1. Answer this question below

1. Why is money important? Explain function and types of money.
2. Briefly explain the purpose of an AD dnd AS curve and describe the characteristics of a typical AD and AS curve.
3. Briefly discuss the wealth effect, interest rate effect, and exchange rate effect.
4. Use supply-demand model to explain how inflation drives up prices and drives down the valuE of money.
5. Why money supply in long run does not affect real variables (real GDP, real interest rate, real wage, ...)?
6. Why do country import or export? Explain with concise examples.
7. What factors can affect a country's net exports? Explain with examples.
8. A typical country can increase its citizens' welfare by enacting policies that would increase its trade surplus (or decrease its trade deficit). Do you agree? If so, why? write answer in essay style (at least three paragraphs).
9. Explain why aggregate supply curve in sort-run slopes upwards (based on sticky-wage theory, sticky-price theory, and misperception theory) and why it is vertical in long-run.
10. Explain why net exports equal net capital outflow, with concise examples.

2. PROBLEM SOLVING

1. We assume there is only one good, cassava, existed. The economy has enough labor, capital, and land to produce real GDP (Y) = 1.5 million tons of cassava. Velocity (V) is constant. In 2022, money supply (MS) = $46 million, Price (P) = $1500/ton. For 2023, the NBC increases money supply by 10%.

A. Compute the 2023 values of nominal GDP and P. Compute the inflation rate for 2022- 2023.

B. Suppose technological progress causes Y to increase to $2 million in 2023. Compute 2022-2023 inflation rate.

2. Suppose Cambodia's adult population (15 and above) in 2023 comprises of 8,900,000 employed, 120,000 unemployed, and 4,500,000 not in the labor force. Compute the labor force, u-rate, adult population, and labor force participation rate.

3. Suppose we have the following information: A. Thailand has 100,000 hours of labor available for production, per month

a) Producing one computer requires 80 hours of labor

b) Producing one ton of rice requires 20 hours of labor

c) Suppose Thailand produces 3800 tons of rice. How many computers would Thailand be able to produce with its remaining labor? Draw the point representing this combination of computers and rice on Thailand's PPF.

B. Cambodia has 40,000 hours of labor available for production, per month.

a) Producing one computer requires 100 hours of labor.

b) Producing one ton of rice requires 20 hours of labor.

c) Suppose Cambodia produces 320 computers. How many tons of rice would Cambodia be able to produce with its remaining labor? Draw this point on Cambodia's PPF.

C. Which country has absolute and comparative advantages in computer?

D. Suppose Thailand exports 800 tons of rice to Cambodia, and imports 120 computers from Cambodia. (Cambodia imports 800 tons rice and exports 120 computers.)

a) How much of each good is consumed in Thailand? Plot this combination on Thailand's PPF.

b) How much of each good is consumed in Cambodia? Plot this combination on Cambodia's PPF.

c) How much each country gains from trade?

4. Suppose Cambodia's GDP equals KHR300 trillion, consumption equals KHR130 trillion, the government spends KHR40 trillion and has a budget deficit of KHR6 trillion. Find public saving, net taxes, private saving, national saving, and investment.

5. While cleaning your apartment, you look under the sofa cushion and find a $50 bill (and a half- eaten taco). You deposit the bill in your checking account. The NBC's reserve requirement is 20% of deposits.

A. What is the maximum amount that the money supply could increase?

B. What is the minimum amount that the money supply could increase?

6. Suppose $200 of currency is in circulation. To determine banks' impact on money supply, please calculate the money supply in the following cases:

A. No banking system

B. 100% reserve banking system (banks hold 100% of deposits as reserves, make no loans)

C. Fractional reserve banking system, reserve requirement is 15%.

7. Draw the AD-SRAS-LRAS diagram for the Cambodia's economy starNng in a long-run equilibrium. Suppose there is a recession occur in Thailand. Use your diagram to determine the SR and LR effects on Cambodia's GDP, the price level, and unemployment.

8. Suppose Cambodia's exchange rate is e = 27 Riels per Japanese Yen, price of Coca Cola in Cambodia is 2500 Riles, while it is 250 Yen in Japan :

A. What is the price of a Cambodia's Coca Cola measured in Yen?

B. Calculate the real exchange rate, measured as Yen lanes per Cambodia's Coca Cola, and interpret the results.

9. What happens to the AD curve in each of the following scenarios? Draw diagram for each scenario.

A. A ten-year-old investment tax credit expires.

B. The U.S. exchange rate falls.

C. A fall in prices increases the real value of consumers' wealth.

D. State governments replace their sales taxes with new taxes on interest, dividends, and capital gains.

10. Suppose we have the following informaNon A. Figure (A): DomesNc price of cassava (PD) is 2$, world price (Pw) is 4$ per kg. Under free trade, how many kgs of cassava will the country import or export? identify CS, PS, and total surplus without trade, and with trade.

A 45 B D 2$ C 500 1000 1500A 45 B D 2$ C 500 1000 1500