well-being, behavior, and general success in life. Additionally, information on family structure in the population has business implications for such things as day care for employees and location of work (for example, from home or at organization). Here are data from 2006 on Canadian families with at least one child:

http://ebooks.bfwpub.com/psbe3e/tables/5_T_UN_10.gif

(a)  What is the probability that a randomly chosen child belongs to a “Father-only family” and is the only child at home?

(b) If you know that the family chosen is a “common-law couple”, what is the probability that the family has three or more children?

(c) If you know that the family chosen is a “married couple”, what is the probability that the family has three or more children?

(d) Are the events “Father-only family” and “one child at home” independent? How do you know?

7. Use this information to answer the following 3 questions. Suppose X~U[0,4] (that is, X is a continuous random variable that follows the Uniform probability distribution taking values between 0 and 4). The probability density function graph is given below:

1/4

0 4

Find the probabilities of the following events:

a) P(X
<
0.5)

b) P(X > 1.5)

c) P(2 < X < 3)

8. Problems 1 in the Appendix C of your textbook (page 744)

Economics homework help

1. Define the following concepts

a. Price elasticity of demand

b. Cross price elasticity of demand

c. Income elasticity of demand

d. Price elasticity of supply

2. The following table shows a demand schedule for laptops, so you have information of prices and

their respective demand. Use that information to answer the questions below

Price laptops ($) Demand laptops
A 500 125
B 600 120
C 700 100
D 800 70

a. Draw the demand curve

b. Compute the price elasticity of demand of laptops when the price grows from $500 to

$600. (Show the procedure)

The formula is 𝐸𝑝𝑥𝑑𝑥 = |
∆%𝐷𝑥

∆%𝑃𝑥
|

Where ∆%𝐷𝑥 =
𝐷𝑓−𝐷𝑖
𝐷𝑓+𝐷𝑖

2

And ∆%𝑃𝑥 =
𝑃𝑓−𝑃𝑖
𝑃𝑓+𝑃𝑖

2

c. What is the interpretation of the result of the computation of the price elasticity of

demand?

3. Answer the following questions

a. When price of laptops boosts, and the price elasticity of demand of laptops is lower than

1, what happens to the revenues of sellers of laptops? Do revenues increase, decrease or

they stay constant? (explain)

b. When price of ice cream increments, and the price elasticity of demand of ice creams is

1, what happens to the revenues of sellers of ice creams? Do revenues increase, decrease

or they stay constant? (explain)

4. The following table shows how demand of laptops of brand “PCA” changes when there are

changes in household income. Use that information to answer the questions below

Household income ($) Demand laptops
A 2000 136
B 2200 104

a. Compute the income elasticity of demand when income decreases from $2200 to $2000

(show the procedure)

The formula is 𝐸𝐼𝑑𝑥 =
∆%𝐷𝑥

∆%𝐼

Where ∆%𝐷𝑥 =
𝐷𝑓−𝐷𝑖
𝐷𝑓+𝐷𝑖

2

And ∆%𝐼 =
𝐼𝑓−𝐼𝑖
𝐼𝑓+𝐼𝑖

2

b. Is the laptop of this brand an inferior or a normal good? (explain)

c. What is the interpretation of the result of the income elasticity of demand?

Economics homework help

Bedrock Tools

Bond Finance – Overview

 Bond use dates back over 100 years with the tax reform act of 1986 shaping

today’s use

 A bond is a loan

 A loan is a promise to pay

 Loans have two components – Principal & Interest

 Principal = Amount borrowed

 Interest = Amount it costs to borrow the principal

 Projects value low interest capital….enter bond financing!!

Bond Finance – How it Works

 Units of government (ISSUERS) borrow regularly in the tax-exempt bond

market by pledging revenues to pay back the bonds

 Remember a bond is just a loan

 Investors (BOND BUYERS) fund these loans and provide the principal capital

 The bond buyer sets the terms and interest rate for the bond

 As a tax-exempt bond, the bond buyer is afforded exemption from income

tax on interest income earned on this investment

 Meaning, the investor does not pay income tax on interest earnings

 As such, the bond buyer offers a lower interest rate to the borrower

Bonds – Two General Types

 Government (GO) Bonds – are tax-exempt, used for public projects

 Private Activity Bonds (PABs) – are tax-exempt, utilized for economic
development

 What can they finance?

 Roads, bridges, sewers, water treatment plants, dams

 City halls, prisons, schools, hospitals, libraries, YMCAs, museums

 Parks, swimming pools, community centers, universities,

 Stadiums, theaters, music halls, clinics

 Recycling plants, energy generation facilities, solar fields

 Small manufacturing facilities, first-time farmers, non-profits, affordable housing

 And much more

Bond Finance – Simplified Process

1. Project – Issuer identifies a project and determines if it qualifies for

tax-exempt financing

2. Legal & Finance – Counsel and underwriters prepare documents,

legal opinions and offering statements to price and sell bonds in

capital markets

3. Placement – Underwriter places (sells) bonds with investors (bond

buyers) raising principal for project

4. Pledge – Issuer pledges revenues (taxes, fees, appropriations,

proceeds, etc.) to pay back the bond

Bond Finance – Simplified Process

4. Repayment – The bond is paid back over prescribed timeframe with

regular principal and interest payments

5. Trustee – Acts as fiduciary agent on behalf of bond holders (bond

buyers) and manages payments

 Benefit to Borrower – Lower cost capital for public purpose investment

 Benefit to Investor – Bond buyer receives relief from federal and state

income taxes on interest earnings on bonds

Borrowers, Issuers & Conduit Bonds

 The issuer and borrower are not always the same entity

 An issuer can be a borrow (such as a city, county, etc.)

 Issuing bonds for their own public benefit purpose

 However, a borrower does not have to be an issuer

 Certain borrowers (non-profits, first time farmers, manufacturers, hospitals, etc.)

may use an issuer to access bond financing

 This type of issuance is called conduit bond financing

Borrowers, Issuers & Conduit Bonds

 Bonds issued on a conduit basis are not backed by the issuer

 Conduit bond debt is solely the responsibility of the borrower

 Issuer has no responsibility to pay back the bonds

 This type of bond is called a non-recourse conduit bond

 Private Activity Bonds are typically issued on a conduit basis

Types of Private Activity Bonds (PABs)

 Exempt Facility Bonds – Can be used for airports, docks, wharves, mass-

community facilities, etc.

 Qualified Redevelopment Bonds – Infrastructure projects that do not meet

the requirements of GOs may qualify for tax-exemption if they meet several

tests of “qualified redevelopment bonds; ” e.g., proceeds used for

redevelopment purposes in designated blighted areas, etc.

 Qualified 501(c)(3) Bonds – Bonds used to finance projects owned and used

by 501(c)(3) organizations. Two types – hospital bonds and nonhospital bonds

Types of Private Activity Bonds (PABs)

 Qualified Exempt Small Issues – IDBs for qualified manufacturing projects

including purchase, construction, extension and improvement of warehouses,

distribution facilities, industrial plants, buildings, fixtures and machinery.

 Aggie Bonds – Support beginning farmers and ranchers with eligible purchases

of farmland, equipment, buildings and livestock.

 Other Revenue Bonds – Allow revenue-generating entities to finance a

project and then repay debt generated revenue. Toll roads and bridges,

airports, seaports and other transportation hubs, power plants and electrical

generation facilities, water and wastewater (sewer).

Why Communities Use Bonds

 Opportunity to invest in projects and businesses that are critical the

health of the local economy and community

 Ability to directly influence ROI for development projects

 Easy to promote and monitor with performance measures

 Low cost and secure source of financial support and alterative to

industry and non-profit borrowers

 Can issue on conduit basis without backing (PABs)

Why Borrowers Use Bonds?

 Alternative lending choice (conventional loans vs. tax-exempt borrowing)

 Potentially lower interest rates and cost of capital (conventional loans

vs. tax-exempt)

 Tax-exempt status to buyers of bonds – attractive investment security

 Access to capital that may not otherwise exist for some borrowers (non-

profits, first time farmers, small manufacturers)

Bond Players

 Issuers – 55,000+ nationwide, must have authority to issue

 Bond Counsel – legal public finance experts

 Underwriters – sells and/or places the bonds in market

 Trustee – fiduciary agent for the bondholders

 Investors – those who actually purchase the bonds

 Financial Advisor – independent reviewer for issuer

 Rating Agencies – independent credit review entities

Notes on Bonds

 Market forces at play – when traditional interest rates are low, bond

use tails off, when traditional interest rates go up, bond issuance

tends to go up

 Need good bond counsel on transactions – don’t risk an issuance going

taxable if it is not a qualified PAB

 Many rules and regulations – learn the programs before making any

determinations

Economics homework help

Data Project #1

Brief Description

Students collect trade data on a given topic (Export of Educational Service by Canada), organize and

summarize the data, and draw conclusions.

Detailed instructions

 Collect data.

Detailed steps can be followed in the video clip in this folder. Watching the clip is highly

recommended. I also explained the dataset in the clip, which may help you understand the data

you are using better.

1. Go to comtrade.un.org/data/.

2. Make the following choices and click to download CSV file. (You may later want to download

more data based on your questions.)

3. You can follow the steps in the video clip to clean the data.

4. You can also take a quick look at page 4-5 in the reference file from Statistics Canada.

http://www.statcan.gc.ca/eng/statistical-programs/document/1536_D2_T9_V1-eng.pdf

 Organize and illustrate the data. (Please see the general instruction file.)

 Submission (Please see the general instruction file.)

 Grading (Please see the general instruction file.)

List of Potential Research Questions

1. (This is a question that does not need data illustration. Every team must complete this question.

Make sure every team member knows about the answer.) Please use your own words to explain

some background information on the topic. (The answer is in the reference file.)

a. What is export of education-related expenditure?

b. How is it measured?

2. What are the patterns in Canadian Export of “Education-related expenditure”?

3. Have the patterns in Canadian Export of “Education-related expenditure” changed over time? If

yes, what are the major changes?

4. What are the common/different points between the changes in the patterns in Canadian export of

“education-related expenditure” and the changes in the patters in other Canadian service export?

5. (1-3, but change from “Canadian export to the world” to “Canadian export to the USA”. This

counts as three questions.)

6. How important is the USA as a trade partner to Canada in this category?

7. What are the common/different points between the (changes of) the patterns in Canadian export

of “education-related expenditure” to the world and that to the USA.

Hint: As you can see, you can always start from the pattern of one product one partner one year, and

then gradually extend to any (combination) of 1) comparison with other products; 2) comparison with

other partners; and 3) the trend across time.

Economics homework help

Question

Write an essay which provides a critical discussion on the point:

– Analyse whether there are differences in trends for the Euro Area and US

over time using indicators on bank profitability and financial performance

measures since 1990s until late 2010s.

Further details

One of the key observations about the banking sector after the Global

Financial Crises has been the significant pressures on the financial

performance of the banks in the Euro Area. In this essay, you are asked to

compare the bank financial performance across the Euro Area and United

States over time using key financial performance measures. You analysis

should document with different measures how the performances differed

before and after the global financial crises as well as critically discuss the

structural and cyclical factors which can explain such differences.

When writing your essay, you should pay attention to these points:

– Make sure that your essay provides a critical discussion addressing the

questions given above. You can expand your essay flexibly on other related

directions, as long as you do not exceed the word limit and you do not provide

arguments irrelevant to the core questions above.

– To solidify your arguments, make use of data and examples from literature.

Your essay should also cite necessary literature in research articles, news

articles, government working papers, books etc.

– Discuss ideas/concepts in your own words. Do not plagiarize! You must cite

even paraphrased ideas/data/examples you find in other sources.

– Draw your own Tables and Figures by using the raw data that you will collect.

Do not copy and paste the Tables and the Figures directly from other

resources. Provide the information on the source of the data (institutions,

report, websites you obtained the data)

– A few writing tips:

o Use headings and sub-headings to break up the paper into distinct parts (ie

Introduction, Main Body, Conclusion).

o Make sure your essay has a title.

o Avoid excessive introductions: get to the point, state it, and then move on.

o Write in a formal language. Check your spelling. Make proof-reading.

Economics homework help

Sheet1

SeedCount
1471
1489
1475
1547
1497
1490
1889
1881
1877
1448
1503
1492
1553
1557
1504
1666
1717
1670
1703
1649
1649
1323
1311
1315
1469
1428
1471
1626
1658
1662
1517
1517
1519
1529
1549
1539
1858
1843
1857
1547
1470
1453
1412
1398
1398
1698
1692
1688
1435
1421
1428
1712
1722
1721
1426
1433
1422
1562
1583
1581
1720
1721
1743
1441
1434
1444
1500
1509
1521
1575
1548
1529
1735
1759
1745
1483
1464
1481
1900
1930
1953

Economics homework help

Running head: SAME-SEX RELATIONSHIPS AND MARRIAGES NOT A FASHION 1

SAME-SEX RELATIONSHIPS AND MARRIAGES NOT A FASHION 7

Same-Sex Relationships and Marriages Not A Fashion

Thurl Redd

Indiana Tech

01/06/2021

Same-Sex Relationships and Marriages

Introduction

Same-sex relationships and marriages have been one of the globally discussed matters that have brought many controversies. The bone of contention is whether these types of relationships should be decriminalized globally or not. Many nations are grappling because many groups, including human rights activists, are pressurizing their governments to legalize the relationships. Men want to be involved with their fellow men as women also prefer to be involved with their fellow women. Around the world, many countries have already legalized unions. The uptake of the relationships in these countries is at an alarming rate. Studies show that people in a same-sex marriage have formed powerful emotional attachments and attracted each other just like in heterosexual relationships. Most of the couples stay in such an arrangement for periods of over ten years. However, same-sex marriages or relationships tear apart the moral fabric of society.

Background information

Gay marriages for the longest period had been happening privately. This is because there were no explicit laws that addressed the issue. However, it was kept so illegal that courts could now allow licensing of the marriages whenever parties applied for them. For example, in 1970, a gay couple’s request for a marriage license was received in court in Minnesota; however, it was declined to pave the way to the Supreme Court. Maryland banned same-sex marriage in 1973; a series of events happened, including marriages of same-sex couples taking place out of the church as courts gave meanings to same-sex couples as families. In 2011, the defense of marriage act was declared unconstitutional by the US president, Mr. Obama. This act disallowed recognition of gay or lesbian marriages or relationships. Well, this made many states in the US to start declaring the unions as constitutional Gay Marriage. (, 2020). Retrieved 4 December 2020, from https://www.history.com/topics/gay-rights/gay-marriage. In 2015, the US Supreme Court decriminalized the relationship allowing the practice to be held in all 50 states.

Counter Argument

Research studies indicate that homosexual couples can make good parents. The children being brought up by gay parents have not shown any signs of compromise and are well taken care of, just like the children under the supervision of parents who are heterosexual set-ups. The homosexuals can take these children for playing, keep them well-fed, and cloth them. These children are as popular as the children of heterosexual parents in terms of schooling performance and all other aspects that pertain to learners during specific periods in their education journey.

Most homosexual parents in schools have openly claimed their LG status and the adoption of the children they bring to school (Goldberg, 2014). They have never received any form of challenges as their way of life has always been respected. Only a few forms of implicit marginalization, such as a use of insensitive language, have been used but have not gone beyond levels that may raise the alarm. Their issues have always been discussed between the parents and the teachers.

Supporting counterclaims

Many children are taken up in childcare agencies across the US. These agencies are tasked with the role of taking care of these children. Some of the agencies’ arrangements are giving out the children to parents who wish to adopt and care for them as their children. When the rates of adoption of these children are compared between heterosexual and homosexual parents, it has been established that homosexual parents form a majority of the children adopted. This is because they prefer to have a child under their care since they cannot bear one of their own. In many states in the US, when compared, there is a rise in adoptions, especially in public adoption agencies and private adoption agencies. The adoption is even taking an international dimension where nationals from different countries adopt children from other countries.

Refuting the counterclaims

Gay or lesbian parents are not any ideal to make good parents. Good parenting starts from when a child is young to when the child grows up. This means that the child will have to identify the gay or lesbian couple as parents. But who is a parent, or guardian, this is a person who can be a father figure or mother figure? A father figure is possible yes, because he is a male and provides all the necessities as desired. This is also true to a mother figure as she is a female, but how do two father figures stay together or have intimate relationships? This is confusing the child who is not even aware of such and an arrangement at that young and tender age.

Evidence for argument

Many children brought up by gay or lesbian parents due to exposure and stigmatization have turned to be disobedient to their parents who happen to have adopted them (“Gay and Lesbian Adoptive Parents: Resources for Professionals and Parents,” 2020). This is because they start discovering many aspects of their lives as their sense of belonging starts to overcome them. They begin to understand that they are not under the care of their birth parents hence becoming rebellious.

A rebellious child can be tolerated by a real or biological parent who may wish that the kid may soon change his or her character. However, foster parents, may not tolerate a rebellious child who may prove to be a hard nut to crack.

My Argument

Gay or lesbian couples cannot be role models to child.

Children always look up to the first people who take care of them as their primary role models. When being raised by a gay couple or lesbian couple, the child’s morals are to greater extents negatively affected. This is they learn bad habits from the adopted parents such that they think of turning out to be gay or a lesbian just like parents. This is raising children to individuals that should have otherwise not been their personal choice.

A child is born by two parents who are heterosexuals. This means that the child deserves the right to be with a type of parent that is equal in aspects of gender orientation (Patterson, 1992). Heterosexual partners believe in procreating, want to have children, and thus take good care of other children they may adopt. On the other hand, homosexuals who will never bear a child will be hostile to any child that may not be submissive to them, especially during the adolescent stage. These parents may collide or brush shoulders with the kid every time, bringing the relationship onto rocks.

Children of homosexuals are prone to harassment and teasing.

When other children learn of one of their own from a homosexual’s family, they may start ridiculing or harassing him or her. This is because the child has two mothers or fathers. When adolescents start discovering themselves, they may harass their colleague who may be coming from a homosexual’s family set up (Patterson, 1992).

It does not matter ogre so well in the minds of a young one that her identity documents have parents with the same gender; this will for a long time expose the young one to ridicule, negatively impacting their productivity.

Conclusion

Looking at the above case in general, people should never think of gay parenting or lesbian parenting as anything worth choosing. They should never think of getting or adopting a kid or a child but instead staying just as they have chosen to be in a union of the same gender.

Plan of action

Child adoption agencies should change and restrict the adoption of children to gay or lesbian couples. This is because these partners naturally do not want to bear kids. The law of nature does not provide them with any means for them to bear children. However, it can be allowed for couples that are barren or have given birth to a few children than their wish and have the capability to take care of children to take the responsibility of adopting only.

References

Gay and Lesbian Adoptive Parents: Resources for Professionals and Parents. (2020). NAIC. Retrieved from https://www.childwelfare.gov/pubPDFs/f_gay.pdf

Gay Marriage. (, 2020). Retrieved 4 December 2020, from https://www.history.com/topics/gay-rights/gay-marriage

Goldberg, A. (2014). Lesbian, gay, and heterosexual adoptive parents’ experiences in preschool environments. Early Childhood Research Quarterly, 29(4), 669-681. doi: 10.1016/j.ecresq.2014.07.008

Miller-Cochran, S. K., Stamper, R., & Cochran, S. (2019). An insider’s guide to academic writing: A rhetoric and reader.

Patterson, C. (1992). Children of Lesbian and Gay Parents. Child Development, 63(5), 1025. doi: 10.2307/1131517

Economics homework help

Sheet1

ECON1010 Taking Charge of Your Economic Future Name:
Unit 4 Touchstone Template Date:
MONTH 1 BUDGET MONTH 2 BUDGET MONTH 3 BUDGET SAVINGS PROGRESS
Amount Percent Amount Percent Amount Percent
Income 100% Income $0 100% Income $0 100% Monthly Savings Cumulative Savings $ to Reach Goal
Expenditure Expenditure Expenditure Month 1 $0
Housing Housing Housing Month 2 $0
Food Food Food Month 3 $0
Transportation Transportation Transportation
Education Education Education
Utilities Utilities Utilities
Taxes Taxes Taxes
Health Care Health Care $400 Health Care $400 Note:
Family Care Family Care Family Care To increase the height of a row, hover over the bottom border of that row in the far left margin until your cursor becomes and up-down arrow. Then click and drag the bottom border to the desired row height. If you make an error, you can use the shortcut Ctrl + Z to undo it.
Miscellaneous Miscellaneous Miscellaneous $100
Savings Savings Savings
Total Total Total
PART 1: ANALYZING YOUR PERSONAL FINANCES PART 2: REFLECTION QUESTIONS
SCENARIO: Your monthly budget is going through some changes over the next three months. The good news is that your income has increased because of your strong performance at work. However, health care and miscellaneous costs have also gone up. You will need to reallocate your monthly budget based on these changes. The changes are represented by embedded formulas in the MONTHLY BUDGET tables above, located inside the shaded cells. QUESTION 1: In step 4 and step 6, you created several graphs. Explain the reasons for the graph types that you selected. How will the graphs you created help readers understand the financial data? Your Answer (150 words or less):
STEP 1: Enter the previous values you obtained from the Unit 2 Touchstone into the MONTH 1 BUDGET. Important: Before you do, be sure to divide each dollar amount by 12. Remember, the Unit 2 Touchstone was an annual basis while this Touchstone is a monthly basis. If you no longer have the previous values, create new ones. Remember to start by entering your income and be sure the MONTH 1 BUDGET balances. QUESTION 2: Explain the results of your financial analysis in steps 1-6 in terms of the following:
• Overall progress toward your savings goals
• Changes you might make to the budget to improve progress in the coming months
• Economic or life impacts that may affect your budget in the future
Your Answer (150 words or less):
STEP 2: Now create your MONTH 2 BUDGET and your MONTH 3 BUDGET above. Do not change the predetermined costs for Health Care in the second month or Miscellaneous in the third month. Do not modify the income in either month. Remember that your monthly income must equal your monthly expenditures (including savings). Look ahead to step 3 to see how you can use formulas for proper balancing. QUESTION 3: Assume that your income continues to grow, but consumer prices also rise due to inflation. Determine how economic factors like these might affect your financial analysis one year from now:

A. What economic trends might you need to account for when making a one-year projection?
B. How might you plan for unexpected expenses when making a one-year projection?

Your Answer (150 words or less):

A.

B.

STEP 3: Your MONTH 2 BUDGET and your MONTH 3 BUDGET may or may not be balanced. To check, do the following:
• Enter a formula to calculate your total expenditures. Adjust your expenditures until the total equals your monthly income.
• Next, enter formulas in the percent column to calculate each expenditure as a percentage of the total expenditure.
STEP 4: Using the tools in Excel, make a graph for each of the three budgets to show your spending allocation. You may use a pie chart, column chart, bar chart, or some other graph type. Review the tutorial in Unit 1 called Data Visualization if you need a refresher on graphing. If your embedded graphs block your view, move them off the work area, either downward or to the right.
STEP 5: Fill in the table for SAVINGS PROGRESS located at the top right of this spreadsheet:
• Enter your monthly savings from steps 1-4. The cumulative savings column will calculate automatically.
• Recall your total savings goal from the Unit 2 Touchstone. In the last column, record how much more money you need to save in order to reach your goal.
• If you can’t recall your savings goal, create a new one so you’re able to complete the table.
STEP 6: Using the tools in Excel, make a graph that shows your incremental progress toward your savings goal based on the data in the SAVINGS PROGRESS table:
• Select a graph type that best illustrates your progress. Move the graph off the work area if it obstructs your view.
• Finally, using steps 1-6 as a reference, complete the REFLECTION QUESTIONS on the right side of this spreadsheet.
Sophia Learning, LLC. Copyright © 2021. All rights reserved.

Economics homework help

1

Running Head: CULTURE SHOCK

3

CULTURE SHOCK

Culture shock

Indiana Tech

Culture shock

Question 1 – culture shock refers to the condition, or circumstance where an individual experiences the feeling of anxiety and frustration due to the sudden change in cultural environment (Oberg, 1960). The various aspects and circumstances in the new cultural environment causes the respective feeling of cultural shock, which might be realized in form of discomfort.

Question 2– the four stages of culture shock include the honeymoon process, where they get to foreign places and stay in hotels as they try to gain knowledge about the new culture, followed by frustration, where they feel as outcasts and irrelevant to the respective environment, and comes the adjustment, where individuals try to adjust to the conditions and circumstances in the particular place, and then the adaptation stage where they adapt to the particular culture and environment.

Question 3 – migration and immigration processes and activities were done in the recent past, where people had the mandate to adapt and adjust to foreign cultures and environments that they visit. Such is an illustration reveals the time that Oberg’s essay was written (Oberg, 1960). From the actions of travelling and migration still evident to date, there is idea for the essence and the validity of Oberg’s essay.

Content/ form response grid

Content/form (what)

Response

Honeymoon

The writer talks about the first stage of cultural shack. Migration to new places is witnessed

Frustration

This is witnessed after the reception becomes opposite of the expectation

Adjustment

One tries to adjust and fit to the respective environment and culture

Adaptation

One slowly becomes used to the new culture and starts to become one of them.

Oberg’s art about culture shock adjustment to new cultural environments was first written in 1960, and has been cited 4401 times, and maybe cited more according to the google scholar database. The theory of culture shock deems to have received improvising to make it compatible and eligible to the changing world and technologies (Oberg, 1960). Evidence of the particular circumstances is the realized from the display of the article in digital databases, together with the high number of citations from the book. This implies that there is no alteration that has been implemented on the respective article.

The evidence of the number of citations is found in the link:
https://scholar.google.com/scholar_lookup?hl=en&volume=7&publication_year=1960&pages=177-182&author=+Oberg%2C+K.&title=Culture+shock+adjustment+to+new+cultural+environments

Reference

Oberg, K. (1960). Cultural shock: Adjustment to new cultural environments. Practical anthropology, (4), 177-182.

Economics homework help

Targeted Tools

Targeted Tools

 Represent fastest growing area of development finance.

 Goal of targeted tools is to catalyze investment and transform the

real estate values of a geographic area.

 Three general categories:

1. Special assessment district financing

2. Tax increment financing

3. Tax Abatement

 These categories often overlap and work in conjunction with each

other as a layered financing mechanisms.

Targeted Tools:
Special Assessment

Special Assessment District Financing

 Mechanism by which business, industry, commercial districts and
governments generate funds by applying special tax assessments on
geographic areas.

 Two general structures:

1. Business and Neighborhood Districts
– Self assessment
– BID, SID, NID, etc.

2. Government Districts
– Sometimes self-assessed, often govt. created
– SSD, SAD, CFD, CDD, TID

Business & Neighborhood Districts

 Business and Neighborhood Districts help to support a variety of
services:

 security and safety patrols

 snow removal

 promotions, marketing and events

 graffiti removal

 beautification and cleanliness programs

 economic development

 Typically run by property owners in defined area

 Property owners voluntarily impose tax to provide for infrastructure
improvements or enhanced public-type services

Types of Business & Neighborhood Districts

 Business Improvement Districts (BID)

 Special Improvement District (SID)

 Community Improvement District (CID)

 Community Development Authority (CDA)

 Neighborhood Improvement District (NID)

Government Districts

 Services and improvements directed by local government in defined

area

 Can be initiated by property owners or by local government

 Special Services District (SSD)

 Special Assessment District (SAD)

 Community Facilities District (CFD)

 Community Development District (CDD)

 Transportation Improvement District (TID)

Benefits of Special Assessment

 Can be leveraged with bonds

 Not development-dependent

 Can span two or more jurisdictions

 Generally strong collection enforceability – lien status

 Can be combined with TIF

Challenges of Special Assessment

 Overburden to property owners

 Less likely to approve other necessary tax increases?

 If assessment can be imposed with less than unanimity, litigation is

common by non-approving property owners

Targeted Tools:
Tax Increment Finance

Tax Increment Finance

 Second and most common targeted form of financing.

 First created in 1952 in California to act as a catalyst for redevelopment areas.

 Quickly spread across the country – 48 states and District of Columbia have

enabling legislation.

 Referred to by a variety of names:

 TIF – Tax increment financing (most states)

 TAD – Tax allocation district financing (GA)

 PDF – Project Development Financing (NC)

 TIRZ – Tax increment reinvestment zones (TX)

 California currently does not have a TIF law

What is TIF?

 Special authority provided to a local governmental jurisdiction which allows

them to allocate specific tax revenues towards the redevelopment,

development or renovation of the built environment.

 A mechanism used to capture the future tax benefits of real estate

improvements to pay the present cost of specific improvements.

 TIF is used to channel incremental taxes toward improvements in distressed

or underdeveloped areas where development would not otherwise occur by

using the increased property or sales taxes that new development generates

to finance qualified costs related to development.

What is Increment?

 Increase in taxes resulting from development

 Difference between base frozen tax and future generated taxes.

 Types of taxes used:

 Real estate – most common

 Sales tax

 Income tax

 Gross tax

 Value added tax

Why Use TIF?

 Encourage development, eliminate blight, addresses environmental issues

 Adaptively reuse old buildings and facilities for modern day commerce and

economic development.

 Finance critical infrastructure while shifts portion or all of financial burden

for infrastructure to the private sector through public-private partnerships

 Advances economic development or redevelopment projects that otherwise

may not move forward in today’s economy

 Attracts economic development prospects by having infrastructure financing

plan in place

 Create jobs and preserve and strengthen the tax base

Who Controls TIF?

 States authorize enabling legislation.

 Local governmental jurisdictions (city or county) designate districts or project

areas.

 Development agencies or other entities implement the program.

 Private developers, real estate and financial institutions partner with

development agencies.

Common TIF Developments

 Mixed-Use

 Residential

 Commercial

 Industrial

 Amenity Creation

 Retail Development

 Transportation

What can TIF Finance? (Generally)

 Infrastructure Improvements

 Site Preparation

 Facility / Amenity Construction

Such as:
 Public Infrastructure
 Land Acquisition
 Relocation
 Demolition
 Utilities
 Debt Service
 Planning Costs
 Direct Costs of Development (typically only in blight situation)

Typical Improvements – Infrastructure

 TIF is commonly used to finance necessary infrastructure improvements that

allow a deal to move forward. While each state’s TIF statute establishes

eligibility, some common infrastructure improvements that typically qualify

include:
 Publicly owned and maintained utilities

 Sanitary sewers

 Wastewater treatment facilities

 Lift stations

 Force mains

 Transmission lines

 Sewer pump stations and related equipment

 Drainage facilities including storm sewer systems, collection and detention

facilities, pumps, inlets, canals and related channel equipment

Typical Improvements – Infrastructure

 TIF can be used to finance a number of expenses related to infrastructure.

While what is eligible varies by state, some examples of common TIF eligible

expenses include:
 Public roads and streets

 Bridges

 Lighting

 Traffic signals and related equipment

 Decorative pavers

 Medians

 Turn lanes

 Property used for right of way

 Compensable utility relocations that occur due to the placement or construction

of a roadway

 Beautification components and related hardware

Typical Improvements – Infrastructure

 TIF may finance improvements beyond typical infrastructure needs to include

pedestrian-friendly amenities such as:
 Hiking and biking trails

 Pathways that facilitate intermodal transportation

 Sidewalks

 Bike lanes in street right of way

 Pedestrian bridge systems that link commercial centers to transit systems

 Sky bridges that link public buildings

 Public tunnel systems for private buildings

 Pedestrian platforms for rail or light rail transit systems and similar facilities

Two Categories of Public Improvements

 Generic Public Improvements
 Roads, bridges, sidewalks

 Utility extensions (water, sewer, electric, gas, telecommunications)

 On-site Public Improvements
 Environmental Remediation

 Parking facilities

 Landscaping

 Storm water management

Requirements for Use of TIF (generally)

 Establish TIF District

 “But for” Analysis

 Feasibility or Market Study

 TIF or Development Plan

 Development Agreement

Leveraging TIF – Securing Debt

Bond Financing

 Challenges based on speculative revenue stream

 Could be tax-exempt

Pay-As-You-Go Financing

 Developer responsible for financing and providing necessary security to lender

 Harder to do tax-exempt financing

Project-Specific & District-Wide TIF

 TIF application is either project-specific or district-wide, depending

on the scope of the effort: whether it is one site or an entire

neighborhood.

 Both methods also have limitations and varying levels of risk.

Project-Specific TIF

 Usually a single project or single piece of property
 Specific user so generally less complicated
 Cleaner process / fewer parties
 Funds typically go to public improvements necessary to make project feasible

(parking garages, infrastructure and sewer / water improvements)
 In certain states, funds can be used to acquire land
 Often, land is controlled by single owner
 Effective in providing gap financing for a particular improvement
 More risk since the success of the project often relies on one user
 More difficult credit hurdles for bond investors
 Can cause unfair development advantage
 The community buy-in process must be fair and transparent
 Used as a complement to other finance mechanisms addressing the greater

community

District-Wide TIF

 Multiple users and potentially many property owners.

 Transactions more complex and require significant due diligence

 Traditionally applied to large area of land or entire neighborhood

 Communities use to eliminate blight and deterioration in larger areas.

 Typically support major infrastructure projects such as roads, traffic lights,

landscaping of public areas, parks, parking garages and other public benefit aspects

 Can support infrastructure and preparation of “ready to go” sites as part of an

industrial, medical or research park

 Can allow land assembly

 Can raise community suspicions of driving longtime property owners out of area

 Can be frustrating for property owners and developers outside the TIF area

Simple Project-Specific TIF Example

Using Up-Front Method of Financing:

 Existing property generates $50,000 a year in real estate taxes.

 Government designates the property as a “TIF” district.

 Tax base is frozen at $50,000 level.

 New project is proposed for the site and will in effect raise overall tax base

generated to $150,000 (and rising) a year once completed.

 Developer agrees to make significant investment and seeks TIF funds from

govt. for eligible public improvements.

Simple Project-Specific TIF Example

 Government conducts “but for” test and agrees to TIF deal and issues tax-

exempt bonds to finance proposed infrastructure improvements.

 Bonds are issued generating cash for the project (several options on actual

financing mechanism).

 Once project is complete, new assessment is completed on property

($150,000 in taxes a year as indicated before).

 Frozen base ($50,000) continues to flow to pre-existing coffers (city, county,

schools, state, etc.).

 Increment (additional $100,000) goes towards debt service on the bonds that

were issued for the project.

Simple Project-Specific TIF Example

 Increment is used to pay back bonds over time, anywhere from 10-40 years.

 Once bonds are paid off, the property taxes are “unfrozen” and the full tax

base generated goes to existing coffers (city, county, schools, state, etc.).

 THE KEY – No new taxes are requested and no existing taxes are used in

the financing of the project.

Graphically Speaking

3 Critical Public Policy Considerations

1. Due Diligence

2. Transparency

3. Accountability

Due Diligence – Do the Work!

 Go through all the step necessary to ensure an acceptable level of
satisfaction.

 Take a conservative approach

 Application process and fees are okay

 Crunch all the numbers and do the math

 Request more data

 Ask lots of questions

 Be thorough and dig deep

 Seek partnerships with developers who want to provide all the
numbers

 KEY – Don’t accept assumptions

Due Diligence – “But for” Test

 The “but for” test is a public policy test for measuring the appropriate

need for TIF financing.

 Major part of the community buy-in process.

 TIF authorizing agencies should be conducting this test for every project.

 Provides a rational and justification for approving TIF funding.

 Eliminates the argument that the funding is “corporate welfare”.

 Sets the appropriate amount of TIF funding for the project. The project

may not require 100% of the TIF funds for debt service and this test will

help establish the necessary financing.

Due Diligence – “But for” Test

 The test should be conducted using financial models or impact

programs and outside professionals are almost always more equipped

to crunch the numbers.

 Seek professionals if uncertain. They provided a 3rd party point of

view and are invaluable to the process.

 Be aware and beware of the assumptions!

Transparency – It’s All Out There

It is not enough to act transparent, you must actually be transparent.

 Best Practices – open meetings, open records, all laws followed, sound

leadership, community events, web/newsletters, single point of contact, etc.

 Address Failures – Play the “what if” game and answer the “what now”

questions.

 Build Consensus – Determine primary, secondary and tertiary considerations

for various stakeholders. Be prepared to compromise and be creative in

addressing conflicting objectives or interests

 Strategize – Plan changes, roadblocks and find champions for solutions that

come from third party supporters (not always the government entity) (i.e.

Federal Reserve in Kansas City)

Accountability

 Be accountable to stakeholders, report success and failure, draft policies that
meet goals and objectives. For instance:

 Application and approvals process

 Use standards – industrial, blight, retail philosophy

 Investment participation level policy

 Geographical targeting policy

 Transportation and housing policy

 Consider what the broader goals are in pursuing TIF:

 Big picture items (jobs, investment, physical change)

 Master plan, redevelopment strategy, etc.

Accountability

 Create process for vetting TIF developer assistance

 Establish a framework for community input

 Determine how TIF implementation can best meet objectives

 Document steps taken and results to aid in debt approval at the public level

 Detail the fiscal impact for each entity

 Diagram the increment financing process

 Provide sufficient analysis of the economic and fiscal impact and benefit to the city

Targeted Tools:
PACE & Abatement

Property Assessed Clean Energy (PACE)

 PACE financing is a mechanism for achieving energy improvements on existing

privately-owned buildings through special assessment financing

 Loans are provided by private capital sources

 Loans are paid back via the property owners’ property tax bills

 Loan stays with the property, even if the property is sold or transferred

 New property owner assumes the special assessment and must make assessed

payments

PACE – Process (generally)

1. Property owner identifies necessary and qualified energy efficiency upgrades,
retrofit and/or generation investment for their home or business

2. Private capital provider (bank, energy company, etc.) provides loan to property
owner for improvements

3. Once completed and certified, municipality places a special assessment on that
property’s tax bill.

4. Assessment is collected during the regular property tax payment process with
payments made to the private lender via the municipality.

5. Over time, the loan is paid off and the property sees measurable energy savings

PACE Benefits

 PACE is a very flexible and easily implementable financing tool

 Currently authorized in over 35 states and hundreds of local programs

 Programs can be established to address a single piece of property, a district, a

region or an entire state

 Communities can create broad programs that encompass larger geographic

districts and allow for multiple uses whole also being tailored to specific

targeted users

 Tax bill enforceability ensures strong repayment thus eliminating private

capital provider’s risk

Tax Abatement

 The reduction of an entities tax liability for the purpose of job creation,

investment or retention/location of business in community/state

 Widely used through United States

 Performance based approach emerging

 Highly political, often a zero-sum outcome with inner state/city business

relocations

 #1 tool in state development agencies toolbox

 Notable abuse, misuse and failures

Economics homework help

Q.1 Week 8 Discussion Requirements: 
The expectation for week 8 discussions, with at least one reference to an article/video on one of the macroeconomic topics for the week.

 Review major news reports and discuss a current macroeconomic event. Explain the nature of the event, problem, or the current issue of choice and discuss its relationship and/or impact on any of the following macroeconomic variables.

· GDP

· Inflation

· Unemployment

· International trade

· Interest rates

· Investment

· Aggregate supply

· Aggregate demand

· Fiscal policy

· Monetary policy

· Economic development

Moreover, share your views about the consequences (good or bad) of such event on the overall economy.

Q.1

Week 8 Discussion Requirements:

The expectation for week 8 discussions

, with at

least one reference to an article/video on one of the macroeconomic topics for

the week.

Review major news reports and discuss a current macroeconomic event. Explain the nature of the

event, problem, or the current issue of choice and discuss its relationship and/or impact on any of

the following

macroeconomic variables

.

·

GDP

·

Inflation

·

Unemployment

·

International trade

·

Interest rates

·

Investment

·

Aggregate supply

·

Aggregate demand

·

Fiscal policy

·

Monetary policy

·

Economic development

Moreover, share your views about the consequences (good or bad) of such event on the

overall economy.

Q.1 Week 8 Discussion Requirements: The expectation for week 8 discussions, with at

least one reference to an article/video on one of the macroeconomic topics for

the week.

Review major news reports and discuss a current macroeconomic event. Explain the nature of the

event, problem, or the current issue of choice and discuss its relationship and/or impact on any of

the following macroeconomic variables.

 GDP

 Inflation

 Unemployment

 International trade

 Interest rates

 Investment

 Aggregate supply

 Aggregate demand

 Fiscal policy

 Monetary policy

 Economic development

Moreover, share your views about the consequences (good or bad) of such event on the

overall economy.

Economics homework help

Writing Assignments



Please select two of the following options and answer each of the questions related to that option.

Your responses should be thorough and well supported. You are encouraged to use our textbook and the online book for this class, which is called Popular Economyths.

A good, well-reasoned, detailed answer should be at least 3 to 3.5 pages (total) in length (and please do NOT rewrite the questions). You need to answer each of the questions for the option you select.

 

OPTION 1 – The Minimum Wage

 

Since 2009, the national minimum wage has been $7.25 per hour for most occupations in the private sector. Many of those who support an increase in the minimum wage believe this is one way the government could possibly reduce poverty, while its opponents believe that it creates unemployment and hurts low-skilled workers. The following items address the idea of raising the minimum wage from the current federal minimum of $7.25 per hour.

1) Describe who the suppliers and demanders are in the labor market. Is a government-mandated minimum wage a price floor or ceiling? Discuss the effect of raising the minimum wage from a supply and demand standpoint, making sure to address the concept of surplus or shortage, and specify what that shortage or surplus is most commonly called in economic terms.

2) Raising the minimum wage will also affect the labor costs of businesses. What is going to happen to the prices these businesses charge for their products? And who is going to be most affected by these price changes, those with low incomes or those with high incomes?

3) Discuss any potential changes in the incentives for low-skilled workers – those who keep their jobs and their hours – to increase their human capital when the minimum wage increases. What about those who lose their jobs or never get hired? Discuss the incentives for employers to substitute capital inputs (technology and automation) for labor.

4) What might be an unintended impact on government spending on entitlements such as welfare, food stamps, and unemployment compensation because of the changes in the minimum wage and its impact on unemployment and underemployment?

5) Do advocates of a minimum wage law believe that workers should be paid based on their output (i.e., performance) or on their level of need? What do opponents of the minimum wage law believe workers’ wages should be based on? Which one is sustainable and why?

For the sake of comparison, how should students be graded in class, based on their performance or level of need?

 

6) Advocates of a minimum wage often believe that employers would “exploit” or “take advantage” of their workers if there were no minimum wage. How would you know if employers are “taking advantage” of their workers if there were no minimum wage? What simple thing could the employee do if they believed they were being exploited?

7) What percentage of American workers get paid

above

minimum wage? In general, why do such workers get paid
more
than the government-mandated minimum wage if employers are supposedly so greedy?

8) Compare and contrast some of the information contained in the three videos:


Obama: “Raise Minimum Wage to $9 an Hour” – SOTU 2013 

How the Minimum Wage Creates Unemployment – Note: this video uses an example of a $5 minimum wage as an illustration only. The same exact point could be made with a minimum wage of $7.25, $9, $12.37, or any other amount, so please do not get hung up on the $5 amount. The point is whether or not the government ought to dictate the wages of a private transaction between a willing employee and employer.

We the Internet TV: Pledge for $15

Describe the main points of each video. Which one or two videos do you agree with more from an economic perspective and why? Be specific!

9) Based on your previous responses, do you believe that the minimum wage should be raised, lowered, remain as it currently is, or be altogether eliminated? If you think there should be a minimum wage, how would you arrive at the specific wage? You need to give a thorough reason for your answer.

10) Who should get to decide how much a worker gets paid, the worker and their employer or a politician? WHY?

  

OPTION 2 – Outsourcing

There has been much talk in recent time about outsourcing and “sweatshops.” Outsourcing is usually defined as occurring when a company chooses to export some of its production to foreign countries. Jobs in which foreign workers work in “sub-standard” conditions and are paid lower wages (than their American counterparts) are typically referred to as “sweatshops.”

1) What are some of the economic reasons why some firms choose to relocate some of their productive facilities to foreign countries?

2) With regards to low- and high-skill laborers, which domestic (American) workers may gain from outsourcing, and which domestic workers might lose? Why is this the case?

3) With respect to the types of products produced by companies that outsource, what effect may outsourcing have on domestic prices of these products?

4) If the US government wanted to reduce outsourcing, what changes in policy could it make to do so?

5) Please watch the following 2 videos regarding “sweatshops.”

Inside Look at Apple’s Chinese Sweatshops!

John Stossel – Sweatshops

Describe the main points of EACH video. What evidence do they present to reach their overall conclusions?

6) After watching the videos, please tell me if “sweatshops” are a good or bad thing for foreign workers? WHY? You need to thoroughly explain your answer.

 

OPTION 3 – “Buy American” Provisions

The American Recovery and Reinvestment Act of 2009 (ARRA) was passed by President Obama and Congress in response to the recession of 2007-2009. The primary components of this bill included tax cuts and increased government spending, with an emphasis on infrastructure spending such as roads and bridges. Included in the bill was a “Buy American” provision which required all manufactured goods (a few exceptions did apply) purchased with ARRA funds to be made in the United States. The intention of this provision was to increase jobs in the United States by preventing foreign companies from reaping the rewards of the new spending projects.

1) Are attempts to protect U.S. firms from foreign competition, such as the Buy American provision, good ideas? Explain.

2) Explain why some American companies might be opposed to this provision.

3) Explain whether or not you believe the Buy American provision would create jobs in the United States.

4) What do you think will be the economic consequences of a Buy American provision?

5) Do you believe the government should get involved in this aspect of private business, even when the available funds are coming from the government? If so, why? If not, why not?

6) Watch the following 2 videos:

Why Buying American Made Matters

John Stossel – Buy American

Describe the main points of EACH video. What evidence do they present to reach their overall conclusions?

Which of these videos make more economic sense than the other? BE SPECIFIC! What points does the better video make that the other fails to adequately address?

OPTION 4 – “Worker-owned” Businesses

 

Some politicians have recently proposed ideas that would encourage or require more businesses to operate as “co-ops” or “worker-owned” businesses. In such businesses, the workers and the bosses get paid the same amount of money and have an equal say in the management of the business.

1) Do you believe that more businesses should be run in such a manner, as cooperatives in which the owner and employees make roughly the same amount of money?

2) What are the potential drawbacks to the owners of such an idea? What about drawbacks to the workers?

3) If you like the idea of “worker-owned” businesses, should the government require businesses to operate in such a manner? Why or why not?

4) Why do you think some politicians may want to pass laws that would require more businesses to become cooperatives?

5) Please watch the following two videos and answer the following questions.

Capitalism: A Love Story – Workplace Democracy and Cooperatives

Why Capitalism Works

Describe the main points of EACH video. What evidence do they present to reach their overall conclusions?

Which of these two videos makes the most sensible economic conclusions? WHY? Be specific.

OPTION 5 – Race- and Sex-Based Preferences

Some people argue that colleges and employers should give preferences to women and racial/ethnic minorities due to discrimination in the past (and maybe even now, as well). Others disagree and believe that such preferences unfairly hurt not only men and white people directly, but also indirectly hurt women and minorities.

1) Recently, California became the first state to pass a law requiring a gender quota for corporate boards. California SB 826 requires boards to have a minimum number of females. Please watch the following two videos:

CNBC: How a California law is changing boardrooms all over the country

Anastasia Explains: Race and Gender Quotas

Does this law help or hurt females? Explain in detail

Does this law help or hurt males? Explain in detail

2) Please watch the following two videos:

Pink tax: Why do women pay more for goods and services?

The Daily Show’s Pink Tax Segment: DEBUNKED

Which video makes more economic sense? Utilizing economic principles, is the “pink tax” real? Explain in detail

3) Watch the following videos regarding the concepts of “diversity, equity, and inclusion” (DEI) and “meritocracy.”

Why Diversity Is More Important Than Meritocracy: Quotas, Talent, Wall Street | Sallie Krawcheck

Campus Reform: Students Support Diversity Quotas…Until It Comes to Football

Which concept is based on a person’s identity/immutable characteristics such as gender and race? Which concept is based on a person’s performance, experience, or skills?

4) Who benefits and who is harmed when governments or private businesses make hiring decisions based on “DEI”?

5) Who benefits and who is harmed when governments or private businesses make hiring decisions based on “meritocracy”?

6) Which concept, DEI or meritocracy, is most economically sustainable or feasible?

7) Which concept is most conducive to capitalism and which is most conducive to socialism?

8) Which of the above concepts would you like to be graded on in academia? In sports? In applying for a job? WHY? Explain in detail

Economics homework help

Question 1 Comment by PlagScan: Possible source:
Your PlagScan document “Unnamed” dated 2022-03-02

As outlined in the discussion overview, culture shock refers to a specific condition or circumstances where experiences the ultimate feeling of anxiety and frustration caused by the change in culture and closely associated environment. This Factor is associated with several characteristics that include the feeling of uncertainty, confusion, and anxiety. This may lead to an adjustment environment, and letters adjust to the unfamiliar environment.

Question 2 Comment by PlagScan: Possible source:
Your PlagScan document “Unnamed” dated 2022-03-02

The shock culture process has four main stages that come along with it. The first one is the honeymoon, and it is typically used to Usher in various personnel have changed their culture. Stay in hotels and other lodges at the appropriate time to learn about the new culture. The second scope includes frustrations caused by being new in the environment. The adjustment process follows if we are an individual must adjust to the given sets of conditions and circumstances and the particular area of the dwelling. The last characteristic adaptation is where an individual adjusts to the new environment despite the characteristics.

Question 3 Comment by PlagScan: Possible source:
Your PlagScan document “Unnamed” dated 2022-03-02

The art of culture shock was written in the 1960s and had been outlined more than 4400 times, and it is available in various databases that document data. In this regard, migration and immigration actions include various activities done in the recent past where people are forced to adapt to the new environment because of the prevailing circumstances.

Response grip Comment by PlagScan: Possible source:
Your PlagScan document “Unnamed” dated 2022-03-02

Procedural dynamic and changes

Procedural evolvement and change of status

Honeymoon This is where an individual move from one place and settles in another regionHoneymoon .

Frustration It comes along after reception comes alongside the nature of one’s expectation.

Adjustment This is a set of activities that one carried out to ensure that he fits in the outlined new environmentAdjustment . Comment by PlagScan: Possible source:
Your PlagScan document “Unnamed” dated 2022-03-02

Adaptation Adapting to the new culture and taking all the corresponding action ensures that one makes the right judgment and adapt to the new environmentAdaptation . Comment by PlagScan: Possible source:
Your PlagScan document “Unnamed” dated 2022-03-02

Reference

Oberg, K. (1960). Cultural shock: Adjustment to new cultural environments. Practical anthropology, (4), 177-182.

Economics homework help

Principles of Microeconomics

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Table of Contents
Preface . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Chapter 1: Welcome to Economics! . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

1.1 What Economics Is and Why It’s Important . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
1.2 Microeconomics and Macroeconomics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
1.3 How Economists Use Theories and Models to Understand Economic Issues . . . . . . . . . . 13
1.4 How Economies Can Be Organized: An Overview of Economic Systems . . . . . . . . . . . . 15

Chapter 2: Choice in a World of Scarcity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
2.1 How Individuals Make Choices Based on Their Budget Constraint . . . . . . . . . . . . . . . 26
2.2 The Production Possibilities Frontier and Social Choices . . . . . . . . . . . . . . . . . . . . 31
2.3 Confronting Objections to the Economic Approach . . . . . . . . . . . . . . . . . . . . . . . 36

Chapter 3: Demand and Supply . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
3.1 Demand, Supply, and Equilibrium in Markets for Goods and Services . . . . . . . . . . . . . 44
3.2 Shifts in Demand and Supply for Goods and Services . . . . . . . . . . . . . . . . . . . . . 49
3.3 Changes in Equilibrium Price and Quantity: The Four-Step Process . . . . . . . . . . . . . . 59
3.4 Price Ceilings and Price Floors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
3.5 Demand, Supply, and Efficiency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68

Chapter 4: Labor and Financial Markets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
4.1 Demand and Supply at Work in Labor Markets . . . . . . . . . . . . . . . . . . . . . . . . . 80
4.2 Demand and Supply in Financial Markets . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
4.3 The Market System as an Efficient Mechanism for Information . . . . . . . . . . . . . . . . . 94

Chapter 5: Elasticity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103
5.1 Price Elasticity of Demand and Price Elasticity of Supply . . . . . . . . . . . . . . . . . . . 104
5.2 Polar Cases of Elasticity and Constant Elasticity . . . . . . . . . . . . . . . . . . . . . . . 109
5.3 Elasticity and Pricing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111
5.4 Elasticity in Areas Other Than Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 119

Chapter 6: Consumer Choices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 127
6.1 Consumption Choices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 128
6.2 How Changes in Income and Prices Affect Consumption Choices . . . . . . . . . . . . . . 135
6.3 Labor-Leisure Choices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 139
6.4 Intertemporal Choices in Financial Capital Markets . . . . . . . . . . . . . . . . . . . . . . 144

Chapter 7: Cost and Industry Structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 155
7.1 Explicit and Implicit Costs, and Accounting and Economic Profit . . . . . . . . . . . . . . . 156
7.2 The Structure of Costs in the Short Run . . . . . . . . . . . . . . . . . . . . . . . . . . . . 158
7.3 The Structure of Costs in the Long Run . . . . . . . . . . . . . . . . . . . . . . . . . . . . 163

Chapter 8: Perfect Competition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 177
8.1 Perfect Competition and Why It Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . 178
8.2 How Perfectly Competitive Firms Make Output Decisions . . . . . . . . . . . . . . . . . . . 179
8.3 Entry and Exit Decisions in the Long Run . . . . . . . . . . . . . . . . . . . . . . . . . . . 193
8.4 Efficiency in Perfectly Competitive Markets . . . . . . . . . . . . . . . . . . . . . . . . . . 196

Chapter 9: Monopoly . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 203
9.1 How Monopolies Form: Barriers to Entry . . . . . . . . . . . . . . . . . . . . . . . . . . . 204
9.2 How a Profit-Maximizing Monopoly Chooses Output and Price . . . . . . . . . . . . . . . . 208

Chapter 10: Monopolistic Competition and Oligopoly . . . . . . . . . . . . . . . . . . . . . . . . 223
10.1 Monopolistic Competition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 224
10.2 Oligopoly . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 232

Chapter 11: Monopoly and Antitrust Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 243
11.1 Corporate Mergers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 244
11.2 Regulating Anticompetitive Behavior . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 250
11.3 Regulating Natural Monopolies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 252
11.4 The Great Deregulation Experiment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 255

Chapter 12: Environmental Protection and Negative Externalities . . . . . . . . . . . . . . . . . 263
12.1 The Economics of Pollution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 264
12.2 Command-and-Control Regulation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 268
12.3 Market-Oriented Environmental Tools . . . . . . . . . . . . . . . . . . . . . . . . . . . . 268
12.4 The Benefits and Costs of U.S. Environmental Laws . . . . . . . . . . . . . . . . . . . . . 272
12.5 International Environmental Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 275
12.6 The Tradeoff between Economic Output and Environmental Protection . . . . . . . . . . . 276

Chapter 13: Positive Externalities and Public Goods . . . . . . . . . . . . . . . . . . . . . . . . 287
13.1 Why the Private Sector Under Invests in Innovation . . . . . . . . . . . . . . . . . . . . . 289
13.2 How Governments Can Encourage Innovation . . . . . . . . . . . . . . . . . . . . . . . . 292
13.3 Public Goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 295

Chapter 14: Poverty and Economic Inequality . . . . . . . . . . . . . . . . . . . . . . . . . . . . 305
14.1 Drawing the Poverty Line . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 306
14.2 The Poverty Trap . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 309
14.3 The Safety Net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 312
14.4 Income Inequality: Measurement and Causes . . . . . . . . . . . . . . . . . . . . . . . . 316
14.5 Government Policies to Reduce Income Inequality . . . . . . . . . . . . . . . . . . . . . . 322

Chapter 15: Issues in Labor Markets: Unions, Discrimination, Immigration . . . . . . . . . . . . 333
15.1 Unions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 336
15.2 Employment Discrimination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 342
15.3 Immigration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 347

Chapter 16: Information, Risk, and Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . 355
16.1 The Problem of Imperfect Information and Asymmetric Information . . . . . . . . . . . . . 356
16.2 Insurance and Imperfect Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 361

Chapter 17: Financial Markets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 375
17.1 How Businesses Raise Financial Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . 377
17.2 How Households Supply Financial Capital . . . . . . . . . . . . . . . . . . . . . . . . . . 381
17.3 How to Accumulate Personal Wealth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 392

Chapter 18: Public Economy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 403
18.1 Voter Participation and Costs of Elections . . . . . . . . . . . . . . . . . . . . . . . . . . 404
18.2 Special Interest Politics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 406
18.3 Flaws in the Democratic System of Government . . . . . . . . . . . . . . . . . . . . . . . 409

Chapter 19: International Trade . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 417
19.1 Absolute and Comparative Advantage . . . . . . . . . . . . . . . . . . . . . . . . . . . . 418
19.2 What Happens When a Country Has an Absolute Advantage in All Goods . . . . . . . . . 424
19.3 Intra-industry Trade between Similar Economies . . . . . . . . . . . . . . . . . . . . . . . 428
19.4 The Benefits of Reducing Barriers to International Trade . . . . . . . . . . . . . . . . . . 432

Chapter 20: Globalization and Protectionism . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 439
20.1 Protectionism: An Indirect Subsidy from Consumers to Producers . . . . . . . . . . . . . . 440
20.2 International Trade and Its Effects on Jobs, Wages, and Working Conditions . . . . . . . . 447
20.3 Arguments in Support of Restricting Imports . . . . . . . . . . . . . . . . . . . . . . . . . 450
20.4 How Trade Policy Is Enacted: Globally, Regionally, and Nationally . . . . . . . . . . . . . 457
20.5 The Tradeoffs of Trade Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 460

Appendix A: The Use of Mathematics in Principles of Economics . . . . . . . . . . . . . . . . . 469
Appendix B: Indifference Curves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 487
Appendix C: Present Discounted Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 501
Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 549

This OpenStax book is available for free at http://cnx.org/content/col11627/1.10

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About Principles of Microeconomics
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Preface 1

to Ph.D.-granting universities. They told us about their courses, students, challenges, resources, and how a textbook
can best meet the needs of both instructors and students.

The result is a book that covers the breadth of economics topics and also provides the necessary depth to ensure the
course is manageable for instructors and students alike. And to make it more applied, we have incorporated many
current topics. We hope students will be interested to know just how far-reaching the recent recession was (and
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The pedagogical choices, chapter arrangements, and learning objective fulfillment were developed and vetted with
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The book is organized into five main parts:

What is Economics? The first two chapters introduce students to the study of economics with a focus on
making choices in a world of scarce resources.

Supply and Demand, Chapters 3 and 4, introduces and explains the first analytical model in economics:
supply, demand, and equilibrium, before showing applications in the markets for labor and finance.

The Fundamentals of Microeconomic Theory, Chapters 5 through 10, begins the microeconomics portion
of the text, presenting the theories of consumer behavior, production and costs, and the different models of
market structure, including some simple game theory.

Microeconomic Policy Issues, Chapters 11 through 18, covers the range of topics in applied micro, framed
around the concepts of public goods and positive and negative externalities. Students explore competition and
antitrust policies, environmental problems, poverty, income inequality, and other labor market issues. The text
also covers information, risk and financial markets, as well as public economy.

International Economics, Chapters 19 and 20, the final part of the text, introduces the international
dimensions of economics, including international trade and protectionism.

Chapter 1 Welcome to Economics!
Chapter 2 Choice in a World of Scarcity
Chapter 3 Demand and Supply
Chapter 4 Labor and Financial Markets
Chapter 5 Elasticity
Chapter 6 Consumer Choices
Chapter 7 Cost and Industry Structure
Chapter 8 Perfect Competition
Chapter 9 Monopoly
Chapter 10 Monopolistic Competition and Oligopoly
Chapter 11 Monopoly and Antitrust Policy
Chapter 12 Environmental Protection and Negative Externalities
Chapter 13 Positive Externalities and Public Goods
Chapter 14 Poverty and Economic Inequality
Chapter 15 Issues in Labor Markets: Unions, Discrimination, Immigration
Chapter 16 Information, Risk, and Insurance
Chapter 17 Financial Markets
Chapter 18 Public Economy
Chapter 19 International Trade
Chapter 20 Globalization and Protectionism

Appendix A The Use of Mathematics in Principles of Economics
Appendix B Indifference Curves
Appendix C Present Discounted Value

2 Preface

This OpenStax book is available for free at http://cnx.org/content/col11627/1.10

Alternate Sequencing

Principles of Economics was conceived and written to fit a particular topical sequence, but it can be used flexibly to
accommodate other course structures. One such potential structure, which will fit reasonably well with the textbook
content, is provided. Please consider, however, that the chapters were not written to be completely independent, and
that the proposed alternate sequence should be carefully considered for student preparation and textual consistency.

Chapter 1 Welcome to Economics!
Chapter 2 Choice in a World of Scarcity
Chapter 3 Demand and Supply
Chapter 4 Labor and Financial Markets
Chapter 5 Elasticity
Chapter 6 Consumer Choices
Chapter 19 International Trade
Chapter 7 Cost and Industry Structure
Chapter 12 Environmental Protection and Negative Externalities
Chapter 13 Positive Externalities and Public Goods
Chapter 8 Perfect Competition
Chapter 9 Monopoly
Chapter 10 Monopolistic Competition and Oligopoly
Chapter 11 Monopoly and Antitrust Policy
Chapter 14 Poverty and Economic Inequality
Chapter 15 Issues in Labor Markets: Unions, Discrimination, Immigration
Chapter 16 Information, Risk, and Insurance
Chapter 17 Financial Markets
Chapter 18 Public Economy
Chapter 20 Globalization and Protectionism

Appendix A The Use of Mathematics in Principles of Economics
Appendix B Indifference Curves
Appendix C Present Discounted Value

Pedagogical Foundation

Throughout the OpenStax version of Principles of Microeconomics, you will find new features that engage the
students in economic inquiry by taking selected topics a step further. Our features include:

Bring It Home: This added feature is a brief case study, specific to each chapter, which connects the chapter’s
main topic to the real word. It is broken up into two parts: the first at the beginning of the chapter (in the Intro
module) and the second at chapter’s end, when students have learned what’s necessary to understand the case
and “bring home” the chapter’s core concepts.

Work It Out: This added feature asks students to work through a generally analytical or computational
problem, and guides them step-by-step to find out how its solution is derived.

Clear It Up: This boxed feature, which includes pre-existing features from Taylor’s text, addresses common
student misconceptions about the content. Clear It Ups are usually deeper explanations of something in the
main body of the text. Each CIU starts with a question. The rest of the feature explains the answer.

Link It Up: This added feature is a very brief introduction to a website that is pertinent to students’
understanding and enjoyment of the topic at hand.

Questions for Each Level of Learning

The OpenStax version of Principles of Microeconomics further expands on Taylor’s original end of chapter materials
by offering four types of end-of-module questions for students.

Self-Checks: Are analytical self-assessment questions that appear at the end of each module. They “click–to-
reveal” an answer in the web view so students can check their understanding before moving on to the next
module. Self-Check questions are not simple look-up questions. They push the student to think a bit beyond
what is said in the text. Self-Check questions are designed for formative (rather than summative) assessment.
The questions and answers are explained so that students feel like they are being walked through the problem.

Preface 3

Review Questions: Have been retained from Taylor’s version, and are simple recall questions from the
chapter and are in open-response format (not multiple choice or true/false). The answers can be looked up in
the text.

Critical Thinking Questions: Are new higher-level, conceptual questions that ask students to demonstrate
their understanding by applying what they have learned in different contexts. They ask for outside-the-box
thinking, for reasoning about the concepts. They push the student to places they wouldn’t have thought of
going themselves.

Problems: Are exercises that give students additional practice working with the analytic and computational
concepts in the module.

Updated Art

Principles of Microeconomics includes an updated art program to better inform today’s student, providing the latest
data on covered topics.

Since 2000, corporate profits after tax have mostly continued to increase each year, save for a substantial decrease
between 2008 and 2009 as a result of the Great Recession. (Source: http://research.stlouisfed.org/fred2)

4 Preface

This OpenStax book is available for free at http://cnx.org/content/col11627/1.10

About Our Team
Senior Contributing Author

Timothy Taylor, Ma

Economics homework help

Business & Management

Social entrepreneurship is a revolution occurring around the world today. People from

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ISBN: 978-1-4987-1704-5

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K25430

w w w . c r c p r e s s . c o m

Introduction to
Social Entrepreneurship

Teresa Chahine
6000 Broken Sound Parkway, NW
Suite 300, Boca Raton, FL 33487
711 Third Avenue
New York, NY 10017
2 Park Square, Milton Park
Abingdon, Oxon OX14 4RN, UK

an informa business

www.crcpress.com

Intro
d

uctio
n

to
So

cial E
ntrep

ren
eurship

C
hahine

K25430 cvr mech.indd 1 4/5/16 9:14 AM

Introduction to
Social Entrepreneurship

Introduction to
Social Entrepreneurship

Teresa Chahine

CRC Press
Taylor & Francis Group
6000 Broken Sound Parkway NW, Suite 300
Boca Raton, FL 33487-2742

© 2016 by Taylor & Francis Group, LLC
CRC Press is an imprint of Taylor & Francis Group, an Informa business

No claim to original U.S. Government works
Version Date: 20160413

International Standard Book Number-13: 978-1-4987-1705-2 (eBook – PDF)

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Visit the Taylor & Francis Web site at
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This book is dedicated to the social entrepreneur inside each one of us.

vii

Contents

Preface: A Letter to the Reader ………………………………………………………………………………….xvii
Acknowledgments …………………………………………………………………………………………………….xix
Author ……………………………………………………………………………………………………………………..xxi

1 Introduction …………………………………………………………………………………………………..1
How This Book Works…………………………………………………………………………………………. 1
Definitions …………………………………………………………………………………………………………. 2
Sustainable Development ……………………………………………………………………………………… 2
Why Is Social Entrepreneurship Different from Commercial Entrepreneurship? …………… 3
How Is Social Entrepreneurship Different from Other Forms of Social Progress? ………….. 5
Terminology ………………………………………………………………………………………………………. 6
Institutions Supporting Social Entrepreneurs ………………………………………………………….. 6
Common Characteristics in Social Entrepreneurship ………………………………………………… 6
What Are Some of the Basic Skills Needed for Social Entrepreneurship? ……………………..10
How to Use This Book …………………………………………………………………………………………11
Interview Box. Bill Drayton, Founder and CEO of Ashoka Innovators
for the Public ………………………………………………………………………………………….. 12
Learning Tools ……………………………………………………………………………………………………13
Modules …………………………………………………………………………………………………………….14
Learning Objectives …………………………………………………………………………………………….16
Summary and Next Steps …………………………………………………………………………………….17
Exercise: Your Assignment for This Chapter ……………………………………………………………17
Social Ventures Mentioned in This Chapter …………………………………………………………….18

2 Characterizing Your Challenge ……………………………………………………………………….21
Part One: Introduction ………………………………………………………………………………………..21
Two Important Viewpoints …………………………………………………………………………………. 22

Seeing the Opportunities ……………………………………………………………………………….. 23
Understanding the Challenges ………………………………………………………………………… 23

Scope of This Chapter ………………………………………………………………………………………… 23
Data Is Power ……………………………………………………………………………………………………. 24
Approaching Your Topic ………………………………………………………………………………………25

Think Like a Child ………………………………………………………………………………………… 26
Question All Assumptions ……………………………………………………………………………… 26

Part Two: A Framework for Characterizing Your Challenge …………………………………….. 26
What Exactly Does This Mean? ………………………………………………………………………. 26
What Are You Trying to Change? ……………………………………………………………………. 27

viii ◾ Contents

Who Is Affected? …………………………………………………………………………………………… 27
Where Are These People?………………………………………………………………………………… 27
Why Has This Challenge Arisen, and Why Has It Persisted? ……………………………….. 28
How Do These Root Causes Affect the Challenge and Its Outcomes?……………………. 28
Dimensions of the Social Challenge …………………………………………………………………. 28
Dimensions of Data ………………………………………………………………………………………. 29
Different Types of Data ………………………………………………………………………………….. 30
Prior Attempts to Conquer the Challenge …………………………………………………………. 30

Interview Box. Matt Flannery, Kiva Cofounder and Former CEO; Branch Founder
and CEO …………………………………………………………………………………………………………..31
Part Three: How to Select Your Topic …………………………………………………………………… 32

Subject Fields of Interest and Expertise …………………………………………………………….. 32
Sociodemographic Setting ………………………………………………………………………………. 32
Needs-Based Framework ………………………………………………………………………………… 32
Access to Resources …………………………………………………………………………………………33
Strengths and Weaknesses ………………………………………………………………………………..33
Passion and Motivation ……………………………………………………………………………………33

Part Four: Digging Deeper …………………………………………………………………………………. 34
Collecting Information ………………………………………………………………………………….. 34

Analyzing Your Results ………………………………………………………………………………………. 36
Summary and Next Steps …………………………………………………………………………………… 39
Exercise: Your Challenge …………………………………………………………………………………….. 39

3 Co-Creating with the Community …………………………………………………………………..41
“Community”—What Does This Mean? ………………………………………………………………..41
Piecing Together Pieces of the Puzzle ……………………………………………………………………. 42
The Social Entrepreneur as a Connector ……………………………………………………………….. 42
Catalyzing Change ……………………………………………………………………………………………. 43
Who Is Your Starting Team? ……………………………………………………………………………….. 44
Interview Box. Libby McDonald, MIT CoLab Director of Global Sustainability
Partnerships ……………………………………………………………………………………………………….45
Interview Box. Albina Ruiz, Founder and CEO, Ciudad Saludable, Lima, Peru ………….. 46
Step 1. Assessing Stakeholders for Knowledge Exchange …………………………………………..47

Who Are the Key Players? ………………………………………………………………………………. 48
Tool: Stakeholder Analysis ……………………………………………………………………………… 48

Step 2. Community-Driven Research …………………………………………………………………… 49
Defining the Agenda ……………………………………………………………………………………… 49
Understanding the People, Places, Problems, and Potential ………………………………….. 50
Research Tools ……………………………………………………………………………………………… 50
Research Tips and Techniques ………………………………………………………………………….51

Step 3. Creating Collective Capacity………………………………………………………………………52
The Goal: Conceptualizing the Solution …………………………………………………………….53
The Process: Mobilizing the Community ………………………………………………………….. 54
The Key: Incorporating Local Infrastructure ……………………………………………………… 54
Participatory Planning……………………………………………………………………………………. 56
Where Are the Local Entrepreneurs? ………………………………………………………………… 56
Examining Local Supply Chains ……………………………………………………………………… 56

Contents ◾ ix

Checklist: AAAQ ……………………………………………………………………………………………….57
Values and Characteristics of Various Stakeholders …………………………………………….. 58

Reflective Practice ……………………………………………………………………………………………… 58
Summary and Next Steps …………………………………………………………………………………… 58
Exercise: Your Homework …………………………………………………………………………………….59
Social Ventures Mentioned in This Chapter …………………………………………………………… 60
Case Study: Ciudad Saludable ………………………………………………………………………………61
Conclusions ……………………………………………………………………………………………………… 62

4 Designing Your Solution ………………………………………………………………………………..63
Levels of Innovation …………………………………………………………………………………………… 64
Failing Is Part of the Process ……………………………………………………………………………….. 64
Innovation and Design ………………………………………………………………………………………..65

User Driven Design …………………………………………………………………………………………65
User Driven = Data Driven ………………………………………………………………………………65

Generating Ideas, Models, and Solutions ………………………………………………………………..67
Full Immersion ……………………………………………………………………………………………….67
Blended Perspectives ………………………………………………………………………………………..67
Experiment with Different Ideas ……………………………………………………………………….67
Ask the Right Questions ………………………………………………………………………………… 68
Brainstorming Rules ……………………………………………………………………………………… 68
Deep Reflection vs. Group Dynamics for Design ……………………………………………….. 68
Tips and Tricks to Try ……………………………………………………………………………………. 69

Who Is Your Design Team? ………………………………………………………………………………… 71
Building Your Solution ………………………………………………………………………………………. 72

Analyzing and Organizing Your Options ………………………………………………………….. 72
Prototyping ………………………………………………………………………………………………….. 72

Testing …………………………………………………………………………………………………………….. 73
Test, Test, Test! Test It ’til You Break It …………………………………………………………….. 73
Piloting Your Product ………………………………………………………………………………………74

Interview Box. Umesh Malhotra, Founder and CEO, Hippocampus Learning
Centers, Karnataka, India …………………………………………………………………………………….74
Designing a System around Your Product or Service ………………………………………………. 75
Beyond Design …………………………………………………………………………………………………..76
Your Theory of Change ………………………………………………………………………………………. 78

Tools to Develop Your Theory of Change ………………………………………………………….. 79
Incremental Innovation and Disruptive Innovation Are Not Mutually Exclusive …….. 80

Summary and Next Steps …………………………………………………………………………………….81
Exercise: Your Deliverables …………………………………………………………………………………. 82
Social Ventures Mentioned in This Chapter …………………………………………………………… 82
Case Study: Hippocampus Learning Centers…………………………………………………………. 84

Designing Impact, Scale, and Sustainability ……………………………………………………… 84

5 Market Strategy …………………………………………………………………………………………….87
The Multidimensional Market …………………………………………………………………………….. 87

This Little Solution Went to Market…………………………………………………………………. 87
Compass: Vision, Mission, Values ………………………………………………………………………… 87

x ◾ Contents

Vision ………………………………………………………………………………………………………….. 88
Mission ……………………………………………………………………………………………………….. 88
Values ………………………………………………………………………………………………………….. 89

Value Proposition and Unique Selling Point ………………………………………………………….. 89
Market Size: Defining Your Denominator ………………………………………………………………91
Social Market Strategy …………………………………………………………………………………………91

Co-Creation …………………………………………………………………………………………………. 92
Product ……………………………………………………………………………………………………….. 92
Customer …………………………………………………………………………………………………….. 92
Place ……………………………………………………………………………………………………………. 93
Cost ……………………………………………………………………………………………………………. 93
Price ……………………………………………………………………………………………………………. 94
Competitors …………………………………………………………………………………………………. 95
Positioning …………………………………………………………………………………………………… 95
Promotion ……………………………………………………………………………………………………. 96
Collaborators ………………………………………………………………………………………………… 97

Tool: Business Canvas ………………………………………………………………………………………… 98
Branding ………………………………………………………………………………………………………….. 99

Key Concepts ……………………………………………………………………………………………….. 99
Examples ……………………………………………………………………………………………………… 99

Interview Box. Doug Rauch, Founder and President, Daily Table; CEO, Conscious
Capitalism ……………………………………………………………………………………………………….101
Market Research ……………………………………………………………………………………………….102
Summary and Next Steps …………………………………………………………………………………..102
Exercise: Taking Your Solution to Market!…………………………………………………………….103
Social Ventures Mentioned in This Chapter …………………………………………………………..104
Case Study: Daily Table ……………………………………………………………………………………..105

Iterating the Business Model …………………………………………………………………………..106

6 Delivering Your Solution ……………………………………………………………………………… 111
Operations and Distribution ………………………………………………………………………………. 111
What Is Operations? …………………………………………………………………………………………. 111

Process Mapping …………………………………………………………………………………………..112
Distribution Models ………………………………………………………………………………………….113

Expanding Your Reach—Different Mechanisms ………………………………………………..113
Expanding Central Production Volume ………………………………………………………..113
Opening New Branches …………………………………………………………………………….. 114
Franchising ……………………………………………………………………………………………… 115
Microfranchising ……………………………………………………………………………………… 115
Nonmonetized Methods ……………………………………………………………………………. 116

Success Factors across Distribution Models …………………………………………………………… 116
Define Your Core Package ……………………………………………………………………………… 116
Standardize …………………………………………………………………………………………………. 117
Automate …………………………………………………………………………………………………….. 117
Shorten the Last Mile ……………………………………………………………………………………. 117
Foster Local Leadership …………………………………………………………………………………. 118
Decentralize Operations ………………………………………………………………………………… 118

Contents ◾ xi

Tailor to the Local Population ………………………………………………………………………… 119
Leveraging Existing Channels ………………………………………………………………………… 119

Interview Box. Thulasiraj Ravilla, Executive Director, Aravind Eye Care Systems ……… 120
Strategic Partnerships ……………………………………………………………………………………….. 120
Your Biggest Resource: Your Team ………………………………………………………………………121

Building the Team ………………………………………………………………………………………..121
Composition of the Executive Team ……………………………………………………………….. 122
Do You Have to Be the CEO? ……………………………………………………………………….. 123

Summary and Next Steps …………………………………………………………………………………. 123
Exercise: How Will You Deliver Your Solution? ……………………………………………………. 124
Example Social Ventures from This Chapter ………………………………………………………….125
Case Study: Aravind ………………………………………………………………………………………… 127

7 Measuring Impact ……………………………………………………………………………………….131
Targeting Success ………………………………………………………………………………………………131

Theories to Results ………………………………………………………………………………………..132
Different Metrics for Different Fields ……………………………………………………………………132

What Is ROI? ……………………………………………………………………………………………….132
Quantifying Your Social Investment ………………………………………………………………..133
Which Metrics Are the Right Fit for You? …………………………………………………………133

Before You Start ………………………………………………………………………………………………. 134
Decide Early On …………………………………………………………………………………………. 134
Measure Inherently ……………………………………………………………………………………… 134
Don’t Measure Too Much …………………………………………………………………………….. 134
Refer to Baseline Data ………………………………………………………………………………….. 134

What to Look for in Your Impact Metrics …………………………………………………………….135
The Comparative Factor …………………………………………………………………………………135
Baseline Data ……………………………………………………………………………………………….135
Controlling for Other Factors ……………………………………………………………………….. 136
Linking to Quality ………………………………………………………………………………………. 136
Inputs versus Outputs versus Outcomes ……………………………………………………………137
Short- versus Long-Term Goals ……………………………………………………………………….137
Measuring Intermediate Outcomes ………………………………………………………………….137
This Is Where You “Cash In” the Benefits of Your Evidence-Based Solution! ………….137
Direct versus Indirect Benefits …………………………………………………………………………138

Further Considerations ………………………………………………………………………………………138
Valuating the Supply Chain ……………………………………………………………………………138
Management Indicators ………………………………………………………………………………….139
Build Systems for Data Collection and Analysis …………………………………………………139

Interview Box. Jake Harriman, Founder and CEO, Nuru International …………………….140
Interview Box. Bennadette Mugita, Impact Programs Manager, Nuru Kenya …………….141
Building Your Logical Framework ……………………………………………………………………….142

Step 1: Setting SMART Objectives ………………………………………………………………….142
Step 2: Producing Measurable Outputs …………………………………………………………….143
Step 3: Determining the Inputs ……………………………………………………………………….144

Outlining the Activities Needed to Produce These Outputs …………………………….144
Estimating the Time and Cost of Conducting These Activities ………………………..144

xii ◾ Contents

Pros and Cons of the Logical Framework ………………………………………………………….145
How to Choose Your Targets ………………………………………………………………………………145

To Be Ambitious or to Start Small? ………………………………………………………………….146
Setting Up an M&E System ……………………………………………………………………………….146
Assessing Your Results With Your Stakeholders ……………………………………………………..147
Summary and Next Steps …………………………………………………………………………………..147
Exercise: Measuring Success ……………………………………………………………………………….148
Social Ventures Mentioned in This Chapter …………………………………………………………..149
Case Study: Nuru International …………………………………………………………………………..149

8 Completing the Business Model …………………………………………………………………….155
Building Your Budget ……………………………………………………………………………………….. 155

The Basics ……………………………………………………………………………………………………. 155
Forecasting Growth……………………………………………………………………………………….156
Cost per Unit ………………………………………………………………………………………………. 157

Revenue Models ………

Economics homework help

BCO121 GLOBAL ECONOMICS – Task brief & rubrics

Mid term

Task:

• Individual task

• In the week 7 class on March 7th you will have to submit your mid term assignment through turnitin on the Moodle page of this course

• You must complete the task in class on your computer and submit it before the end of your class

• You must submit your work as a word document and any other type of document will not be accepted as other types of documents will not give turnitin
scores

Question:

Why did Donald Trump seek to start a trade war with China when he was the President of the USA?

In your answer you should:

– Define free trade and define trade wars

– Consider the pros and cons of free trade, referring to the theory of comparative advantage

– Consider the impacts of free trade on blue collar (former manufacturing) workers over the last 40 years in the USA,

– Consider the validity of allegations made against China of unfair trade practices such as allegations that China devalued the RMB/Yuan and why China
would have done this (if it did indeed do this)

– With the use of relevant economic diagrams consider the pros and cons of the USA applying trade barriers (such as but not only tariffs) on Chinese
goods entering the USA

– Consider who in the USA would win and who would lose from the application of trade barriers on Chinese goods

– Consider how China has so far reacted and may continue to react to the application of trade barriers by the USA on Chinese goods

Formalities:

• The minimum amount of words to be used is 2000 and the maximum is 2500

• You may want to include images/graphics etc. (for example from their website) to make your reasoning and argumention more visual and explicative

• Font: Arial. Size: 12,5pts. Line spacing: 1,5. Text align: Justified.

• Appendices and References, do not count towards the final wordcount but are strongly recommended (referencing websites, articles, books etc.)

• In text references and and a bibliogrpahy are expected and must follow the Harvard citation style.

Submission: is due on Turnitin by 18:00 on 7th March 2022. Submission can not be completed before the start of your class on 7th March 2022

Weight: This task is worth 40% of your overall grade for this subject.

Outcomes: This task assesses the following learning outcomes:

• develop a complex understanding of the main concepts of international economics and how to apply them;
• understand and analyze the different global economic theories;
• distinguish between the different international economic systems;
• explore economic integration in different economic areas

Rubrics

Exceptional
90-100

Good
80-89

Fair
70-79

Marginal fail
60-69

Knowledge and
Identification
of the main

Issues

20%

Identifies and demonstrates
a sophisticated
understanding of the main
issues / problems in the
case study

Identifies and demonstrates
an accomplished
understanding of most of the
issues/problems.

Identifies and demonstrates
acceptable understanding of
some of the issues/problems
in the case study

Does not identify or
demonstrate an acceptable
understanding of the issues/
problems in the case study

Application
30%

Student applies fully
relevant knowledge to the
situation provided

Student applies mostly
relevant knowledge to the
situation provided

Student applies some relevant
knowledge to the situation
provided. Some minor
misunderstandings may be
evident.

Student applies little relevant
knowledge to the situation
provided. Misunderstandings
are evident.

Evaluation
30%

Student assembles a
coherent response to the
question, providing a range
of support and justification
that leads to a well-
reasoned conclusion

Student assembles a good
response to the question,
providing support and
justification that lead to a
well-reasoned conclusion

Student assembles a fair
response to the question,
providing some support and
justification that lead to a
well-reasoned conclusion.
Minor misunderstandings may
be evident

Student’s response to the
question lacks coherence.
Limited support and
justification are provided that
may or may not be well linked
to the conclusion

Communication
20%

Student communicates
ideas extremely clearly and
concisely. Compliance with
the guidelines on font, size,
line spacing and text align
will also be taken into
account.

Student communicates ideas
clearly and concisely.
Compliance with the
guidelines on font, size, line
spacing and text align will also
be taken into account.

Student communicates ideas
fairly clearly and concisely.
Compliance with the
guidelines on font, size, line
spacing and text align will also
be taken into account.

Student attempts to
communicate ideas clearly
and concisely, with some
problems. Student does not
follow the guidelines on font,
size, line spacing and text
align.

Economics homework help

Livingstone College

Principles of Economics

ECON-231

Final Exam Fall 2021

Student Name: Ja’Niya Ladson

ID: 172000

Exam date: March 2, 2022

Instructor Signature:

Note: Each question carries 5 points.

1. When the federal government uses taxation and spending actions to stimulate the economy it is conducting
a. Fiscal policy b. Incomes policy
c. Monetary policy d. Employment policy

2. Fiscal policy is enacted through changes in: 
a. Interest rates and the price level
b. The supply of money and foreign exchange
c. Unemployment and inflation
d. Taxation and government spending

3. When a consumer wants to compare the price of one product with another, money is primarily functioning as a: 
a. Store of value b. Unit of account
c. Checkable deposit d. Medium of exchange

4. What function is money serving when you deposit money in a savings account? 
A. A store of value b. A unit of account
c. A checkable deposit d. A medium of exchange

Money Market Mutual Funds held by individuals $ 200

Money Market Mutual Funds held by Business $ 220

Currency in circulation $ 70

Checkable Deposit $ 70

Savings Deposits, including Money Market Deposit Accounts $ 50

Large-denominated ($100,000 or more) time deposits $180

Small-denominated ($100,000 or more) time deposits $ 80

M0 and M1= coins and notes+ checkable deposit

M2 = M1 + short-term time deposits in banks + saving deposit in money market mutual funds (held by individual) + money market deposit account

M3 = M2 + longer-term time deposits and money market funds + saving deposit in money market mutual funds (held by business)

5. Refer to the above information. Money supply M1 for this economy is: Show Work
a. $60. b. $70.
c. $130. d. $140.

 6.a. Refer to the above information. Money supply M2 for this economy is: Show Work
a. $480. b. $370.

c. $490. d. $360.

6.b. Refer to the above information. Money supply M3 for this economy is: Show Work
a. $580. b. $770.
c. $490,. d. $760

7. An Federal open market committee (FOMO) refers to:

(a) The purchase of goods and services by the Fed.

(b) An announcement about the level of the money supply in the economy.

(c) The process of printing more money and distributing it to the public.

(d) The purchase or sale of bonds to influence the level of the money supply in the economy.

8. To say money is socially defined means that: 
A. money has been defined in a Constitutional amendment.
B. whatever performs the functions of money extremely well is considered to be money.
C. the money supply includes all public and private securities purchased by society.
D. society, acting through Congress, specifies what shall be included in the money supply.

 9. Money functions as: 
A. a store of value. B. a unit of account.
C. a medium of exchange. D. all of these.

 10.a. If you are estimating your total expenses for school next semester, you are using money primarily as: 
A. a medium of exchange. B. a store of value.
C. a unit of account. D. an economic investment. 

10.b. If you place a part of your summer earnings in a savings account, you are using money primarily as a: 
A. medium of exchange. B. store of value.
C. unit of account. D. standard of value.

11. If Carol’s disposable income increases from $1,200 to $1,700 and her level of saving increases from minus $100 to a plus $100, her marginal propensity to: 
A. save is three-fifths. B. consume is one-half.
C. consume is three-fifths. D. consume is two-fifths.

 12. With an MPS of .4, the MPC will be: 
A. 1.0 minus .4. B. .4 minus 1.0.
C. the reciprocal of the MPS. D. .4.

 13. The period of declining growth in real GDP between the peak of the business cycle and the trough is called a:

a. recessionary phase.

b. recovery.

c. expansionary phase.

d. stationary phase.

14. Which of the following groups of people are members of the labor force?

a. People in prison.

b. Fulltime students.

c. People over 16 years of age who are employed.

d. Anyone not actively looking for work during the past 30 days.

15. Inflation is an increase in:

a. prices of all products in the economy.

b. homes, autos and basic resources.

c. the general price level of products.

d. none of the above.

16. The type of unemployment that occurs because of a recession is called:

a. frictional unemployment.

b. seasonal unemployment.

c. natural unemployment.

d. cyclical unemployment.

17. Consider an economy made up of 100 people, 50 of whom hold jobs, 10 of whom are looking for work, and 15 of whom are retired. The unemployment rate is approximately:

a. 10 percent. b. 12 percent. c. 17 percent. d. 20 percent. e. 25 percent.

18. Suppose a market basket of goods and services costs $400 in the base year and the consumer price index (CPI) is currently 125. This indicates the price of the market basket of goods is now:

a. $275. b. $425. c. $500. d. $525.

In Millions

Civilian population

100

People incapable of working

10

People not looking for work

10

Employed workers

70

19. Using the table above, the unemployment rate is: Show work
a.    3 percent.
b.    5 percent.
c.    10 percent.
d.    9 percent

20. A price index in years after  the base year:
a.    Is never 100.
b.    Is always greater than 100.
c.    Is always less than 100.
d.    Can be less than, greater than, or equal to 100


Essay Type Questions

1. What generally causes the business cycle? What are the four phases of a single business cycle? What are the problems associated with the business cycle?

The business cycle is caused by the forces of supply and demand—the movement of the gross domestic product GDP—the availability of capital, and expectations about the future. The four stages of the cycle are expansion, peak, contraction, and trough. Factors such as GDP, interest rates, total employment, and consumer spending, can help determine the current stage of the economic cycle. Insight into economic cycles can be very useful for businesses and investors.

 Section B

A hypothetical economy’s consumption schedule is given in the table below. Show work

GDP=DI

C

660

668

680

684

700

700

720

716

740

732

760

748

780

764

800

780

Use the information to answer the following:

a. If disposable income were $740, how much would be saved? 732

b. What is the “break-even” level of disposable income?

c. What is this economy’s marginal propensity to consume?

d. What is the average propensity to consume when disposable income is $700? When disposable income is $800?

2. The following table is a consumption schedule. Assume taxes and transfer payments are zero and that all saving is personal saving. Show work

(GDP = DI)

C

S

APC

APS

1500

$1540

$_____

1.027

–.027

1600

1620

_____

1.013

–.013

1700

1700

_____

_____

_____

1800

1780

_____

.989

.011

1900

1860

_____

.979

.021

2000

1940

_____

_____

_____

2100

2020

_____

.962

.038

2200

2100

_____

_____

_____

a. Compute saving at each of the eight levels of disposable income and the missing average propensities to consume and to save.

b. The break-even level of disposable income is $________.

c. As disposable income rises, the marginal propensity to consume remains constant. Between each two GDPs the MPC can be found by dividing $________ by $________, and is equal to _______.

d. The marginal propensity to save also remains constant when the GDP rises. Between each two GDPs the MPS is equal to $________ divided by $________, or to _______.

e. Plot the consumption schedule, the saving schedule, and the 45-degree line on the graph below.

Economics homework help

Macroeconomics Fall 2021

Country Economic Breakdown

Basic Guidelines:

By now students should have selected their country/economy for this project. Once you’ve selected the country to be discussed you will need to prepare an informal outline. The outline may contain as much information as you would like to incorporate, but has to cover the bare minimum topics.

Title Page: Name, Date, Class, Title

Introduction: Briefly describe your country and their economy. What are their main exports? What type of economic structure is employed (Market System, Command System, Hybrid)? Who is in control of economic resources? Simply put, how does this country make money?

Income Tax Distribution:

What type of income tax system is used? Proportional? Regressive? Progressive?

What are the income tax levels/rates?

What are the corporate tax levels/rates?

Are there any other taxes that jump out at you as different/odd? For example, the US used to have a ‘Death Tax’.

Money & Banking:

Is there a central bank?

Who is in control/charge of the money?

What is this country’s currency? Exchange rate to the dollar?

Fiscal Policy:

When was the last time fiscal policy was used?

Explain any recent changes to the income tax system and why these changes have been made.

Monetary Policy:

When was the last time monetary policy was used? (Interest rates changed)

Why did the decision makers decide to employ monetary policy? What was happening in the economy to warrant the use of monetary policy?

Did these measures produce the desired result?

Is there anything currently happening in your country to suggest future monetary policy efforts might be used (soon)?

Conclusion: Based on your research, how does this country compare to that of the United States? What changes do you think this country could make in their economy to be better positioned in the global economy moving forward?

Works Cited Page: MLA Format

Economics homework help

Please read “The Rising Price of Bread in Turkey: Daily Life in a High Inflation Economy” written by Veronica Horton and found here: https://econeveryday.com/the-rising-price-of-bread-in-turkey-daily-life-in-a-high-inflation-economy/. 

What is inflation? What does it mean in terms of consumer purchasing power? Why has the Turkish lira lost 50 percent of its value?

In response to the country’s economic difficulties, Turkey’s leaders have raised the minimum wage by 50 percent. What effect will this policy decision have on the ability of people to buy the goods they need?

You will need to include a well-reasoned and well-written defense of all your answers. The reflection essay will be approximately 1-2 paragraphs in length and will be devoid of typographical and grammatical errors.

Economics homework help

Term Paper (see instructions)

Instructions

ECON 203 6381 Principles of Microeconomics (2222) EG

ECON 203 Project Description (Term Paper)

Due at the end of week 7

Select at least two articles that discuss the economic concept that you chose as a topic for

your term paper.

At least one article should be dated within the previous year.

Please note that the goal of this assignment is to read, understand, and discuss recent news

using microeconomic terminology. The articles should be from an on-line newspaper or

magazine. Materials posted on educational websites, like www.thebalance.com,

www.khanacademy.org , and so on, are not considered news articles even if they were

recently updated and contain material related to the term paper topic.

The Term paper should have the following structure:

1. Abstract (0.25 of a page) – the short description of the concepts, problems, questions

discussed in the Term paper.

2. Introduction (0.25 of a page) (optional)

3. Literature Review (about 1 page) – please compare and contrast the opinions of the

authors of the articles, present the important information, data, statistics to support

your conclusions. It is important that the Literature review is written in your own

words with small quotes from the article. All quotes must have references in

accordance with the 7th Edition APA Style.

4. Discussion (about 1 page) – Your task for this part of the Term paper is to analyze the

issue described in the articles using the economic concepts and theory learned in this

class. Refer to the course content materials and use specific economic vocabulary

within your term paper. The articles you choose may not use these exact terms;

therefore, it is incumbent upon you to convert the article language into economic

language as is appropriate. Include at least one graph developed in our course.

5. Conclusion (0.25 of a page)

The Term paper should be the title page and sub-titles that correspond to the structure

described above.

Please note the Term paper should be written in your own words. You can use short quotes

from the article(s) to support your statements. However the size of these quotes should be

reduced to minimum. No more than 20% of the text of the term paper should be made up of

quotes. (less is better!!!).

Please also avoid copying the materials from any textbooks, including our textbook.

Please note that this is the course of microeconomics, so you should choose the concepts

related to microeconomics (not macroeconomics).

Possible concepts include: (feel free to call me to discuss your choice of topic)

taxes and consumer or producer surplus

elasticity on a particular product

perfect competition

imperfect competition, such as monopolies

monopolistic competition

oligopoly

labor market,

wage determination

income inequality

poverty and public policy

another topic selected by the professor

Format of the Paper:

Written projects:

1. Must be typed, double-spaced, in 12-point Times New Roman or Arial font, with one-

inch margins

2. Must have the title page in APA-7th style

3. Must have in-text citations in APA-7th edition style

4. Must have reference list in APA-7th edition style. Please note that you must reference

the data you are using for the project

5. Must be prepared using word processing software (Microsoft Word preferred)

The Term Paper must be posted to the LEO Student Assignments as a Attachments are

limited to a maximum two files in doc, docx., xls. xlsx., or rtf. formats. OTHER FORMATS

ECON 203 Project Description (T… (18.73 KB)

Submissions

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You can upload files up to a maximum of 2 GB.

ARE NOT ACCEPTABLE, will not be reviewed or graded.

The Term Paper should be about 2-3 double-spaced typewritten pages (plus tables and

graphs)

Please note that hand-written and scanned works, pdf. files, jpg. files, as well as files posted

in google drive, will not be accepted or graded.

Please note that starting from the Fall 2020 semester the UMGC moved to the 7th Edition

of the APA Style. The links to the 7th Edition of the APA Style methodology are posted in

Content – Course Resources – Writing Resources.

Please note that Use of 7th Edition APA Citation Methodology is required for the assignment

The links to APA citation methodology are posted in Content – Course Resources – Writing

Resources.

In accordance with the UMUC Academic Policy, notes taken for papers and research

projects should accurately record sources of material to be cited, appropriately quoted, or

summarized, and papers and research projects should acknowledge these sources in the

appropriate places in the text of the paper as well as in a reference list at the end of the

paper, in accordance with accepted citation practices.

All works must be Word processed. Handwritten and scanned work will not be accepted and

graded.

Due March 1 at 11:59 PM

Task: Submit to complete this assignment Assessment

Short Paper and Term

Paper Rubric

Last Visited Feb 28, 2022 8:49 PM

Activity Details

Economics homework help

Research Paper Proposal Requirement

Length of the Paper : 3 pages

Font: Times New Roman 12

Spacing: 1.5

1. Choose a country (10 points)

2. Do a literature survey of scholarly work relating to the industrialization (or lack of it) using the country Business Library Resources or Google Scholar, or any other resource. Correctly list 10 papers using a standard system of citing literature. (20 points)

3. Choose 3 papers and provide a summary of each of the three papers. (30 points)

4. Explain economic principles that has led to the industrialization or lack of it. (40 points)

Point Deductions

1. Too many pages – 5 points

2. Wrong font – 5 points

3. Wrong spacing – 5 points

Economics homework help

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Economics homework help

BCO122 ORAL COMMUNICATION SKILLS (4 ECTS) Task briefs & rubrics

Task One

Summative evaluation assessment: Individual Oral Presentation Portfolio 60%:

• This is an individual presentation to be given with accompanying slides in class and an outline that you will submit before you present.

• Your presentation will last between 8-10 minutes including a Q&A session. Aim to speak for 8 minutes and the Q&A will consist of 2-3 questions and last

approx. 2 minutes. You will take any questions from both the lecturer and your classmates.

• The topic of your presentation must be business related on a topic of your choice. The context could be on industry/technology trends, or on a specific

company, for example, in sports management, with current and future projections, or, on an aspect of international trade, and so on. The more specific

the topic, the better – this will help you focus on your purpose and line of argument. Bear in mind you only have 8 minutes to speak so if you choose a

broader topic, you will end up dealing with it only superficially.

• Delivery Skills: you will be assessed on presentation skills including effective presentation techniques for public speaking such as rhetorical and

persuasive devices studied on the course, non-verbal language, appropriate use of voice, and the Q&A session – see also the rubrics in the table on the

final page of this document.

• The Table of Contents in your presentation will be the aim(s) or purpose of your talk. These need to be concisely set out in a slide, detailed in your

outline and explained at the start of your presentation.

• You should submit your presentation slides in pdf format, together with an outline document including key points, notes and your bibliography.

Formalities:

• Instructions for accompanying documents:

1. Presentation outline 800 words with a Bibliography (10% of the total presentation mark)

• In the outline, the cover page (including your name, year, the date and course title), Table of Contents and References are excluded of the

total wordcount.

• Font: Arial 12,5 pts.

• Text alignment: Justified.

• Cover page: include your full name, year, course title, and submission date

• The in-text References and the Bibliography in the outline have to be in Harvard’s citation style.

2. Visual Aids/your slides must be uploaded to Turnitin as a pdf prior to the presentation (10% of the total presentation mark)

• Duration: 8-10 minutes including two-three questions.

• Number of PPT slides: approx. 8-10 slides

• Recommended font for slides: Georgia 20 (or Arial/Calibri), 20 pts plus for main body text; Helvetica Neue or similar for headings of 40 pts or

more. Keep use of italics to a minimum.

• Text alignment: justified (for bullet points) or centered (for headings), depending on slide design

• In the slides, keep text to a minimum with a maximum of 5-6 points per slide and approx. 6-7 words per line, except for the references at the

end. Your references, for example, authors, quotes, and sources for data you refer to in your presentation need to be in Harvard’s citation

style.

Submission: Week 5 – submit your outline and slides via Moodle (Turnitin) by 23:00h on Sunday 27th February 2022.

NB: presentations will be given in class either (week 6) on Friday 4th March 2022 or, (week 7) Friday 11th March 2022, depending on the number of students in
class and the day your lecturer assigns you.

Weight: This presentation task accounts for 60% of your total grade for this subject. You will receive an individual mark for this task.

This presentation task assesses the following learning outcomes:

• Outcome 1: understand the differences between verbal and nonverbal communication and how to use each effectively, being aware of the influence of

each on effective communication;

• Outcome 2: demonstrate the ability to research, organize, prepare and deliver individual oral presentations;

• Outcome 3: create effective visual aids that will enhance oral presentations.

Task Two

Summative evaluation assessment: written exam on oral communication 40%:

• This paper-based written exam will be held in class on the last day of the course.

• Duration: the exam will last approximately 120 minutes.

• Questions will be based on all topics from the course and will include evaluating a case study, some open questions about course contents, including a

question regarding your mid-term presentation.

• For exam criteria, please see the rubrics set out in the table on the final page of this document.

Formalities:

Date of exam: week 13, Friday 6th May, held either between 08.00-10.55h, or between 11.05-14.00h.

Weight: This exam accounts for 40% of your total grade for this subject.

The exam assesses the following learning outcomes:

• Outcome 1: understand the differences between verbal and nonverbal communication and how to use each effectively, being aware of the influence of

each on effective communication;

• Outcome 2: apply acquired skills of effective oral communication in different settings such as for solving problems in groups and giving effective

speeches at meetings.

Rubrics (descriptors and weightings have been adapted according to the Task).

Exceptional 90-100 Good 80-89 Fair 70-79 Marginal fail 60-69

Knowledge &
Understanding

(20%)

Student demonstrates
excellent understanding of
key concepts and uses
specific vocabulary in an
entirely appropriate
manner.

Student demonstrates
good understanding of the
task, mentions some
relevant concepts and
demonstrates use of
specific vocabulary.

Student understands the
task and provides minimum
theory and/or some use of
relevant vocabulary.

Student understands the task
and attempts to answer the
question but does not
mention key concepts or uses
minimum amount of relevant
vocabulary.

Application (20%) Student applies fully
relevant knowledge from
topics delivered in class.

Student applies mostly
relevant knowledge from
topics delivered in class.

Student applies some
relevant knowledge from
topics delivered in class.
Some misunderstanding
may be evident.

Student applies little relevant
knowledge from topics
delivered in class.
Misunderstandings are
evident.

Critical Thinking
(20%)

Student critically assesses
in excellent ways, drawing
outstanding conclusions
from relevant authors, data
and references.

Student critically assesses
in appropriate ways,
drawing conclusions from
relevant authors, data and
references.

Student provides some
insights but deals with the
topic somewhat
superficially. Some
references and data may
not be relevant or reliable.

Student offers few or no
critical insights, does not
refer to appropriate authors
or data, and/or does not
provide valid, reliable
sources.

Communication
(40%)

Student communicates
their ideas extremely
clearly and concisely,
employing a wide range of
appropriate presentation
techniques; uses non-
verbal language and voice
highly effectively when
speaking; deals with
challenging questions
effectively and respects
speaking time; checks word
count, grammar and
spelling in documents such
as slides. Student uses
suitable visuals that
enhance their message
effectively.

Student communicates
their ideas clearly and
concisely, employing a
range of appropriate
presentation techniques;
uses appropriate non-
verbal language and voice
when speaking; deals with
questions effectively in
Q&A and respects speaking
time; checks word count,
grammar and spelling in
documents such as slides.
Student uses suitable
visuals that match their
message appropriately.

Student communicates
ideas with some clarity and
conciseness, employing
some presentation
techniques; uses mostly
appropriate non-verbal
language/voice; answers
most questions effectively
but with some hesitation.
Their presentation may be
slightly over/under the
speaking time or
wordcount limit. Some
misspelling or errors may
be evident in documents
such as slides. Student uses
visuals that mostly match
their message.

Student communicates their
ideas somewhat unclearly
and inconcisely and employs
few presentation techniques.
Inappropriate use of non-
verbal language and/or voice
are evident when presenting.
Deals with questions
ineffectively in Q&A. Does
not reach or exceeds
speaking time. Student goes
significantly under or over
the wordcount and language
and misspelling errors are
evident in documents such as
slides. Student uses some
inappropriate visuals.

Economics homework help

IT for Management: On-Demand Strategies for Performance, Growth, and Sustainability

Twelfth Edition

Turban, Pollard, Wood

Chapter 5

Data Privacy and Cyber Security

Learning Objectives (1 of 5)

2

Copyright ©2021 John Wiley & Sons, Inc.

Data Privacy Concerns and Regulations

Extent and Cost of Cyberattacks and Cyberthreats

Cyberattack Targets and Consequences

Defending Against Cyberattacks and Managing Risk

Regulatory Controls, Frameworks and Models

Data Privacy Concerns and Regulations

Data privacy is the right to self-determine what information about you is made accessible, to whom, when, and for what use or purpose

It centers around the following four main concerns:

How data are shared with third parties

How data are collected and stored

How data are used

How data are regulated

3

Copyright ©2021 John Wiley & Sons, Inc.

3

Confused, Concerned, and Out of Control

Copyright ©2021 John Wiley & Sons, Inc.

4

Copyright ©2021 John Wiley & Sons, Inc.

5

Privacy paradox is the disconnect between how important people say their online privacy is versus how they actually behave in real life.

U.S. Consumer Protection Data Privacy Regulations

U.S. Federal consumer protection data privacy regulations currently in place include:

Health Insurance Portability and Accountability Act (HIPAA)

Gramm-Leach-Bliley Act

Privacy Protection Act of 1980

Driver’s Privacy Protection Act (DPPA)

Fair Credit Reporting Act

All 50 U.S. states have adopted data breach notification laws. At least 35 states and Puerto Rico have data disposal laws and 25 states have enacted data privacy laws

6

Copyright ©2021 John Wiley & Sons, Inc.

European Union’s General Data Protection Rules (GDPR)

The GDPR is an EU-wide consumer Bill of Rights enacted in May 2018.

It empowers EU consumers by forcing retailers, marketers, and others to explicitly tell consumers how they are collecting, using, and storing consumers’ personal data.

Companies that violate the GDPR face a maximum fine of $23 million (€20 million) or 4% of their annual global turnover, whichever is larger.

7

Copyright ©2021 John Wiley & Sons, Inc.

The EU-U.S. Privacy Shield

The EU does not consider the data privacy laws currently in place in the United States to be adequate, so U.S. businesses must work around this requirement by adhering to the EU-U.S. Privacy Shield.

The EU-U.S. and Swiss-U.S. Privacy Shields are designed to provide companies on both sides of the Atlantic with a mechanism to comply with GDPR data protection requirements.

8

Copyright ©2021 John Wiley & Sons, Inc.

Data Privacy Concerns and Regulations: Questions

What are the four main concerns of data privacy?

Why is it important for you to know how your online data is handled?

What is the name of the phenomenon where users are concerned about data privacy, but their behaviors contradict these concerns?

Who has responsibility for data privacy laws at the U.S. federal level?

Name three U.S. consumer protection data privacy regulations.

What is the name of the new California data protection law?

Is an EU citizen who does not live in the EU protected under the GDPR?

Why is the United States not considered part of the GDPR?

What is the name of the mechanism that brings the United States under the jurisdiction of the GDPR?

9

Copyright ©2021 John Wiley & Sons, Inc.

9

Learning Objectives (2 of 5)

10

Copyright ©2021 John Wiley & Sons, Inc.

Data Privacy Concerns and Regulations

Extent and Cost of Cyberattacks and Cyberthreats

Cyberattack Targets and Consequences

Defending Against Cyberattacks and Managing Risk

Regulatory Controls, Frameworks and Models

Cyberattacks and Cyberthreat Terminology (1 of 2)

Cyberattack is an actual attempt to expose, alter, disable, destroy, steal, or gain unauthorized access to a computer system, infrastructure, network, or any other smart device.

Cyber threat is the method used to commit a cyberattack that seeks to damage data, steal sensitive data, or disrupt digital life in general.

Cyber security is the discipline dedicated to protecting information and systems used to process and store it from attack, damage, or unauthorized access.

11

Copyright ©2021 John Wiley & Sons, Inc.

Cyberattacks and Cyberthreat Terminology (2 of 2)

Data breach is the successful retrieval of sensitive information by an unauthorized individual, group, or software system.

Vulnerability is a gap in IT security defenses of a network, system, or application that can be exploited by a cyber threat to gain unauthorized access.

Attack vector is a path or means by which a computer criminal can gain access to a computer or network server in order to deliver a malicious outcome.

12

Copyright ©2021 John Wiley & Sons, Inc.

Copyright ©2021 John Wiley & Sons, Inc.

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Copyright ©2021 John Wiley & Sons, Inc.

14

Unintentional Cyber Threats

The causes for these unintentional cyber threats fall into three major categories:

Human error can occur in the design of the hardware or information system; during programming, testing, or data entry; neglecting to change default passwords or failing to manage patches

Environmental hazards include volcanoes, earthquakes, blizzards, floods, power failures or strong fluctuations, fires, defective heating, ventilation and HVAC systems, explosions, radioactive fallout, and water-cooling- system failures.

Computer systems failures can occur as the result of poor manufacturing, defective materials, or poor maintenance.

15

Copyright ©2021 John Wiley & Sons, Inc.

Intentional Cyber Threats

Intentional security breaches are overt and direct actions designed to disrupt a system and include data theft such as inappropriate use of data; theft of computer time; theft of equipment and/or software; deliberate manipulation in handling, entering, programming, processing, or transferring data; sabotage; malicious damage to computer resources; destruction from malware and similar attacks; and miscellaneous computer abuses and Internet fraud

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Intentional Cyber threats: Hacking

Hacking is broadly defined as intentionally accessing a computer without authorization or exceeding authorized access. There are three types of hackers.

Hacktivist: is short for hacker-activist, or someone who performs hacking to promote awareness, or otherwise support a social, political, economic, or other cause.

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Intentional Cyber Threats: Social Engineering

A hacker’s clever use of deception or manipulation of people’s tendency to trust, be helpful, or simply follow their curiosity on social media.

In a phishing attack, the attacker sends an e-mail to gain the victim’s trust by evoking a sense of curiosity, urgency or fear, to steal confidential information. This is done by the attacker posing as a known person or legitimate organization.

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Intentional Cyberthreats: Spear Phishing

Spear phishers often target select groups of people with something in common

Trick user into opening an infected email

Emails sent that look like the real thing

Confidential information extracted through seemingly legitimate website requests for passwords, user IDs, PINs, account numbers, and so on.

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Intentional Cyber threats: Malware

Types of intrusive software:

Cookie

Spamware

Adware

Spyware

Types of hostile malware:

Zero-Day

Backdoor

Rootkit

Boot Record Infector

File Infector

Keylogger

Virus

Worm

Trojan

RATS

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Refers to various levels of intrusive or malicious software that can run undetected in the background on an IS or personal computer.

Intentional Cyber threats: Botnets

The term botnet is derived from the words robot and network.

Cyber criminals use trojan viruses to breach the security of several user computers, take control of each computer and organize all of the infected machines into a network of “bots” they can remotely control for malicious purposes.

Botnets are typically used to send spam and phishing e-mails and launch DDoS attacks.

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Intentional Cyber threats: Ransomware and Cryptojacking

Ransomware is designed to block access to a computer system until a sum of money has been paid. Ransomware works by first infiltrating a computer with malware and then encrypting all the files on the disk.

Cryptojacking is a ransomware-like scheme to use other people’s devices without their consent or knowledge to secretly syphon off cryptocurrency at the victim’s expense.

SQL Injection is one of the most dangerous vulnerabilities of a network app since attackers can use SQL injection to bypass application security measures. The intent is to execute SQL code inside an app or Web page for personal gain or simply to be destructive.

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Intentional Cyber threats: Man-in-the-middle (MitM)

MitM attacks occur when cyber criminals insert themselves between two-parties in a transaction with the intention of stealing data.

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Intentional Cyber threats: Denial of Service Attacks

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Intentional Cyber threats: Insider Threats

Internal threats and misuse of privileges threats are a major challenge largely due to the many ways an employee or contractor can carry out malicious activities

Data tampering is a common means of cyberattack

Refers to an attack during which someone enters false or fraudulent data into a computer, or changes/deletes existing data

Data tampering is extremely serious because it may not be detected; the method often used by insiders and fraudsters

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Cyber Threats: Intentional/Unintentional

Physical theft or loss is the threat of an information asset going missing, whether through negligence or malice

Miscellaneous errors: The main concern related to this source of cyberthreat is a shortage of capacity that prevents information from being available where and when needed.

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High Profile and Under the Radar Attacks

Advanced Persistent Threats (APT)

Launched by attacker through phishing to again access to enterprise’s network

Designed for long-term espionage

Profit-motivated cybercriminals often operate in stealth mode to continue long-term activities

Hackers and hacktivists, commonly with personal agendas, carry out high-profile attacks to further their causes.

Anonymous and LulzSec are two hacker groups who have committed daring data breaches, data compromises, data leaks, thefts, threats, and privacy invasions.

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How Much Does a Cyberattack Really Cost an Organization?

In 2019 the global average total cost of a data breach was $3.92 million.

The average size of a data breach was 25,575 records, the cost per record lost was $150 and it took an average of 279 days for companies to identify and contain a breach.

Companies in the United States reported the highest average cost of a breach at $8.19 million and health care had the highest industry average cost of $6.45 million.

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Extent and Cost of Cyberattacks and Cyberthreats: Questions

Define and give an example of an intentional threat and an unintentional threat.

Why might management not treat cyberthreats as a top priority?

Describe the differences between distributed denial-of-service (DDoS), telephony denial-of-service (TDoS), and permanent denial-of-service (PDoS).

List and define three types of malware.

What are the risks caused by data tampering?

Define what a trojan is and explain why it is dangerous.

Why are MitM attacks on the rise? How might companies guard against MitM attacks?

What is cryptojacking? How can you protect yourself from being a victim of cryptojacking?

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Learning Objectives (3 of 5)

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Data Privacy Concerns and Regulations

Extent and Cost of Cyberattacks and Cyberthreats

Cyberattack Targets and Consequences

Defending Against Cyberattacks and Managing Risk

Regulatory Controls, Frameworks and Models

Cyberattack Targets and Consequences

Managers make the mistake of underestimating IT vulnerabilities and threats and appear detached from the value of confidential data (even high-tech companies).

Targets for cyberattacks include weak passwords; critical infrastructure; theft of IP; identity theft; shadow IT; bring your own device (BYOD) and social media.

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Weak Passwords and Critical Infrastructure

Weak Passwords: The capture and misuse of credentials, such as user’s IDs and passwords, is one of the foundation skills hackers use them execute numerous types of cyberthreats, such as phishing, leaving organizations open to data breaches

Critical infrastructure: Systems and assets, whether physical or virtual, so vital to a country that the incapacity or destruction of such systems and assets would have a debilitating impact on security, national economic security, national public health or safety, or any combination of those matters

Industroyer: A new form of malware developed to target critical infrastructure in the energy sector

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Copyright ©2021 John Wiley & Sons, Inc.

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Theft of Intellectual Property

Intellectual Property is a work or invention that is the result of creativity that has commercial value.

Includes copyrighted property such as a blueprint, manuscript or a design, and is protected by law from unauthorized use by others.

Intellectual property can represent more than 80% of a company’s value.

Losing customer data to hackers can be costly and embarrassing but losing intellectual property, commonly known as trade secrets, could threaten a company’s existence.

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Identity Theft

Thefts where individuals’ Social Security and credit card numbers are stolen and used by thieves.

Made worse by electronic sharing and databases

Shadow IT (stealth IT) introduces security risks when unsupported hardware and software used by individuals or departments circumvent IT security measures that apply to approved technology

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Bring Your Own Device (BYOD)

Bring Your Own Device (BYOD): employees providing their own (mobile) devices for business purposes to reduce expenses through cut purchase and maintenance costs.

Roughly 87% of U.S. organizations are using or planning to use BYOD

Cuts business costs by not having to purchase and maintain employees’ mobile devices

Security risk: mobile devices rarely have strong authentication, access controls, and encryption even though they connect to mission-critical data and cloud services. Could also be lost or stolen.

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Social Media Attacks

Social networks and cloud computing increase vulnerabilities by providing a single point of failure and attack for organized criminal networks.

Facebook recently reported that it disabled almost 1.3 billion fake accounts

Twitter suspended 70 million accounts

LinkedIn openly admitted they have no reliable system for identifying and counting duplicate or fraudulent accounts.

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Networks and Services Increase Exposure to Risk

Time-to-exploitation is the elapsed time between when vulnerability is discovered and when it is exploited

When new vulnerabilities are found in operating systems, applications, or wired and wireless networks, patches are released by the vendor or security organization

Patch is a software program that users download and install to fix a vulnerability.

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Cyberattack Targets and Consequences: Questions

What is a critical infrastructure?

List three types of critical infrastructures.

How do social network and cloud computing increase vulnerability?

Why are patches and service packs needed?

Why is it important to protect IP?

How are the motives of hacktivists and APTs different?

Explain why data on laptops and computers need to be encrypted.

Explain how identity theft can occur.

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Learning Objectives (4 of 5)

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Data Privacy Concerns and Regulations

Extent and Cost of Cyberattacks and Cyberthreats

Cyberattack Targets and Consequences

Defending Against Cyberattacks and Managing Risk

Regulatory Controls, Frameworks and Models

Defending Against Cyberattacks
and Managing Risk

To effectively guard against cyberattacks, top management must sponsor and promote security initiatives and fund them as a top priority

The first step in a cyber security initiative is to choose a cyber defense strategy

Then adopt risk mitigation strategies specific to different types of assets and

Deploy robust security measures that are not just the responsibility of IT and top management, but the ongoing duty of everyone in an organization

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Cyber Defense Strategies

The primary objective of IT security management is to defend all the components of an information system.

To do this a company must gather strategic and tactical intelligence to develop a customized cybersecurity defense.

Strategic intelligence informs HOW an organization will defend itself.

Tactical intelligence informs WHAT an organization needs to do when it is attacked.

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Managing Risk

Risk is a situation involving exposure to danger.

Risks mitigation is the action taken to reduce threats and ensure resiliency.

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Securing Systems: Cyber Defense Tools

Antivirus Software: Anti-malware tools are designed to detect malicious codes and prevent users from downloading them

Intrusion Detection Systems (IDSs): An IDS scans for unusual or suspicious traffic.

Intrusion Prevention Systems (IPSs): An IPS is designed to take immediate action— such as blocking specific IP addresses—whenever a traffic-flow anomaly is detected.

IP Intelligence Services: IP intelligence service providers can help organizations significantly reduce malicious network activity

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Protecting Against Malware Reinfection, Signatures, Mutations, and Variants

Attempts to remove the malware can fail and the malware may reinfect the host for two reasons:

Malware is captured in backups or archives

Malware infects removable media

Malware signature is a unique value that indicates the presence of malicious code.

Zero-day exploits—malware so new their signatures are not yet known

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Protect Mobile Devices

Mobile biometrics, such as voice and fingerprint biometrics, can significantly improve the security of physical devices

Voice biometrics is an effective authentication solution across a wide range of consumer devices including smartphones, tablets, and TVs

Rogue application monitoring is used to detect and destroy malicious applications

Mobile kill switch or remote wipe capability as well as encryption are needed in the event of loss or theft of a device

Encryption is process of converting information or data into a code and is essential to prevent unauthorized access to sensitive information transmitted online

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Becoming IT Resilient

IT resilience is the ability to protect data and apps from any planned or unplanned disruption to eliminate the risk of downtime to maintain a seamless customer experience.

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Backup and Recovery

An effective IT resilience strategy should consist of four elements:

Availability—keep customers continuously connected to their data and apps.

Mobility—be able to move apps and workloads while keeping them fully protected.

Agility—maintain the freedom to choose your own cloud and be able to move to, from and between clouds.

Training—IT and non-IT employees must understand their roles in case of a disruption or disaster and been trained in how to respond.

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Business Continuity Planning (1 of 3)

Business continuity refers to maintaining business functions or restoring them quickly when there has been a major disruption.

The plan covers business processes, assets, human resources, business partners, and more.

Each function in the business should have a feasible backup plan.

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Business Continuity Planning (2 of 3)

To supplement and strengthen a business continuity plan the following strategies can be put in place to help reduce the impact of a disaster or disruption:

Direct individual employees to make regular off-site backups of their files that can be accessed remotely with a secure username and password

Deploy a cloud-based Email Continuity Solution to provide uninterrupted access to e-mail.

Make sure you have cross-device software compatibility so that business can continue on employee mobile devices.

Unify communications on a secure off-site cloud server that will keep operating in the event of a power outage, natural disaster or other disruptions.

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Business Continuity Planning (3 of 3)

To supplement and strengthen a business continuity plan the following strategies can be put in place to help reduce the impact of a disaster or disruption (cont.):

Establish a service-level agreement with your provider that offers fast support, emergency backup and routing to alternative servers when necessary.

Put processes in place to ensure that IT teams can act quickly without approvals in case of a disaster or disruption.

Make sure enough resources are allocated in the IT budget for adequate business continuity and disaster recovery services

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Disaster Recovery Services

Set up a secure, off-site disaster recovery space. The three types of sites are:

Hot site: all the necessary equipment including office space, furniture, communications capabilities and computer equipment

Warm site: a fully equipped physical data center, but it has no customer data

Cold site: provides office space but requires the customer to provide and install the equipment needed to continue operations

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Defending Against Cyberattacks and
Managing Risk: Questions

Explain why it is becoming more important for organizations to make cyber risk management a high priority?

Name three IT defense tools.

What is the purpose of rogue application monitoring?

Why is a mobile kill switch or remote wipe capability an important part of managing cyber risk?

Why does an organization need to have a business continuity plan?

Name the three essential cybersecurity defenses.

What is the difference between hot, warm, and cold sites?

When and why do companies impose do-not-carry rules?

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Learning Objectives (5 of 5)

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Data Privacy Concerns and Regulations

Extent and Cost of Cyberattacks and Cyberthreats

Cyberattack Targets and Consequences

Defending Against Cyberattacks and Managing Risk

Regulatory Controls, Frameworks and Models

Regulatory Controls, Frameworks, and Models

General defense controls are established to protect the system regardless of the specific application.

Application defense controls are safeguards that are intended to protect specific applications.

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Physical controls

Physical controls protect physical computer facilities and resources. Appropriate physical security may include several physical controls such as:

Appropriate design of the data center (noncombustible and waterproof).

Shields against electromagnetic fields.

Emergency power shutoff and backup batteries.

Properly designed and maintained air-conditioning systems.

Motion detector alarms that detect physical intrusion.

Badges for authorized persons.

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Access controls

Access controls dictates who is authorized to use an organization’s computing resources. Restricted access is achieved through a two-step process of

user authentication to identify different users on the network and

user authorization that grants or denies specific access permissions.

Data security controls are needed to protect sensitive data throughout the five stages of its lifecycle from creation to disposal.

Communications controls restrict access to devices on the network to endpoint devices that comply with the organization’s security policy and secure the flow of data across networks.

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Administrative controls

Administrative controls deal with issuing guidelines and monitoring compliance with an organization’s security guidelines.

Examples of administrative controls are:

Appropriately select, train, and supervise employees, especially in accounting and information systems

Foster company loyalty

Require periodic modification of access controls, such as passwords

Perform periodic random audits of the system

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Application Defense Controls

An application defense control is a security practice that blocks or restricts unauthorized apps from executing in ways that put data at risk.

Application controls include:

Completeness checks to ensure records processing from start to finish

Validity checks to ensure only valid data is input or processed

Authentication to identify users

Authorization to ensure appropriate permissions

Input controls to ensure data integrity of all data entered

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Auditing Information Systems

Auditing is an additional layer of controls or safeguards.

Auditing a website is a good preventive measure to manage the legal risk.

Auditing e-commerce is also more complex since, in addition to the website, one needs to audit order taking, order fulfillment, and all support systems.

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Government Regulations

As cyber threats continue to evolve and gain momentum in other industries, more and more legislative bills are being proposed

The Federal Information Security Management Act (FISMA) that requires federal agencies to develop, document, and implement an information security and protection program

In 2019, at least 43 U.S. states introduced bills that dealt significantly with cyber security. Of these, 31 states enacted cyber security legislation

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Risk Management and IT

Economics homework help

Investment Tools

Investment Tools

 Investment tools, such as tax credits, opportunity zones and EB-5 play a
major role in local economic development efforts

 States have created hundreds of programs with both targeted and broad
based functions

 Federal government has numerous programs which are proving to be very
successful

 Response to dwindling federal resources for financing development over the
past 15 years

 Both federal and state govt. recognize power of credits – hundreds of
programs

 Programs have emerged based on need for niche financing to help capitalize
new business ventures or solidify project financing for real estate projects

Investment Tools:
Tax Credits

Taxation 101

 Taxable Income –Portion of your income that is subject to taxation

 Tax Deduction – Allowances that reduce your taxable income

 Tax Rate – Rate with which you are taxed

 Tax Liability – Amount you owe after taxable income and deductions have

been factored accordingly with your tax income tax rate

 Tax Credit – Amount of relief afford to you to offset your tax liability (dollar

for dollar)

Basics of Tax Credits

 Investors receive a state/federal credit on their tax liability for qualified cash

investments in projects/deals

 Investors must demonstrate, with written proof, that the resource

commitment has been made and in turn the distributor of the tax credit is

only authorized to issue credit based on actual outlays of these resources

 Investor then takes the credit on govt. tax liability. Can be personal, business,

corporate or other liability

 In some cases, the credit is transferable to others through sale creating a

secondary financial market

Benefits of Tax Credits

 Fill a variety of roles in many types of marketplaces (urban, suburban, etc.)

with targeted assistance (rehab, low-income)

 Increase ROI for investors

 State and local administration and control

 Bring many different players to the table beyond traditional sources

Tax Credit Distinctions

 Require considerable oversight and understanding for qualified investments

 Require high level of disclosure

 Performance based tool so must be proved by investor

 Easier financing such as loans, grants, bonds, etc., reduce the interest in credits

 Misconceptions – often cited as corporate welfare

 General lack of application and understanding across the board – little

marketing, few concrete training options, projects hard to define, lack of

federal oversight

New Markets Tax Credits (NMTCs)

 New Markets Tax Credits (NMTCs) are federal, dollar-for-dollar tax credits to

assist in the funding of neighborhood changing/job creating commercial real

estate projects and businesses located in low-income census tracts.

 According to the GAO, 88% of NMTC investors would not have considered

investing in a project without the NMTC.

 Credit is equal to 39% of total qualified investment.

 Very complex, lots of terminology, requires considerable legal and accounting

oversight.

https://www.cohnreznick.com/nmtc-map

NTMCs – What can be Financed?

 Charter schools, health care facilities, timberlands, child care providers,

supermarkets, restaurants, museums, hotels

 Performing arts centers, pharmacies, convenience stores, manufacturers,

processors, distributors, trucking companies, printing companies

 Waste management, renewable energy projects, sporting goods, office

buildings, shopping centers

 Substance abuse treatment facilities, recording studios, movie studios,

parking garages, etc., etc.

NMTCs – About the Credit

 NMTCs are offered to investors for Qualified Equity Investments (QEIs) in the CDE

 Credit equals 39% of amount of QEIs

 Credit claimed over 7 Years:

 5% in each of the first three years

 6% for each of the final four years

 QEI must remain invested in the same CDE for a seven year credit period

(“compliance period”)

NMTCs – Simplified Process (silly)

Step 1: Entities apply to the CDFI Fund for CDE certification (rolling basis).

Step 2: CDEs apply competitively to the CDFI Fund for a NMTC allocation.

Step 3: The CDFI Fund allocates NMTCs to CDEs that are selected.

Step 4: CDEs use allocations to offer NMTCs to investors for cash investments

called a Qualified Equity Investment(“QEI”).

Step 5: CDEs use proceeds to make Qualified Low-Income Community

Investments (“QLICIs”) in QALICB.

NMTCs – Simple Example (demonstrative)

 CDE receives a $10 million allocation of NMTCs.

 This is only allocation authority!

 $10 million of allocation x 39% credit = $3.9 million of federal tax credits to be
received by the investor.

 Single investor makes a $10 million investment in a CDE and receives $3.9 million
in tax credits as such.

Year 1 – 5% = .5 million

Year 2 – 5% = .5 million

Year 3 – 5% = .5 million

Year 4 – 6% = .6 million

Year 5 – 6% = .6 million

Year 6 – 6% = .6 million

Year 7 – 6% = .6 million

7 Years – 39% = $3.9 million

Becoming a CDE?

 Entities can apply to become a CDE on a rolling basis but process is costly and

complex

 CDEs have access to NMTCs through competitive application rounds each year.

 Alternatives – Collaborate with an existing CDE that either has allocation or

expects to apply for future allocation.

 Pipeline projects and shop around to find CDE that is right fit and can be a

partner in your efforts

 Dozens of national CDEs have allocation that is used throughout the country.

https://www.cdfifund.gov/programs-training/Programs/new-markets-tax-credit/Pages/default.aspx

Historic Preservation Tax Credit

 20% income tax credit available for the rehabilitation of historic buildings

 Credit claimed over 5 year period (2017 law change)

 Credit investment qualifies on income-producing buildings that are

determined through the National Park Service (NPS) to be “certified historic

structures”

 State Historic Preservation Offices and the NPS review the rehabilitation work

to ensure that it complies with the Secretary’s Standards for Rehabilitation

HTC – Basics

 The IRS defines qualified rehabilitation expenses on which the credit may be taken

 Owner-occupied residential properties do not qualify for the federal rehabilitation

tax credit

 Each year, NPS approves approximately 1200 projects leveraging $6 billion annually

in private investment

https://www.nps.gov/tps/tax-incentives.htm

State Tax Credit Programs

 Every single state and the District of Columbia have tax credit programs

that address a number of different investment areas including

 Machinery and equipment

 Low-income area investment

 Job creation

 Commercial revitalization

 Historic rehab

 Venture capital investment

 Brownfields

 Targeting hiring

 Relocation – manufacturing

 Expansion

 Critical industries

 Capital improvements

 Clean energy

 Many more

Strategies for Tax Credit Success

 Invest in understanding all available credits at both federal and state level

and prepare fact sheets on available credits

 Categorize available credits for real estate property for potential investors,

developers – they often do not know if a site is historic, brownfield or eligible

for NMTCs (or state credits)

 Engage your financial community – many banks want deal flow and will buy

and sell credits, get them active in available projects

 Consider mirroring credit programs that match state/federal programs

Investment Tools:
Opportunity Zones

Innovation: Opportunity Zones

 8,700 Opportunity Zones across the United States

 Nominated by Governors in early 2018. All Opportunity Zones designated by

the U.S. Department of the Treasury as of June 2018.

 Opportunity Zones are low-income census tracts eligible for investment from

Opportunity Funds.

 Approximately 35 million people live in Opportunity Zones

 56% of those residents are minorities

 294 Zones are tribal lands

 76% are in metropolitan areas

Source: Economic Innovation Group

https://www.cohnreznick.com/nmtc-map

Basics of OZs

 Opportunity Funds can help tap into the estimated $6 trillion market for

unrealized capital gains.

 Two main incentives for investors:

1. Defer taxes owed on federal capital gains taxes by moving them into an

Opportunity Fund. If invested for 5 years, receive a 10% reduction in the tax. If

invested for 7 years or more, receive a 15% reduction in the tax.

2. For investments held for 10 years, any earnings realized by an Opportunity Fund

are not subject to federal capital gains taxes.

 The belief is that a successful Opportunity Fund will earn enough over the 10

year period to pay off the original capital gains taxes owed and have enough

remaining to realize the tax free earnings.

Basics of OZs

 Opportunity Funds must make equity investments.

 Investors can capitalize Opportunity Funds using gains realized within 180

days of a sale.

 No limit on size of funds, number of funds, or how many Opportunity Zones

the fund invests in.

 Opportunity Funds must invest at least 90% of their assets in qualified

investments located in Opportunity Zones.

 Opportunity Funds can make equity investments in qualified businesses or real

estate projects.

 Opportunity Fund investors are seeking responsible exit solutions in order to

realize the tax free earnings after the 10 year period.

State & Local OZ Strategies

 Understand that not every Opportunity Zone will receive investment without
local leadership.

 Develop a strategy to identify potential investments and make those
opportunities known to investors.

 Early research is showing that Opportunity Fund capital will meet about 5-30%
of capital needed for a project.

 Identify local programs available for debt financing or other incentives now
and make those resources known.

 Identify projects and local economic development strategies and clearly
communicate how investors can engage.

 Encourage additional reporting requirements from investors in order to access
additional incentives or co-investment.

Investment Tools:
EB-5

EB-5 Immigrant Investor Program

 Federal program established in 1990 to encourage investment in U.S. business

by immigrant investors

 Direct foreign investment tool that encourages wealthy foreign individuals to

invest in U.S. based economic development projects that create jobs

 If an immigrant investor creates U.S. jobs by his investment, investor receives

a permanent Green Card

 Typically, EB-5 investment is raised and generated through an EB-5 Regional

Center that specialize in this program

 1,000 regional centers nationwide with varying footprints and focus areas

How EB-5 Works

 Investment = $500,000

 Location = Targeted Investment Areas (TIA)

 Three keys components:

 Must create 10 permanent jobs (direct and/or indirect)

 Must pay investor 1% minimum return

 Must pay investor back after 5+ years

 What can it be used for?

 Hotels, office, mixed use

 Health care, hospitals, universities

 Charter schools, mixed-use housing

 Film production, manufacturing

 Agriculture, food production

 Small business loans, revitalization projects

 Etc. etc.

EB-5 Details

 Regional center program has emerged as strongest option

 Investment is a security and regulated by the SEC

 Strict laws and enforcement of immigration elements involved

 Typical investor is very wealthy and making investment for their

security and future of children

 Program under ongoing threat due to rolling re-authorizations status

Economics homework help

Homework 5

1. While the government is an important force in setting off Industrial Revolutions, the government suffers from corruption and other problems occurring in the civil service.

a. Refer the document for HW 5. The document is available in ICON and the following site, and list ten measures taken by China to prevent corruption, and make the government more effective.

www.unodc.org/documents/treaties/UNCAC/WorkingGroups/workinggroup4/2011-August-22-24/Replies_to_CU_2011_45/20110616_China_English.pdf

b. What has happened to the corruption perception index in China since 2012?

2. Go to the following website of the Worldbank.

https://databank.worldbank.org/source/world-development-indicators

Download the following data for Bangladesh from 1971 (year of Bangladesh Independence) till 2020.

Population, total

Agriculture, forestry, and fishing, value added (% of GDP)

Industry (including construction), value added (% of GDP)

Services, value added (% of GDP)

GDP per capita (current US$)

a. Define Malthusian Trap

b. Draw line graphs of above data.

c. Explain if Bangladesh has broken the Malthusian Trap

d. Explain the effectiveness of the Government of Bangladesh in setting off an industrial revolution.

Economics homework help

M6: Discussion 6.1

No unread replies.No replies.

Instructions

Please discuss:

1. Why you think this price discrimination scheme is effective?

2. What role is Amazon playing in defeating the price discrimination scheme used by the author?

See the article below:


From the author’s blog (Links to an external site.)

Amazon has made it much easier to defeat international price discrimination schemes, (like the one used by the authors of this book.)

Managerial Economics (Hardcover)

by Luke M. Froeb,Brian T. McCann,Michael R. Ward,Mike Shor

United States

United Kingdom

Germany

France

Canada

USD

USD

GBP

USD

EUR

USD

EUR

USD

CAD

USD

Item price

$194.61

$194.61

£105.00

$150.10

€230.34

$256.30

€227.10

$252.70

C$259.95

$188.33

Shipping per item

Free

Free

£2.99

$4.27

Free

Free

€1.90

$2.11

C$1.99

$1.44

Sub-total

$194.61

$194.61

£107.99

$154.37

€230.34

$256.30

€229.00

$254.81

C$261.94

$189.77

Cost per shipment

Free

Free

£3.99

$5.70

€14.00

$15.58

€9.00

$10.01

C$7.99

$5.79

Total

$194.61

$194.61

£111.98

$160.08

€244.34

$271.88

€238.00

$264.83

C$269.93

$195.56


Buy at
Amazon.com (Links to an external site.)


Buy at
Amazon.co.uk (Links to an external site.)


Buy at
Amazon.de

M6: Discussion 6.2

Instructions

Provide an original post and 2 feedback posts to other students’ responses.

A manufacturer of microwaves has discovered that male shoppers, on average, have lower values for microwave ovens than female shoppers. Additionally, male shoppers attribute almost no extra value to an auto-defrost feature, while female shoppers, on average, value the auto-defrost feature. There is little additional cost to incorporating an auto-defrost feature. The manufacturer is considering introducing two different models. The manufacturer has determined that men value a simple microwave at $70 and one with auto-defrost at $80, while women value a simple microwave at $80 and one with auto-defrost at $150.

1. If there is an equal number of men and women, what pricing strategy will yield the greatest revenue?

2. What if women comprise the bulk of microwave shoppers?

M7: Discussion 7.1

Instructions

Provide an original post and 2 feedback posts to other students’ responses.

Venture capital (VC) firms are pools of private capital that typically invest in small, fast-growing companies, which usually can’t raise funds through other means. In exchange for this financing, the VCs receive a share of the company’s equity, and the founders of the firm typically stay on and continue to manage the company.

1. Describe the nature of the incentive conflict between VCs and the managers, identifying the principal and the agent.

2. VC investments have two typical components: (1) managers maintain some ownership in the company and often earn additional equity if the company performs well; (2) VCs demand seats on the company’s board. Discuss how these two components help address the incentive conflict.

Economics homework help

Summary:

Task 1: Midterm Assessment

The mid-term assessment is an individual case study essay based on a connected enterprise.

 

Business Situation:

CAPCITY is the capital city of an emerging economy, EMERGE.

The ongoing financial crisis has led to a severe income inequality within the citizens of EMERGE. The mayor of CAPCITY, with an aim of closing this gap and reducing poverty within the city, decides to start a charity campaign.

Joining forces with the CAPCITY ICT team, they create a new e-platform with following characteristics of matchmaking:

· The families in need of primary resources (food, electricity, garments) can add their information to a list. They also submit how much they need to be financed that month, by submitting their unpaid bills. Originality of the bill is detected and approved by the portal’s system.

· The people who would like to help, enter the portal and randomly select one family from the unanimous list of families, with the help of the random selector.

· The platform also provides online secure payment tool. The selected family and their pre-submitted bills are paid by the contributors.

 

Task: Write a structured essay which incorporates the explanations for the questions below.

· Which type of business model does the portal belong to (with regards to users/contributors)? (5 points)

· Discuss the structure of this case in relevance to Open and Proprietary Platforms. (5 points)

· What features would you add to this portal to transform its model to generate revenue for CAPCITY as well? How would those features work? (5 points)

· Which of these enabling technologies (cloud, www, IoT, big data, AI, ML) might be used for the infrastructure of this portal? Explain why. (5 points)

· Explain at least 3 reasons why CAPCITY is a player of digital smart economy. Explain how the features introduced in the charity platform has reinforced the smart economy with its overall effects in ecosystem and society. (15 points)

·  

Formalities:

· Wordcount: max 1000 words

· Add Introduction, Conclusion sections to overall structure of your essay You may also use tables and graphics. Use your design talent at max.

· Cover, Table of Contents, References and Appendix are excluded of the total wordcount.

· Font: Arial 10. Single spacing. Text alignment: Justified.

· The in-text References and the Bibliography have to be in Harvard’s citation style.


Submission: Week (6) – Via Moodle (Turnitin). Sunday 6th March 2022. 23:59

Weight: 
This task is a 35% of your total grade for this subject.

· It assesses the following learning outcomes:

· Outcome 1: understand the framework and concepts of the digital economy;

· Outcome 2: critically assess the connected enterprise and how ICT impacts its transformation

 

Exceptional 90-100

Good 80-89

Fair 70-79

Marginal fail 60-69

Knowledge & Understanding (20%)

Student demonstrates excellent understanding of key concepts and uses vocabulary in an entirely appropriate manner.

Student demonstrates good understanding of the task and mentions some relevant concepts and demonstrates use of the relevant vocabulary.

Student understands the task and provides minimum theory and/or some use of vocabulary.

Student understands the task and attempts to answer the question but does not mention key concepts or uses minimum amount of relevant vocabulary.

Application (30%)

Student applies fully relevant knowledge from the topics delivered in class.

Student applies mostly relevant knowledge from the topics delivered in class.

Student applies some relevant knowledge from the topics delivered in class. Misunderstanding may be evident.

Student applies little relevant knowledge from the topics delivered in class. Misunderstands are evident.

Critical Thinking (30%)

Student critically assesses in excellent ways, drawing outstanding conclusions from relevant authors, learning materials and project environment.

Student critically assesses in good ways, drawing conclusions from relevant authors, project and ecosystem with references.

Student provides some insights but stays on the surface of the topic. References may not be relevant.

Student makes little or none critical thinking insights, does not provide valid sources.

Communication (20%)

Student communicates their ideas extremely clearly and concisely, respecting word count, grammar and spellcheck

Student communicates their ideas clearly and concisely, respecting word count, grammar and spellcheck

Student communicates their ideas with some clarity and concision. It may be slightly over or under the wordcount limit. Some misspelling errors may be evident.

Student communicates their ideas in a somewhat unclear and unconcise way. Does not reach or does exceed wordcount excessively and misspelling errors are evident.

Rubrics for individual reports/essays

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Economics homework help

Development Economics

Problem Set 1

Sherif Khalifa

1. (a) What is the usual indicator of living standards?

(b) How is this indicator of living standards calculated ?

(c) What are the problems with this indicator?

2.Consider a country whose national income is $750 Million and whose population is 12.5
million. Assume in this country that the rich are 20% of the population and own 85% of the

nation’s income.

(a) The income per capita of the nation =

(b) The income per capita of the rich =

(c) The income per capita of the poor =

(d) If the total income of the rich increases by 50%, the new nation’s income =

(e) If the total income of the rich increases by 50%, the new nation’s income per capita =

(f) The growth rate of the nation’s income per capita =

(g) Can we conclude that the living standards have improved in this country? Why?

1

3.Assume the growth rate of income is 10% and the growth rate of population is 5.83%?
(a) The doubling time of income =

(b) The doubling time of population =

(c) The doubling time of income per capita =

4. Consider the following information about a developing country:

Income per capita $1037

Life expectancy 43 years

Adult literacy 53%

Gross enrollment 46%

(a) Income index =

(b) Life Expectancy index =

(c) Education index =

(d) Human Development index =

2

5. Consider the Harrod-Domar model:
(a) If capital output ratio is 3, and the saving rate is 27%. The growth rate of income =

(b) To increase the growth rate of income, what do we need to do?

(c) if you want your country to grow at 5%, and the capital output ratio is 2. The nation

should save what percentage of the nation’s income =

(d) What are the criticisms to the Harrod-Domar model?

6. Consider the Lewis Theory of structural change. What are the assumptions that are
considered unrealistic in this model?

3

7. Consider the following table with individuals in a country and their incomes:

Individuals Income Deciles Quintiles

1 1

2 3

3 5

4 8

5 10

6 12

7 13

8 15

9 16

10 17

Total 100 100 100

(a) Calculate the deciles and quintiles.

(b) The Kuznets’ratio =

(c) The Palma ratio=

(d) The Quintile ratio=

4

8. Consider the following table with individuals in a country and their incomes. Fill in
the following table:

Individuals Income % of income recipients % of Income

1 $4 10%

2 $8 20%

3 $16 30%

4 $20 40%

5 $28 50%

6 $40 60%

7 $44 70%

8 $60 80%

9 $80 90%

10 $100 100% 100%

Total $400

Draw the Lorenz curve for this country:

10% 20% 30% 40% 50% 60% 70% 80% 90% 100%0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

% of income recipients

% of income

5

9. Consider the following Lorenz curves for countries A and B:

A

B

(a) Which country has a higher income inequality?

(b) Which country has a higher Gini coeffi cient?

(c) What is bad about income inequality?

10. Consider the following graph for the labor market in a developing country:

Supply

Demand

500
Employment

Wage

300

650

(a) Total income =

6

(b) Total wages =

(c) Total profits =

(d) The share of workers out of the nation’s income =

(e) The share of capitalists out of the nation’s income =

11. Consider the following table of annual incomes of individuals in a country. Assume
the poverty line is at $1 per day:

Individual Income

1 465

2 215

3 505

4 325

5 275

6 400

7 175

8 265

9 105

10 65

(a) The headcount index =

(b) The total poverty gap =

(c) The average poverty gap =

(d) The average income shortfall =

7

12. If a country has a birth rate of 25 per 1000 of the population, and a death rate of 15
per 1000 of the population, and no net migration. What is the population growth rate?

13. Consider the Malthusian model:

Income per capita

Growth rates
Income growth rate

Population growth rate

15,4391,685

2.3

0.56

5,674

Forecast the population growth rate, income growth rate, and income per capita for a

country with the following initial income per capita:

Initial Final Final Final

Income per capita Population Growth Income Growth Income per capita

$16,000

$15,439

$7,891

5,674

$4,367

$1,685

$981

8

14. Consider the household theory of fertility. If the income of the household is $250,
and the price of a child=$25, while the price of goods=$5:

Children

Goods

0 X

Y

(a) X =

(b) Y =

If the equilibrium number of children and goods is always determined by dividing the

income equally between them.

(c) The initial equilibrium number of children =

(d) The initial equilibrium number of goods =

(e) Start from the initial equilibrium in the following graph. If the cost of children declines

to $12.5 only, draw the new household’s budget line and the new household’s equilibrium?

Children

Goods

0 X

Y

9

(f) Start from the initial equilibrium again. If the income of the household doubles because

men got better paying jobs, draw the new household’s budget line and the new household’s

equilibrium?

Children

Goods

0 X

Y

(g) Start from the initial equilibrium again. If the income of the household doubles because

women are working and contributing to the income of the household, which increases the

opportunity cost and the price of children to $50, and the price of goods=$5. Draw the new

household’s budget line and the new household’s equilibrium?

Children

Goods

0 X

Y

10

15. Consider the Harris-Todaro model:
Agriculture

Wage
Manufacturing

Wage

70

0 1000375 525 875

66

4

14

Assume full employment and flexible wages:

(a) Manufacturing wage =

(b) Agriculture wage =

(c) Manufacturing employment =

(d) Agriculture employment =

If the labor union increases the manufacturing wage to $70, and assuming full employment:

(a) Manufacturing wage =

(b) Agriculture wage =

(c) Manufacturing employment =

(d) Agriculture employment =

If the labor union increases the manufacturing wage to $70, and assuming unemployment:

(a) Manufacturing wage =

(b) Agriculture wage =

(c) Manufacturing employment =

(d) Agriculture employment =

(e) Total Unemployment =

(f) Unemployment rate in urban areas =

(g) Unemployment rate in the country =

(h) Expected Wage in Manufacturing =

11

16. Consider the child labor model of multiple equilibria:

14,961
Employment

Wage

123

187

10,485

154

12,376

Forecast the wage and the level of child labor and adult labor in a country with the

following initial wages:

Initial Final Final Final

Wage Wage Adult Labor Child Labor

$115

$123

$130

$154

$160

$187

$190

12

17. Consider the following graph for a 13 years old who is deciding whether to attend a
secondary school or dropout from school after primary education.

Age

Earnings

retirement13 18

Secondary

Primary
49.75

23.67

24.98

Describe the decision of this person and its determinants?

13

Economics homework help

ECO102 MACROECONOMICS (DL)

Assessment 2: Article analysis (20%; Week 8)

The article for the analysis will be provided as well as the questions to answer. The
topics on Fiscal and Monetary Policies will be the target for this assessment.

Read the article (you can also watch related to the topic videos placed at the
same webpage)

https://www.cnbc.com/2020/04/28/cnbc-fed-survey-the-us-will-need-to-spend-
trillions-more-as-economy-takes-until-2022-to-fully-recover.html

Questions to answer:

1) That kind of the public policy is referred to in the article (contractionary or
expansionary)? Explain.

2) When should this policy be introduced in the economy (regarding the stages
in the business cycles)?

3) What are the actions in fiscal and monetary policies that should be
considered during this stage of the business cycle? Provide examples and
explanations.

4) What are the positive results of such a policy? You need to support your
answer with the analysis of the main outcomes that are observable in the
market.

5) What are the negative sides of such a policy in short and long run? Explain
and support your analysis with some statistics.