1. Suppose that the economy of Loserville has the following distribution of income: first quintile 5% of aggregate income second quintile 10% of aggregate income third quintile 15% of aggregate income fourth quintile 20% of aggregate income fifth quintile 50% of aggregate income a. From the information provided, please derive a Lorenz Curve for Loserville. Show graphically. b. From the Lorenz Curve you have drawn, find the Gini Coefcient. 2. Suppose that a ton of steel currently sells for $4,000 in the United States, and for 2,000 in Germany. The exchange rate is 1 = $1.50, and it costs $500 to ship a ton of steel between the United States and Germany. a. Can you get rich in this market? Why or why not? Explain. b. In the long run, what would you expect to happen to the price of steel in the U.S. and Germany? What would be the price differential? c. Assume that prices are fixed. According to Purchasing Power Parity Theory, how will exchange rates adjust? 3. To find the U.S. balance of payments data, go to http://wwwbeagov From the BEA home page, click on "Balance of Payments'I under "International", and then click on "Latest News Release ". After reading the news article, answer the following questions: a. What are the recent trends in the U.S. trade decit in the past quarter? Why? b. What are the major components of the Balance of Payments that are discussed in the article? Briey, how have these been moving in the recent past