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(1) The federal government is considering selling tracts of federally owned land to private developers and using the revenues to provide aid to victims of an earthquake in a foreign country. How would this policy affect the levels of federal revenues, expenditures, and deficits under a cash accounting system? What would be different under a capital accounting system?
(2) A government is considering paving a highway with a newly developed "wear-proof" material. Paving the highway would cost $2 billion today, but it would save $300 million in maintenance costs for each of the next 10 years. Use the concept of present value in maintenance costs for each of the next 10 years. Use the concept of present value to determine whether the project is worth undertaking if the government can borrow at an interest rate of 5 %. Is it worth it if the interest rate is 0 %? 10 % ? A politician says to you, " I don't care what the interest rate is. The project is clearly a good investment: it more than pays for itself in only 7 years, and all the rest is money in the bank." What's wrong with this argument and why does the interest rate matter?
(3) Suppose that demand for a product is Q-1200- 4P and supply is Q= -200 +2P? Furthermore, suppose that the marginal external damage of this product is $8 per unit. How many more units of this product will the free market produce than is socially optimal? Calculate the deadweight loss associated with the externality.
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Let us now consider a situation in which we know the timing of a change in policy but are unsure about the composition of the future policy. The association of different policy co
Since complexity theory as a tool, has not been included in the standard tool kits of our economics courses, it is pertinent to have a basic idea of before proceeding to apply to t
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Q. Show the Redistribution Policy? We know that despite policy interventions the disparity of income has been increasing in nearly all the countries. United States is highly un
explain how under the WTO differential treatment in reverse is different from the special and differential treatment
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Examine issues and decisions using the economic way of thinking; identify appropriate economic policy; communicate economics in written format Topic Upon finishing your d
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