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Assignment
Each answer should consist of one or two paragraphs that contain analysis (not opinion).
1. Explain the incentives faced by a Federal Drug Administration drug inspector whose deliberations will determine whether a drug is allowed to be produced or sold to Americans. How is it possible for them to ignore those who die from delayed introduction of a drug?
2. What is the difference between an invention and an innovation? Explain why inventions may not become commercially viable.
3. Who is likely to have better information about safety and the strongest incentive to safely provide air travel services: airlines or FAA regulators? Would you feel safer flying in Air Force One or a regularly scheduled flight, both of which are regulated by the FAA?
4. The wealth of a nation can come from tangible and intangible sources. Explain which is likely to be most important in wealthy nations like the United States? What role do property rights enforcement and enforcement of contracts have in generating wealth?
5. Is access to the house or apartment in which you live open or closed? If it is currently a closed access resource, how would the dwelling likely be treated differently if it were converted to an open access resource - one that anyone could use at any time in any way she chose?
Why might it be difficult for the Fed to formally adopt inflation targeting? Would inflation targeting be a good policy for the Fed in the present economic environment
In using the Taylor Rule as a guideline for monetary policy, what are the pros and cons of using forecasted values of inflation and output rather than observed values of these variables?
Describe the present economic crisis situation in Europe. Why has it been so difficult for the Europeans to find a solution to this problem? Comment on what implications the crisis may have for the rest of the world if Europeans are not able to ag..
Question:. Explain why there are long-term Federal government budget problems. Explain why the base-line forecast of the CBO is misleading.
Question based on Derive and compare demand curve, Derive Ambrose's demand function for peanuts. How does it compare with Johnny's demand curve for peanuts?
Problem based on Utility Function - Problem, Answer and explain the following using a diagram which is completely labeled.
Question based on Laffer Curve : Tax Rate and Tax Revenue, Do raising tax rates necessarily raise tax revenue? What factors affect how tax revenue changes when tax rates change?
Problem - Income Elasticity of Demand, Interpret the following Income Elasticities of Demand (YED) values for the following and state if the good is normal or inferior; YED= +0.5 and YED= -2.5
Question Positive Balance of Payment: "Things will look good for the US if we could just get to where we are consistently running a positive Balance of Payments."
Comment on the effect of a recession on the investment curve (only) and on the level of savings, investment, and the equilibrium real interest rate in the financial crisis that hits United States first starting in fall 2007.
How will a fall in domestic investment affect the trade surplus and net capital outflows in the domestic economy, the trade deficit and capital inflows in the rest of the world.
Banking crises crisis decreases depositors' confidence in the banking system. What would be the effect of a rumor about a banking crisis on checkable deposits in such a country?
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