API tools faq
paste
Guest User

Untitled

a guest
Dec 7th, 2016
2,220
0
Never
Add comment
Not a member of Pastebin yet? Sign Up, it unlocks many cool features!
text 26.10 KB | None | 0 0
raw download clone embed print report
  1. 1. Apple and Samsung are large corporations that produce smart phones, the iPhone and the Galaxy, respectively. They are constantly trying through expensive advertising and product innovations to persuade customers to buy their brand. Is the smart phone market a competitive in the economic sense defined in Chapter 3? Why or why not?
  2.  
  3. Font Family
  4. Font Size
  5.  
  6. 2. Explain the law of demand. What does it tell us about the shape of a demand curve?
  7.  
  8. Font Family
  9. Font Size
  10.  
  11. 3. Why are economists so particular about the difference between an increase in quantity demanded and an increase in demand? Aren't they the same thing?
  12.  
  13. Font Family
  14. Font Size
  15.  
  16. 4. A small private college increases tuition while a large public university in the same state does not. What will happen to the demand (enrollment) for both schools?
  17.  
  18. Font Family
  19. Font Size
  20.  
  21. 5. How would each of the following events affect the demand for new textbooks?
  22. I. The price of a used textbook rises.
  23. II. The price of college tuition rises.
  24. III. More high school graduates decide to attend college.
  25.  
  26. Font Family
  27. Font Size
  28.  
  29. 6. In the following cases, explain what happens to demand or quantity demanded and how the change would be shown on a graph of the demand schedule.
  30. I. Assuming that tickets to an NFL game are normal goods, what is the effect of an increase in the incomes of NFL fans?
  31. II. Assuming that Direct TV and Dish satellite are substitutes, what happens if the price of a Direct TV subscription increases?
  32. III. Assuming that data plans and cell phones are complements, what happens if the price of data plans decreases?
  33.  
  34. Font Family
  35. Font Size
  36.  
  37. 7. Suppose the supply curve for soap bubbles has a slope of +1 and intersects the vertical axis at a price of $2 per bottle. Interpret the meaning of both the y-intercept and the slope.
  38.  
  39. Font Family
  40. Font Size
  41.  
  42. 8. How would each of the following events affect the supply of compact cars?
  43. I. The price of steel rises.
  44. II. The production technology for car manufacturing improves.
  45. III. The price of sport utility vehicles falls.
  46.  
  47. Font Family
  48. Font Size
  49.  
  50. 9. Why do many clothing stores have big after-Christmas sales on their merchandise?
  51.  
  52. Font Family
  53. Font Size
  54.  
  55. 10. You read that college tuition is rising every year, and yet more students attend college every year. Isn't this a violation of the law of demand?
  56.  
  57. Font Family
  58. Font Size
  59.  
  60. 11. In the Midwestern United States, the price of an ear of corn is always lowest in the summer. This seems odd, because consumers really enjoy eating ears of corn in the summer. Can you explain this?
  61.  
  62. Font Family
  63. Font Size
  64.  
  65. 12. In August 2005, Hurricane Katrina damaged or destroyed oil platforms in the Gulf of Mexico, refineries along the Gulf coast, and the pipeline infrastructure that transports oil and gas to customers across the eastern United States. The winter of 2006 was unusually cold in many parts of the country. How did these events affect the market for natural gas?
  66.  
  67. Font Family
  68. Font Size
  69.  
  70. 13. How does an effective price ceiling affect the quantity demanded and the quantity supplied in a competitive market?
  71.  
  72. Font Family
  73. Font Size
  74.  
  75. 14. Suppose the market price of wheat is $7 a bushel and a price ceiling is set at $9 a bushel. What is the impact of this price ceiling?
  76.  
  77. Font Family
  78. Font Size
  79.  
  80. 15. How do price ceilings cause black markets?
  81.  
  82. Font Family
  83. Font Size
  84.  
  85. 16. How could a minimum wage cause an incentive for illegal hiring practices?
  86.  
  87. Font Family
  88. Font Size
  89.  
  90. 17.
  91. Reference: Ref 4-29
  92.  
  93. (Table: The Market for Hamburger Flippers) Look at the table The Market for Hamburger Flippers. If the minimum wage in this market is $8, what is the effect on the market? Who are the winners and losers?
  94.  
  95. Font Family
  96. Font Size
  97.  
  98. 18.
  99. Reference: Ref 4-30
  100.  
  101. (Table: The Market for Salmon) Look at the table The Market for Salmon. The state government has imposed a quota of 6 million pounds and has licensed commercial fishing boats to harvest the salmon. When the quota is reached, the season is over. What is the quota rent per pound of salmon when 6 million pounds is harvested and sold?
  102.  
  103. Font Family
  104. Font Size
  105.  
  106. 19. Explain the difference between comparative advantage and absolute advantage.
  107.  
  108. Font Family
  109. Font Size
  110.  
  111. 20. If the world price of good X is lower than the domestic (autarky) price of that good, will a nation be an exporter or importer of good X? How will the domestic market adjust the price? Explain.
  112.  
  113. Font Family
  114. Font Size
  115.  
  116. 21. Economists claim that opening up a market to imports leads to an increase in total surplus but that trade makes winners and losers. How does this work?
  117.  
  118. Font Family
  119. Font Size
  120.  
  121. 22. Suppose a nation has freely imported sugar at the world price PW for many years. However, a new government administration decides to levy a tariff on imported sugar, and the price rises to Pt. Most economists report that this has caused inefficiency. How?
  122.  
  123. Font Family
  124. Font Size
  125.  
  126. 23. Figure: The Market for Digital Cameras with Tariff
  127.  
  128.  
  129. Reference: Ref 5-23
  130.  
  131. (Figure: The Market for Digital Cameras with Tariff) Look at the figure The Market for Digital Cameras with Tariff. The domestic price is PA and the world price is PW. The government decides to impose a tariff on each imported digital camera, and the new price is Pt. Identify the area corresponding to the tax revenue collected by the government. Identify the area corresponding to the deadweight loss that results from the tariff.
  132.  
  133. Font Family
  134. Font Size
  135.  
  136. 24. Suppose a nation is considering two alternative policies to protect a domestic industry from world trade. The two policies are an import quota of X units and a per-unit tariff that would reduce imports to X units. Though either policy would result in only X imported units of this good, there is a fundamental difference in the outcome. Explain this difference.
  137.  
  138. Font Family
  139. Font Size
  140.  
  141. 25. Some advocates of trade protection in the domestic market for steel argue that it is needed to protect domestic steelworkers' jobs. Why are economists usually unconvinced by this argument?
  142.  
  143. Font Family
  144. Font Size
  145.  
  146. 26. Explain why each of the following transactions would or would not be counted in the GDP of the United States.
  147. a. Japanese auto producer Honda builds a factory in Indiana.
  148. b. You buy a new pair of pants produced at a factory in Honduras.
  149. c. You mow your uncle's yard and he gives you $10 for a job well done.
  150.  
  151. Font Family
  152. Font Size
  153.  
  154. 27. Explain why each of the following transactions would or would not be counted in the GDP of the United States.
  155. a. American auto producer Ford builds a factory in Canada.
  156. b. You buy a blueberry muffin at your coffee shop.
  157. c. A Ford dealership in Ohio has 15 unsold new cars at the end of 2011.
  158.  
  159. Font Family
  160. Font Size
  161.  
  162. 28. A single woman attorney hires a local firm to mow the grass, rake the leaves, and trim the rose bushes. After several years she and the owner of the lawn service fall madly in love and get married. After the honeymoon, her new husband takes care of the yard maintenance, and she no longer pays his company the monthly fee. What has happened to GDP?
  163.  
  164. Font Family
  165. Font Size
  166.  
  167. 29. Why do economists bother to compute real GDP? Why can't we just compare nominal GDP from one year to the next?
  168.  
  169. Font Family
  170. Font Size
  171.  
  172. 30.
  173. Reference: Ref 7-24
  174.  
  175. (Table: Gadget GDP in Rayistan) Look at the table Gadget GDP in Rayistan. Why is real GDP per capita used as a measure of a country's standard of living? What are some of the limitations of using real GDP as the only measure of a country's quality of life?
  176.  
  177. Font Family
  178. Font Size
  179.  
  180. 31.
  181. Reference: Ref 7-24
  182.  
  183. (Table: Gadget GDP in Rayistan) Look at the table Gadget GDP in Rayistan. Rayistan is a small nation that produces only one good, the gadget. The table shows production and prices of gadgets for two consecutive years, as well as the population of Rayistan.
  184. a. Compute nominal GDP in 2010 and 2011.
  185. b. Compute real GDP in 2010 and 2011.
  186. c. Has Rayistan's standard of living, as measured by real GDP per capita, increased, decreased, or stayed the same?
  187.  
  188. Font Family
  189. Font Size
  190.  
  191. 32. Suppose Elmer Brown is campaigning for reelection as governor of his state. He claims that during his first term the state's citizens are 50% better off, since GDP has increased from $10 billion to $15 billion. Why might his claim be misguided?
  192.  
  193. Font Family
  194. Font Size
  195.  
  196. 33. Suppose the consumer price index was 180.5 last year and this year is 202.2. What is the rate of inflation between last year and this year? What is the rate of inflation between the base year and this year?
  197.  
  198. Font Family
  199. Font Size
  200.  
  201. 34.
  202. Reference: Ref 7-25
  203.  
  204. (Table: Muffin Price Index) Look at the table Muffin Price Index. A college town has many small coffee shops, and they all sell muffins. As an economics project you have been assigned to compile a muffin price index (MPI). The base year is 2009. Use these data to compute the MPI for each year.
  205.  
  206. Font Family
  207. Font Size
  208.  
  209. 35.
  210. Reference: Ref 7-25
  211.  
  212. (Table: Muffin Price Index) Look at the table Muffin Price Index. A college town has many small coffee shops, and they all sell muffins. As an economics project you have been assigned to compile a muffin price index (MPI). The base year is 2009. Use these data to compute the rate of inflation in the MPI between:
  213. a. 2009 and 2010.
  214. b. 2008 and 2011.
  215.  
  216. Font Family
  217. Font Size
  218.  
  219. 36. Explain the difference between the consumer price index and the producer price index. Which is likely to be the first to indicate inflation?
  220.  
  221. Font Family
  222. Font Size
  223.  
  224. 37. Some economists argue that the official unemployment rate understates the true level of unemployment. Summarize these arguments.
  225.  
  226. Font Family
  227. Font Size
  228.  
  229. 38. How is it possible for the unemployment rate to overstate the true level of unemployment?
  230.  
  231. Font Family
  232. Font Size
  233.  
  234. 39.
  235. Reference: Ref 8-11
  236.  
  237. (Table: Dexter's Employment Statistics) Look at the table Dexter's Employment Statistics. Use these data to complete the following computations.
  238. a. What is the size of the labor force?
  239. b. What is the labor force participation rate?
  240.  
  241. Font Family
  242. Font Size
  243.  
  244. 40.
  245. Reference: Ref 8-11
  246.  
  247. (Table: Dexter's Employment Statistics) Look at the table Dexter's Employment Statistics. Use these data for the following computations.
  248. a. What is the unemployment rate?
  249. b. Including discouraged workers, what is the unemployment rate?
  250.  
  251. Font Family
  252. Font Size
  253.  
  254. 41. If a labor market is in equilibrium at a wage that sets the quantity of labor demanded equal to the quantity of labor supplied, how can there still be unemployment?
  255.  
  256. Font Family
  257. Font Size
  258.  
  259. 42. Minimum wages and efficiency wages are both above the equilibrium market wage. Briefly describe each type of wage. Do they have similar results in the labor market?
  260.  
  261. Font Family
  262. Font Size
  263.  
  264. 43. Kelli is a server at a casual restaurant in a small town. In each of the following situations, explain Kelli's type of unemployment.
  265. a. The local economy is in a minor recession and the restaurant lays Kelli off. The owner assures her that she will be rehired when business picks up again.
  266. b. A large factory, the major employer in the town, permanently closes, and this hurts all restaurants in town. The restaurant fires Kelli because the owner can only afford to stay open on the weekends.
  267. c. Kelli is dissatisfied with her schedule at the restaurant and quits her job. She is qualified to work at other restaurants and immediately begins to send her résumé to restaurants all over town.
  268.  
  269. Font Family
  270. Font Size
  271.  
  272. 44. What do economists mean by the natural rate of unemployment? How would it be affected by a permanent influx of younger, predominantly unskilled immigrant workers?
  273.  
  274. Font Family
  275. Font Size
  276.  
  277. 45. Explain the difference between shoe-leather costs and menu costs of inflation.
  278.  
  279. Font Family
  280. Font Size
  281.  
  282. 46. Ted is looking to borrow money from a bank. He is told that the nominal rate is 8%; that includes expected inflation of 5% and a real interest rate of 3%. If there is unexpectedly high inflation over the term of this loan, will Ted be hurt or will the bank be hurt? Explain your answer.
  283.  
  284. Font Family
  285. Font Size
  286.  
  287. 47. Suppose you have estimated the supply curve for the local labor market as Qs = W – 5, where W is the hourly wage and Qs is the quantity of workers willing to work at each wage. You have estimated the demand curve for the local labor market as Qd, = 25 – W, where W is the hourly wage and Qd is the quantity of workers demanded by employers at each wage.
  288. a. Solve for the equilibrium wage and quantity of labor.
  289. b. If the government imposes a minimum wage of $18, what are the size of the labor force, the number of unemployed workers, and the unemployment rate?
  290.  
  291. Font Family
  292. Font Size
  293.  
  294. 48. What is meant by the term social insurance? Give an example of a social insurance program.
  295.  
  296. Font Family
  297. Font Size
  298.  
  299. 49. The economy is in a recessionary gap. What are the fiscal policy options available to the government?
  300.  
  301.  
  302. Font Family
  303. Font Size
  304.  
  305. 50. The economy is in an inflationary gap. What are the fiscal policy options available to the government?
  306.  
  307.  
  308. Font Family
  309. Font Size
  310.  
  311. 51. Many economists caution against extremely active stabilization policy because of time lags in its use. Explain this rationale.
  312.  
  313. Font Family
  314. Font Size
  315.  
  316. 52. Suppose that real GDP is $500, potential GDP is $1,000, and the marginal propensity to consume is 0.9. If the government is going to spend and does not impose taxes, what specific fiscal policy action should policy makers take?
  317.  
  318. Font Family
  319. Font Size
  320.  
  321. 53. Suppose that real GDP is $1,500, potential GDP is $1,200, and the marginal propensity to consume is 0.8. If the government is going to close the gap by changing government purchases of goods and services and imposes no taxes, what specific fiscal policy action should policy makers take?
  322.  
  323. Font Family
  324. Font Size
  325.  
  326. 54. Suppose that real GDP is $1,300, potential GDP is $1,800, and the marginal propensity to consume is 0.6. If the government is going to close the gap by changing government purchases of goods and services and imposes no taxes, what specific fiscal policy action should policy makers take?
  327.  
  328. Font Family
  329. Font Size
  330.  
  331. 55. Why does a $1,000 tax cut generate a smaller multiplier effect than a $1,000 increase in government purchases?
  332.  
  333. Font Family
  334. Font Size
  335.  
  336. 56. Explain the difference between automatic stabilizers and discretionary fiscal policy measures. Provide examples to clarify the distinctions.
  337.  
  338. Font Family
  339. Font Size
  340.  
  341. 57. Suppose that economic policy makers want to increase real GDP by $100 with as little impact on the budget balance as possible. Should they increase government purchases of goods and services, increase transfer payments, or decrease taxes?
  342.  
  343. Font Family
  344. Font Size
  345.  
  346. 58. Why does the budget surplus get smaller or the deficit get larger, even without discretionary fiscal policy, when unemployment increases?
  347.  
  348. Font Family
  349. Font Size
  350.  
  351. 59. Explain why a constitutional amendment requiring the federal government to balance the budget annually is a bad idea.
  352.  
  353. Font Family
  354. Font Size
  355.  
  356. 60. Most economists do not support a law that requires the federal budget to be balanced every year. Explain why.
  357.  
  358. Font Family
  359. Font Size
  360.  
  361. 61. What is the opportunity cost of holding money?
  362.  
  363. Font Family
  364. Font Size
  365.  
  366. 62. The money demand curve is shown in a graph with the interest rate on short-term assets on the vertical axis. Why use this short-term interest on the vertical axis and not the rate of return on other financial assets?
  367.  
  368. Font Family
  369. Font Size
  370.  
  371. 63. Why does a recession, all else equal, decrease the demand for money?
  372.  
  373. Font Family
  374. Font Size
  375.  
  376. 64. How would a significant fall in the interest rate on short-term certificates of deposit (CDs) affect the money demand curve?
  377.  
  378. Font Family
  379. Font Size
  380.  
  381. 65. What is the goal of expansionary monetary policy, and how does it work in the short run?
  382.  
  383. Font Family
  384. Font Size
  385.  
  386. 66. What is the goal of contractionary monetary policy, and how does it work in the short run?
  387.  
  388. Font Family
  389. Font Size
  390.  
  391. 67. Suppose that the inflation rate is 2.5%. The unemployment gap is 2%. Use the Taylor rule to estimate the target Federal funds rate.
  392.  
  393. Font Family
  394. Font Size
  395.  
  396. 68. If the economy is operating at potential output, how does a contractionary monetary policy affect short-run and long-run prices and real output?
  397.  
  398. Font Family
  399. Font Size
  400.  
  401. 69. Explain what is meant by money neutrality. Use an example of expansionary monetary policy, both in the short run and the long run.
  402.  
  403. Font Family
  404. Font Size
  405.  
  406. 70. How does an increase in the money supply affect interest rates if the economy is operating at potential output?
  407.  
  408. Font Family
  409. Font Size
  410.  
  411. 71. Suppose the annual inflation rate is at 7% and 3% of the labor force is unemployed. If you were on the Federal Open Market Committee, what action would you prescribe? How would this affect the economy, the inflation rate, and the unemployment rate?
  412.  
  413. Font Family
  414. Font Size
  415.  
  416. 72. Explain why the classical model of the price level is more accurate during high inflation than low inflation.
  417.  
  418. Font Family
  419. Font Size
  420.  
  421. 73. The central bank of a government can print more money to pay for government deficits. Why do some refer to this practice as imposing an inflation tax?
  422.  
  423. Font Family
  424. Font Size
  425.  
  426. 74. Explain the political asymmetry associated with policies that can cause or cure inflation.
  427.  
  428. Font Family
  429. Font Size
  430.  
  431. 75. Explain how the output gap is related to the unemployment rate and the natural unemployment rate.
  432.  
  433. Font Family
  434. Font Size
  435.  
  436. 76. Suppose that the natural rate of unemployment is 5% and that the economy is operating at 97.5% of potential output. Use Okun's law to determine the unemployment rate.
  437.  
  438. Font Family
  439. Font Size
  440.  
  441. 77. Suppose that the natural rate of unemployment is 5% and that the economy is operating at 101% of potential output. Use Okun's law to determine the unemployment rate.
  442.  
  443. Font Family
  444. Font Size
  445.  
  446. 78. Suppose that you live in a city whose economic growth has been declining for several months. Oddly, the official unemployment rate in your city has not begun to rise. How can you explain this?
  447.  
  448. Font Family
  449. Font Size
  450.  
  451. 79. The short-run Phillips curve is believed to be downward sloping with the inflation rate on the vertical axis and the unemployment rate on the horizontal axis. Can this curve extend below the horizontal axis? Can it extend to the left of the vertical axis? Explain.
  452.  
  453. Font Family
  454. Font Size
  455.  
  456. 80. Explain why, in the short run, the unemployment rate tends to fall when the inflation rate rises.
  457.  
  458. Font Family
  459. Font Size
  460.  
  461. 81. Suppose that the public expects inflation to increase from 3% to 4% this year. How will this affect the short-run Phillips curve?
  462.  
  463. Font Family
  464. Font Size
  465.  
  466. 82. Why is the long-run Phillips curve believed to be vertical at the natural rate of unemployment, or NAIRU?
  467.  
  468. Font Family
  469. Font Size
  470.  
  471. 83. Suppose the economy is significantly weakened, real GDP is far below potential GDP, and the unemployment rate is high. The Federal Reserve is concerned that monetary policy might have limited effectiveness because of deflation. How can deflation limit the Fed's ability to increase aggregate demand?
  472.  
  473. Font Family
  474. Font Size
  475.  
  476. 84. Prior to the 1930s, classical economics was the predominant theory about the behavior of the aggregate price level, aggregate output, and the appropriate role of monetary policy. Describe how classical economists believed the economy would be affected by an increase in the money supply.
  477.  
  478. Font Family
  479. Font Size
  480.  
  481. 85. Why did the adoption of Keynesian economics come out of the Great Depression?
  482.  
  483. Font Family
  484. Font Size
  485.  
  486. 86. Explain the rational expectations theory and how it predicts the usefulness of fiscal and monetary policy.
  487.  
  488. Font Family
  489. Font Size
  490.  
  491. 87. The economy is in a recession. The head of the President's Council of Economic Advisers is an ardent proponent of the real business cycle theory. What will this real business cycle economist recommend or not recommend? Explain.
  492.  
  493. Font Family
  494. Font Size
  495.  
  496. 88. The economy is in a recession. The head of the President's Council of Economic Advisers is a student of economic history, and his philosophy tends to follow the Great Moderation consensus. What will this economist recommend or not recommend? Explain.
  497.  
  498. Font Family
  499. Font Size
  500.  
  501. 89. The economy is booming and under inflationary pressure. There is also a budget surplus. The head of the President's Council of Economic Advisers is a proponent of classical economics. What will this classical economist recommend or not recommend? Will she advocate balancing the budget? Explain.
  502.  
  503. Font Family
  504. Font Size
  505.  
  506. 90. The economy is in a recession. The head of the President's Council of Economic Advisers is an ardent proponent of classical economics. What would this classical economist recommend or not recommend? Explain.
  507.  
  508. Font Family
  509. Font Size
  510.  
  511. 91. The economy is in a recession. The head economist at the central bank is concerned about the growing possibility of a liquidity trap. The head of the President's Council of Economic Advisers is an ardent Keynesian. What will this Keynesian economist recommend or not recommend? Explain.
  512.  
  513. Font Family
  514. Font Size
  515.  
  516. 92. The economy is under inflationary pressure. The head of the President's Council of Economic Advisers is a staunch Keynesian. What will this Keynesian recommend or not recommend? Explain.
  517.  
  518. Font Family
  519. Font Size
  520.  
  521. 93. The economy is in a recession. The head of the President's Council of Economic Advisers is an ardent monetarist. What will this monetarist recommend or not recommend? Explain.
  522.  
  523. Font Family
  524. Font Size
  525.  
  526. 94. Consider the following transactions. How would they be entered in the U.S. balance of payments accounts?
  527. a. A U.S. citizen purchases a shirt produced in Mexico.
  528. b. A bank in Mexico City purchases a U.S. Treasury bond.
  529. c. A U.S. company buys an office building in Mexico City.
  530.  
  531. Font Family
  532. Font Size
  533.  
  534. 95. Suppose a nation has a trade deficit on goods and services in the current account. Does this imply that the total balance of the current account is a deficit?
  535.  
  536. Font Family
  537. Font Size
  538.  
  539. 96. Suppose the economy of Alpha in 2008 imported $800 billion in goods and $400 billion in services. The nation exported $500 billion in goods and $600 billion in services. Citizens of foreign nations also purchased $200 billion of Alpha's assets.
  540. a. What was the merchandise trade balance?
  541. b. What was the balance of payments on the current account?
  542. c. What was the balance of payments on the financial account, and what was the value of Alpha's purchases of assets from the rest of the world?
  543.  
  544. Font Family
  545. Font Size
  546.  
  547. 97. Suppose that the United States and Canada are the only trading partners in the world and the U.S. Congress passes more restrictive import policies. Assuming that the Canadian Parliament does not retaliate, what will happen to the U.S. balance of payments on the current account? All else equal, how will more restrictive import policies affect the U.S. balance of payments on the financial account? Explain the thinking behind your conclusions.
  548.  
  549. Font Family
  550. Font Size
  551.  
  552. 98. Suppose that on January 1 the exchange rate was ¥120 per U.S. dollar. On December 31 of that year, it was ¥125 per dollar. Over the course of that year, did the dollar appreciate or depreciate against the yen? Did the change in the exchange rate make U.S. goods and services more or less attractive to Japanese consumers? Explain.
  553.  
  554. Font Family
  555. Font Size
  556.  
  557. 99. Suppose that on January 1 the exchange rate was 15 Mexican pesos per U.S. dollar. On December 31 of that year, a person needed 11 pesos to buy a dollar. Over the course of that year, did the dollar appreciate or depreciate against the peso? Did the change in the exchange rate make U.S. goods and services more or less attractive to Mexican consumers? Explain.
  558.  
  559. Font Family
  560. Font Size
  561.  
  562. 100. Suppose that on January 1 the exchange rate was US$1.40 per euro. On December 31 of that year, a person needed $1.45 to buy a euro. Over the course of that year, did the dollar appreciate or depreciate against the euro? Did the change in the exchange rate make it easier or more difficult for U.S. college students to spend a semester at a European university? Explain.
  563.  
  564. Font Family
  565. Font Size
  566.  
  567. 101. Donald owns several hotels in U.S. tourism destinations. Much of Donald's hotel revenue comes from Europeans. Suppose the U.S. dollar depreciates against the euro. Explain how this will affect Donald's hotel business.
  568.  
  569. Font Family
  570. Font Size
  571.  
  572. 102. Suppose that the United States and Canada are the only trading partners in the world. What will happen to the value of the U.S. dollar if the U.S. Congress passes more restrictive import policies? Explain.
  573.  
  574. Font Family
  575. Font Size
  576.  
  577. 103. Suppose that the U.S. adopts a fixed exchange rate regime, and the target rate is €1.50 per dollar. If the current rate is €1.25 per dollar, what can the U.S. do to reach the target rate?
  578.  
  579. Font Family
  580. Font Size
  581.  
  582. 104. Suppose that China's target exchange rate for the yuan is below its equilibrium exchange rate. What is the possible disadvantage of using monetary policy to achieve the target exchange rate?
  583.  
  584. Font Family
  585. Font Size
  586.  
  587. 105. What are the costs of fixing the exchange rate?
  588.  
  589. Font Family
  590. Font Size
  591.  
  592. 106. What are the advantages and disadvantages of fixed and floating exchange rates?
  593.  
  594. Font Family
  595. Font Size
  596.  
  597. 107. Explain two purposes of devaluation and revaluation in a fixed exchange rate regime.
  598.  
  599. Font Family
  600. Font Size
  601.  
  602. 108. Explain the impact of an expansionary monetary policy in the United States, where exchange rates are floating.
  603.  
  604. Font Family
  605. Font Size
  606.  
  607. 109. Suppose the Federal Reserve is concerned about an inflationary gap, and as a result the Fed reduces the money supply. All else equal, how will this affect the value of the dollar in global currency markets? Explain.
  608.  
  609. Font Family
  610. Font Size
  611.  
  612. 110. Explain how floating exchange rates in the United States can help insulate the U.S. economy from a recession in Europe.
  613.  
  614. Font Family
  615. Font Size
  616.  
  617.  
  618. Start: 3:34 PM
  619.  
  620.  
  621.  
  622. Save
  623.  
  624.  
  625.  
  626.  
  627.  
  628.  
  629. Submit
Advertisement
Add Comment
Please, Sign In to add comment
Public Pastes
We use cookies for various purposes including analytics. By continuing to use Pastebin, you agree to our use of cookies as described in the Cookies Policy.  OK, I Understand
Not a member of Pastebin yet?
Sign Up, it unlocks many cool features!