Category: Economics

Which of the following was an advantage associated with the free banking system in place in the United States during the 19th century prior to the development of the Central Bank?
Currency traders could make a living trading currency between cities.
Individuals had difficulty judging the value of a note printed by an unknown bank.
The banking system created a very stable form of currency.
If a bank in one city went bankrupt, people in other cities would not hear about it for several weeks.
Here are all the tutorials from Unit 3. Use them as needed throughout the Unit 3 Milestone.
Unit 3 Tutorials
3.1 History of Money and the Central Bank
3.1.1 History of Money
3.1.2 Gold Standard
3.1.3 Fractional Gold Standard/Fiat Currency
3.1.4 History of the Central Bank
3.1.5 Central Banks
3.1.6 U.S. Central Bank: Federal Reserve
3.2 Monetary Policy
3.2.1 Money Supply and Interest Rates
3.2.2 Interest Rates
3.2.3 M0, M1, M2
3.2.4 Reserve Requirement and the Money Multiplier
3.2.5 Open Market Operations
3.2.6 Federal Funds Market
3.2.7 Discount Rate
3.2.8 Goals of Monetary Policy
3.2.9 Overview of Expansionary and Contractionary Monetary Policies

[Related to the Economics in Practice in this section] Some employers offer tuition reimbursement for their employees who wish to further their education. Do a Web search to find a list of companies that contribute to tuition for their employees. Look for similarities among these companies and then answer the following question.
Part 2
Why might some companies choose to reimburse their employees for tuition, considering that education can be a source of wage inequality and higher levels of education often command higher wages? (Check all that apply.)
A. Tuition assistance induces employees to stay longer with the company as they make use of the benefit, and this saves employers on the substantial costs of searching for and hiring new employees.
B. Tuition assistance is often mandated by some level of government.
C. Tuition assistance can give employers a hint as to which of their workers possess superior ability.
D. Tuition assistance programs allow firms to hire better quality, more educated, more productive employees.
E. Tuition assistance for courses irrelevant to the employees’ jobs can benefit employers by, for example, helping workers reduce stress.

1. The effects of scaling data on OLS statistics
Suppose a data set of 1388 observations (N = 1388) was analyzed using OLS to examine the factors that influence the birth weight of children. The regression results are as follows, with standard errors in parentheses:
bwght^ = 116.97 (1.05) − 0.46 (0.09) cigs + 0.93 (0.03) faminc
where
bwght = birth weight, in ounces
cigs = number of cigarettes smoked by the mother while pregnant, per day
faminc = annual family income, in thousands of dollars
R
2
= 0.021
SSR = (10,000)
SER = (1,000)
Suppose you would like to measure the dependent variable bwght in grams, rather than ounces. Let bwghtg be the birth weight measured in grams.
Hint: There are approximately 28.35 grams per ounce.
Without rerunning the regression, you know that after transforming your regression to change the units of the dependent variable, your new slope parameter β1^ would be 28.35. You also know that the t statistics as well as the R-squared, for the regression with bwght as the dependent variable, are those of the regression with bwghtg as the dependent variable.

3. LIST AND EXPLAIN THE 4 MAIOR CHARACTERISTICS OF CAPITALISM. EXPLAIN EACH FULLY.
4. EXPLAIN THE CONCEPT OF OPPORTUNITY COST. WHAT ECONOMIC MODEL ILLUSTRATES THIS CONCEPT? DRAW AND EXPLAIN IT. PROVIDE AN APPLICATION OF OPPORTUNITY COST IN YOUR PERSONAL LIFE.
6. WHAT IS THE FEDERAL RESERVE BANK? WHAT IS ITS ROLE IN OUR ECONOMY? DESCRIBE ITS STRUCTURE, DESCRIBE A CURRENT POLICY ACTION TAKEN BY THE FED.
7. WHAT TOOLS ARE USED BY THE FEDERAL RESERVE TO IMPLEMENT MONETARY POLICY? INDICATE SPECIFICALLY HOW EACH OF THESE TOOLS COULD BE APPLIED IF A RECESSION WAS ANTICIPATED. GIVE EXAMPLES OF THE FED’S ACTION IN OUP CURRENT ECONOMIC SITUATION.
8. WHAT IS THE COMPOSITION OF THE U.S. MONEY SUPPLY? WHAT ARE THE FUNCTIONS OF MONEY? PROVIDE AN EXAMPLE OF EACH FUNCTION. WHAT IS M1 AND M2? BRIEFLY DESCRIBE YOUR USE OF MONEY IN YOUR EVERYDAY LIF

Question 1(a)Suppose that the instantaneous per capita utility of a representative household is given by u(c)=cφ, φ < 1. c(t) is the per capita consumption. Population grows at the constant rate, n and L(0)=1. The discount rate is ρ > 0. The representative household uses its financial asset to provide capital services to firms. There is no intra-household borrowing or lending. Household income, both labor income and capital income, is generated from production. Assume that the technology displays constant returns to scale and households supply inelastically one unit of labor input to production. Thus, we have: Y(t)=K(t)α*[A*L(t)]1-α; α < 1. Here, A is a productivity parameter which is constant, K(t) is aggregate physical capital and L(t) is aggregate labor. K(0) is given and K is asymptotically bounded. There is no depreciation of capital. Firms are perfectly competitive and are identical. Therefore, we can consider a representative firm. (i) Set up the household's dynamic optimization problem subject to the budget constraint and the terminal condition. (ii) Set up the Hamiltonian function and derive the Euler equation. (iii) Set up the profit maximiza

Match the terms with their definitions. Question 11 options:
1234567 tax on imports
1234567 resource output with a given input between two goods often expressed algebraically as equality between the X and Y axis of a PPC
1234567 being able to produce at a lower opportunity cost (greater efficiency) than someone else
1234567 having a greater efficiency (more output/input) in producing a good compared to another nation
comparative advantage
tariffs
absolute advantage
cost ratio
law of increasing cost in trade
quota
intensities of trade
Question 12 (5 points) Only nations with the same cost ratio can expect to gain from trade. Question 12 options:
True
False
Question 13 (5 points) Check each of the following that apply to trade. Question 13 options:
voluntary trade benefits both countries
occurs because of the uneven distribution of resources among nations
there is economic advantage for nations to gain unavailable resources exchanging for abundant resources
trade provides benefits from economies of scale and labor specialization
due to economies of scale, as higher output is produced for trade, average costs may increase basic trade analysis dates back to John Maynard Keynes in 1936