Suppose a closed economy experiences a skill-biased technological change and, at the same time, a slowdown in the pace of educational advancement reduces the supply of skilled workers. According to neoclassical theory of distribution what happens to the real wages of skilled workers? Explain and support your answer with ONE labour market diagram for the skilled workers.

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MGEB05 Assignment 1 (Fall 2022) 4

Question 1 (20 points) – Topic 1 (save your answer as HW1-Q1.pdf)

The following table provides the economic data for an economy.

Year 2019 2020 2021

Price Quantity  Price Quantity   Price Quantity

  • Good 1 32 80 36 120 34 110
  • Good 2 11 150 13 160 15 180
  • Good 3 43 40 44 50 50 60
  • Good 4 51 160 58 240 54 180
  • Good 5 22 85 20 80 23 90
  • Good 6 8 340 9 360 6 320

Here is some additional information about this economy that holds true for all 3 years:

  • Unless otherwise stated, the goods are produced within the economy and the goods are consumed by local sectors.
  • Good 1 is a pure consumption good. Domestic households purchase three-fifths of that good while the remaining goes to foreign households.
  • Both households and firms purchase good 2, in which households buy 80% of that good. In addition, half of the good 2 consumed by businesses is produced outside the country.
  • Residents purchase all good 3, and a quarter of them is purchased from abroad.
  • Firms consume half of good 4 while the government purchase 30% of them. The rest is bought by foreign businesses.
  • The share of good 5 consumed by households, firms and government are 40%, 40% and 20% respectively.
  • Half of good 6 goes to the government while the remainder is equally split between households and firms. However, the country does not produce a single unit of the good.
  • The government has chosen 2020 as the base year. In the base year, both the GDP deflator and the CPI are nominalized to 100.

Based on the information given, complete the following table.

2019 2020 2021

  • (Nominal) Consumption
  • (Nominal) Investment
  • (Nominal) Government spending
  • (Nominal) Exports
  • (Nominal) Imports
  • Nominal GDP
  • Real GDP
  • GDP deflator
  • Cost of consumption basket (in CPI)
  • CPI

Note:

  • The above table is reproduced on page 3 of this assignment (so that you can print it & fill it out). You must submit that page as your answer to Question 1 with your assignment for grading.
  • Also, on separate page(s), show your work! You are required to do both; otherwise, you will receive a grade of zero for this part of the question. Keep your answer to 2 decimal places if needed.

 

Submit this page for grading; otherwise, you will receive a grade of ZERO for

Question 1.

2019 2020 2021

  • (Nominal) Consumption
  • (Nominal) Investment
  • (Nominal) Government spending
  • (Nominal) Exports
  • (Nominal) Imports
  • Nominal GDP
  • Real GDP
  • GDP deflator
  • Cost of the consumption basket
  • (in CPI)
  • CPI

 

Question 2 (30 points) – Topic 2 (save your answer as HW1-Q2.pdf)

A closed economy can be described by the long-run classical model:

Y = 2K

0.5L

0.5

C = 950 + 0.5(Y – T) – 70r

I(r) = 3000 – 30r

MPK = K

–0.5L

0.5 MPL = K0.5L

–0.5

Note: r is measured in percentage points (i.e., if r = 5, then r = 5%). Keep your answer to 3 decimal places if needed.

The economy is endowed with 625 units of capital and 10000 workers. Initially, the government collects

14% of output as income taxes and it runs a budget surplus of 100.

  1. a) Find the equilibrium levels of output, real interest rate, and investment. Also, find the long-run equilibrium real wage for labour and real rental price of capital. (5 points) Suppose the business confidence index changes from 113 to 115. As a result, autonomous investment changes by 4%.

Note: you will need to decide whether autonomous investment increases or decreases.

  1. b) Find the new equilibrium levels of real interest rate, investment, and real rental price of capital. (5 points)
  1. c) Show your answers for parts (a) & (b) in three diagrams (that depict the loanable funds market, the labour market, and the rental market for capital in long-run equilibrium). Be sure to identify which points on your diagrams are the long-run equilibria for part (a) & (b) respectively. No written explanation is required. (9 points)
  1. d) (Continued from part b) Suppose the government wants to keep the (equilibrium) level of consumption to 1798 via a change in government spending. Find the level of government spending that could achieve this goal. What happens to the budget balance (i.e., increase or decrease, and by how much)? (6 points)
  1. e) (Ignored part (d)) Now, consider what happens to the economy in the very long-run. Based on your answer in part (b), what happens to the stock of capital and level of output in the very long-run? Explain in words only. (5 points)

Question 3 (30 points) – Topics 2 & 3 (save your answer as HW1-Q3.pdf)

Suppose Canada is a closed economy and in its long-run equilibrium initially. The government increases its subsidy to capital investment projects. At the same time, the shortage of computer chips/semiconductors forces many manufactures to delay their spending on replacing depreciated machinery and equipment. In the context of the long-run classical model, examine the effects of the above events on the following variables in the long run:

  • output
  • real interest rate
  • national savings
  • real rental price of capital
  • price level

Explain your answer with the aids of ONE diagram for the market of loanable funds and ONE diagram for the rental market for capital.

 

Question 4 (20 points) – Topics 2, 3 & 4 (save your answer as HW1-Q4.pdf)

Each part of the question is NOT related to other parts and each part is worth 5 points.

  1. a) Suppose a closed economy experiences a skill-biased technological change and, at the same time, a slowdown in the pace of educational advancement reduces the supply of skilled workers. According to neoclassical theory of distribution what happens to the real wages of skilled workers? Explain and support your answer with ONE labour market diagram for the skilled workers.
  2. b) “When the aggregate price level rises faster than initially expected, borrowers with unindexed contracts will find their real interests paid on loan turn negative.” True/False/Uncertain, explain.
  3. c) Surveys by different polling organizations show that the public expects the prices will continue to rise at the pace that is faster than before. If the overall price level is determined in the money market, what happens to today’s overall price level after the release of these survey results? Explain
  4. d) The economy is in its long-run equilibrium with the size of the labour force is 5000. If the number of workers who are actively looking for job is 500 and the number of unemployed workers who find themselves a job in each month is 270, find the job separation rate.

Note: Keep your answer to 3 decimal places if needed

 

Research Brazil and the United Kingdom in relation to the above statement. Explain three differences between the two countries for the following points.

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FUNDAMENTALS OF INTERNATIONAL TRADE (FIT101C)

SPECIFIC INSTRUCTIONS TO STUDENTS

Students must ensure that they understand the question and what is required of them before attempting to answer.
This assessment covers Study Units 3 – 9 of your study guide – IMM Graduate School. (2022) FIT101C, Fundamentals of International Trade Study Guide. South Africa: IMM  Graduate School.
It is only when you use your own words that the markers can establish whether you have understood the concepts outlined in the study notes. The markers are then in a better position to offer you constructive feedback. Students are therefore required to provide their own interpretation of the questions and concepts. Simply rewriting from the study guide or a textbook will not result in any marks being awarded. Students are reminded that this is an individual effort and group submissions will be penalised.

Case Study
Celebrated North Yorkshire brewers, Theakston, believes their award–winning ales could be a potential winner in locations such as Rio de Janeiro and São Paulo. It has begun a serious investigation to see whether the company can tap into this potentially huge market. The hope is to sell its bottled rather than cask beers into this South American giant. The Masham–based company is awaiting a response to a recent batch of test samples. “Brazil’s history of trading with British brewing companies is very limited,” says Executive Director Simon Theakston. “But there’s growing world interest in craft brewing of which English brewers are leading exponents.” “The challenge is to introduce a beer of a different style and heritage to a new market. To begin with it will no doubt have curiosity value and will take time to achieve critical mass. Getting the beer on to the shelves will be the easy bit. The real measure of success will be how well consumers take them off the shelves.” “It’s early days and we’re just dipping our toes in the market. But Brazil is a big and stable economy so who wouldn’t be interested? We’re very positively orientated towards Brazil. I don’t envisage logistical issues. The key thing is what happens to the product when it gets there.” “We believe that the market for international premium beers in general is ripe for growth as Brazil becomes more international in outlook with both the Olympics and World Cup football being held there in the coming years. That together with the fact that Brazil’s economy has now overtaken our own to be the sixth largest in the world can only help drive the interest in different beer styles.”

Source;
https://www.chamber–international.com/export–import–key–markets/about–import– export–trade–with–brazil/export–company–case–study/

Instructions for completion of this assignment
-All answers need to be practical and focused towards advising / guiding Theakston in their international trade endeavours.
-No marks will be allocated for when information from the study guide is directly copied.
-Additional research is a requirement for some questions and students should indicate resources used.

Question 1 (30 marks)
While language, material culture, aesthetics and social organisation are outward signs of culture, it is a society’s religious beliefs, attitudes, values, and norms that dictate the behaviour of its members. Through this the exporter gains understanding of the practical influence that the culture of a foreign market or market segment could have on their export marketing activities. A businessperson should also demonstrate an understanding of verbal and non–verbal communication skills if he/she is to be successful in a foreign market.

Research Brazil and the United Kingdom in relation to the above statement. Explain three differences between the two countries for the following points. This is not a general discussion; your focus should be on gaining understanding of the practical influence that the culture of a foreign market or market segment could have on their export marketing activities.
1.1 Aesthetics (6)
1.2 Social Organisation (6)
1.3 Religious beliefs (6)
1.4 Sense of space (6)
1.5 Respect (6)

Question 2 (12 marks)
Companies often fail in their early attempts to export because they underestimate what is involved in exporting and do not have sufficient resources. In the case study Theakston is confident that they can their research shows that Brazil is a possible market for their product. However being able to ship a product does not necessarily make a company export ready.
Explain, in your own words, to the management of Theakston what they need to practically consider in terms of export readiness for the following points. Refer to information provided in the case study and research done in question 1.
2.1 Production Capacity and Quality control (6)
2.2 Business planning and senior management commitment (6)

Question 3 (5 marks)
Although some products may not require any alterations to sell in a foreign market, several factors may give rise to the need for some modifications. Taking the case study into consideration, what you have learned in your study guide and by answering question 1 and 2, explain in practical terms to Theakston how the import countries legal requirements may give rise to product modification.

Question 4 (20 marks)
Entering a new country/market means dealing with a different kind of customer in a foreign environment with laws and regulations that may differ radically from those of the domestic market. Explain to Theakston some of the differences that they, as exporters will face when selling across national borders. You answer should be based on information you have gathered thus far, the case study and your study guide.
4.1 Finance and logistics (5)
4.2 Documentation (5)
4.3 Customs rules and regulation (5)
4.4 Exchange Control Rules and Regulations (5)

Question 5 (8 marks)
Explain to Theakston’s management why exporting is important at an individual company level. Your explanation should be practical and incorporate material provided in your study guide and what you have learned by answering the previous questions.
5.1 Lower unit costs (4)
5.2 Spread of risk (4)

TOTAL MARKS: 75 marks

Provide a thoughtful discussion on the following topic: Does financial innovation help economic growth?

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Discussion

One of the most important contributions that high-finance people talk about is financial innovation, which includes things like securitization, creation of derivatives, risk management and hedging, and finding innovative ways of capital management. Many people claim that no country can prosper without a great financial system. But after the 2008 financial crisis, these claims have been disputed by many people.

Provide a thoughtful discussion on the following topic: Does financial innovation help economic growth?

A company had cash and marketable securities worth $200,000 accounts payables worth $51,000, inventory of $1,501,500, accounts receivables of $5,288,128, short-term notes payable worth $220,000, other current liabilities of 100,000, and other current assets of $121,800. Calculate the company net working capital and describe how managers manage the firm working capital.

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Principles of Finance

Deadline for students:

  • Course Name: Principles of Finance Student’s Name:
  • Course Code: FIN101 Student’s ID Number:
  • Semester: 1st CRN:15682
  • Academic Year: 1444/1445 H, Second Semester
  • For Instructor’s Use only
  • Instructor’s Name: Dr. Mohammad Athar Ali
  • Students’ Grade: /15 Level of Marks: High/Middle/Low

Instructions – READ THEM CAREFULLY

⦁ This assignment is an individual assignment.

⦁ The Assignment must be submitted only in WORD format via the allocated folder.

⦁ Assignments submitted through email will not be accepted.

⦁ Students are advised to make their work clear and well presented. This also includes filling in your information on the cover page.

⦁ Students must mention question numbers clearly in their answers.

⦁ Late submitted assignments will NOT be entertained.

⦁ Avoid plagiarism; the work should be in your own words; copying from students or other resources without proper referencing will result in ZERO marks. No exceptions.

⦁ All answered must be typed using Times New Roman  font. No pictures containing text will be accepted and will be considered plagiarism).

Submissions without this cover page will NOT be accepted.

Assignment Questions: (Marks: 15)

⦁ A company had cash and marketable securities worth $200,000 accounts payables worth $51,000, inventory of $1,501,500, accounts receivables of $5,288,128, short-term notes payable worth $220,000, other current liabilities of 100,000, and other current assets of $121,800. Calculate the company net working capital and describe how managers manage the firm working capital.

⦁ Your parents have given you $1,500 a year before your graduation so that you can take a trip when you graduate. You wisely decide to invest the money in a bank CD that pays 7% interest. You know that the trip costs $1600 right now and that inflation for the year is predicted to be 3%. Will you have enough money in a year to purchase the trip? Show your calculations.

⦁ If the following financial information related to XYZ Company. Total Revenues last year $970, depreciation expenses $50, costs of goods sold $450, and interest expenses $55. At the end of the year, current assets were $121 and current liabilities were $107. The company has an average tax rate of 35%. Calculate the net income for XYZ Company by setting up an income statement. (2 Marks)

⦁ Calculate the common-size balance sheet from the following information for the company: (2 Marks)

Cash 50,000 Accts/Pay 25,800

Acct/Rec 60,000 Accrued expenses 30,000

Inventories 200,500 Short-term N/P 9,700

Total Current assets 310,500 Current liabilities 65,500

Net fixed assets 132,000 Long-term debt 150,000

Total assets 442,500 Total liabilities 215,500

Owner’s equity 227,000

Total liabilities and owners’ equity 442,500

⦁ Ten years ago, Amanda Cortez invested $20,000 in an account paying an annual interest rate of 5%. What is the value of the investment today? What is the interest on interest earned on this investment?

⦁ You have just won a lottery that promises an annual payment of $120000 beginning immediately. You will receive a total of 15 payments. If you can invest the cash flow in an investment that is paying 8% annually, what is the present value of this annuity?

⦁ XXX company has forecast a rate of return of 20% if the economy booms (30% probability); a rate of return of 19% if the economy in in a growth phase (40% probability); a rate of return of 2.50% if the economy in in decline (20% probability); and a rate of return of -10% if the economy in a depression (10% probability). What is the company standard deviation of returns?

 

Compare and contrast how the different types of instruments move in the two markets over time, explaining the significance of this information for decisions on where to list. Provide specific examples to support your answer.

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5-2 Project

Risks and Returns. Use this section to analyze the risks and returns of different investment instruments in the U.S. and non-U.S. markets you selected. You may find it helpful to use online brokerage aids or other tools in conducting this analysis. Specifically, you should:

Investment Instruments. Review stock, bond, mutual fund, and commodities performance in the two markets. Be sure to:

Analyze investment returns in each of the two markets, including dividend yields, capital gains, prices relative to intrinsic values, and foreign exchange considerations associated with each of the instruments. Use relevant indicators and visual displays to help present your findings.

Explain what your analysis of returns suggests about each market’s performance and how that might affect decisions on where to list. Justify your response.

Compare and contrast how the different types of instruments move in the two markets over time, explaining the significance of this information for decisions on where to list. Provide specific examples to support your answer. For example, have certain types of instruments historically performed better in one market over another? Have certain types of instruments yielded higher returns more quickly?

Assess the risks versus returns associated with the different types of investment instruments in the two markets.

  • A.How might these trade offs affect listing decisions? Support your response with specific examples.
  • B. Interest and Inflation. Analyze how interest rates and inflation affect different investment instruments and investor decisions. Give specific examples from the two markets selected to support your answer. For example, how do inflation and interest rates affect stock, bond, and mutual fund returns in each market? How does that, in turn, affect business and individual short- and long-term investment planning?
  • C. Taxation. Would tax policies in the two markets make one a better option for IPO listing than the other? Why or why not? Give specific examples.

Why are stock valuation models dependent upon expected dividends, future dividend growth and an appropriate discount rate?

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Field of finance

Answer the following questions in your own words:

Elaborate on these two integral precepts within the field of finance that must be understood for their successful application.

The relationship between a bond’s price and the yield to maturity is an inverse relationship. Explain; make sure you don’t simply restate the inverse relationship, but explain the reasoning.

If you can remember and understand the “why”, you will never forget this important relationship. Examples are encouraged.

Why are stock valuation models dependent upon expected dividends, future dividend growth and an appropriate discount rate? be sure to review how we value any financial asset which will help dissect this answer.

 

Why is the overall cost of capital used for investment decisions even when only one source of capital will be used? Why is the cost of retained earnings equal to the firm’s required rate of return on its common stock ?

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Cost of Capital

Answer the following questions in your own words:

Why is the overall cost of capital used for investment decisions even when only one source of capital will be used (e.g., debt)?

In computing the cost of capital, are the historical costs of existing debt and equity or the current costs as determined in the market used? Why?

Why is the cost of retained earnings equal to the firm’s required rate of return on its common stock (Ke)?

If the company has the opportunity to earn a rate of return less than its cost of capital, but it will still generate a profit, should it make the investment? Why or why not?

 

Suppose the minimum wage is above the equilibrium wage in the market for unskilled labor. Using a supply and-demand diagram of the market for unskilled labor, show the market wage, the number of workers who are employed, and the number of workers who are unemployed. Also show the total wage payments to unskilled workers.

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Principles of Macroeconomics

Policies” Page: – 117 given in your textbook – “Principles of Macroeconomics”.  A case study discusses the federal minimum-wage law.

 Questions: 1

  1. Suppose the minimum wage is above the equilibrium wage in the market for unskilled labor. Using a supply and-demand diagram of the market for unskilled labor, show the market wage, the number of workers who are employed, and the number of workers who are unemployed. Also show the total wage payments to unskilled workers. (100 – 150 words – 1.25 point)

 

  1. Now suppose the secretary of labor proposes an increase in the minimum wage. What effect would this increase have on employment? Does the change in employment depend on the elasticity of demand, the elasticity of supply, both elasticities, or neither? (100 – 150 words – 1.25 point)

 

  1. What effect would this increase in the minimum wage have on unemployment? Does the change in unemployment depend on the elasticity of demand, the elasticity of supply, both elasticities, or neither? (100 – 150 words – 1.25 point)

 

  1. If the demand for unskilled labor were inelastic, would the proposed increase in the minimum wage raise or lower total wage payments to unskilled workers? Would your answer change if the demand for unskilled labor were elastic? (100 – 150 words – 1.25 point)

 

Important Note: – Support your submission with course material concepts, principles, and theories from the textbook.

 

Questions: 2       (5 Marks)

  1. Should a nation tend to export or import goods for which it has a comparative advantage? Explain. Why do economists oppose policies that restrict trade among nations? (Minimum 500 words).  (2.5 Marks)

 

  1. Maria can read 80 pages of economics in an hour. She can also read 40 pages of sociology in an hour. She spends 6 hours per day studying. (2.5 Marks)
  2. Draw Maria’s production possibilities frontier for reading economics and sociology.
  3. What is Maria’s opportunity cost of reading 120 pages of sociology?

 

 

 

 

What is interest rate risk? How does it affect fixed-income securities?

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Discussion of Bank management FIN401

5.2 Action Required:

  • To access the web page, just click on the link (If not working, copy it and paste to the URL)

https://www.investopedia.com/terms/i/interestraterisk.asp

5.3 Test your Knowledge (Question):

Q: what is interest rate risk? How does it affect fixed-income securities?

 

 

Relate the stock market crashes of 1987 and 2000 to the strong and weak versions of the efficient market hypothesis. Explain the benefits of applying concepts from other social sciences to the behavior of securities prices.

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Financial Institutions and Markets: Discussion Board week 5

Interactive activity

Explain the efficient market hypothesis.

  • Summarize the evidence for and against the efficient market hypothesis.
  • Indicate and justify the optimal investment strategy based on the efficient market hypothesis.
  • Relate the stock market crashes of 1987 and 2000 to the strong and weak versions of the efficient market hypothesis.
  • Explain the benefits of applying concepts from other social sciences to the behavior of securities prices.

5.2 Action Required:

Watch this short video:

5.3 Test your Knowledge (Question):

Summarize the efficient market hypothesis in your own words.

5.4 Instructions

  • Avoid plagiarism, the work should be in your own words
  • minimum words 200.