1- Two neighboring countries have some political differences. Because of this, one of the countries has banned the import of wine from the other country. This is an example of a(n)

• embargo.
• quota.
• subsidy.
• tariff.
• import duty.

2- Which statement is true of the North American Free Trade Agreement (NAFTA)?

• It makes it tougher for businesses in the United States to invest in Mexico.
• It provides protection for intellectual property.
• It complicates the country-of-origin rules.
• It has virtually eliminated tariffs on goods traded between the United States and Cuba.
• It enforces trade restrictions on agricultural goods.

3- If the United States limits the amount of steel imported from China in order to protect American workers and boost its own steel production, then the United States is imposing ________ on Chinese steel.

• a subsidy
• an embargo
• a quota
• a price ceiling
• a trade surplus

4- Suppose a country barters the surplus cotton it grows for wheat grown in a neighboring country. There is no exchange of currency between these countries. The type of business arrangement between the two countries can be regarded as a(n)

• countertrade arrangement.
• cartel arrangement.
• embargo.
• dumping arrangement.
• franchise.

(b) Java is sometimes said to be "dynamically typed" in that a variable whose type is (class) C can be assigned a value of (class) D provided that D extends C; conversely a variable of type D can be assigned a value of type C using a cast. By considering storage layouts, explain why the former assignment is always valid and the latter sometimes invalid. [4 marks] (c) A new programming language has the notion of "statically scoped exceptions" in which the program exception foo; void f( ) { try { void g() { raise foo; } try { BO : except (foo) { c2 } except (foo) { c1 } would execute Ci rather than C2 as the former was in scope at the raise point. By analogy with statically scoped variables, or otherwise, explain how such exceptions might be implemented on a stack. [10 marks]1. In this Iquestion1 we will use the framework of the real business cycle model to study con sumption in the bee of anticipated productivity shocks. \"relt'are ofthe representative agent is given by ifnncwvllnils: awn, (U1 f= where 63 denotes consumption1and 3'; denotes labor supply. Assuming the household is en- dowed with one unit of time1 then [I lg} represents leisure The household's budget con straint is given by Ct + Kt+1 = {1+ 1':th + Weir. {FBCl with K; denoting capital, Cg consumption1 r: the real interest rate1 and no, the wage rate. Note that we have simplied by setting capital depreciaition to zero. The rm chooses capital and labor to maximize prots given by prots = 1; ms. rJC'. where 1'; = Apart?\" {PRO} where 1" is output. and 21 is productivity. i-Ve assun:Le that at some unknown future date1 there will be an adverse productivity shoclc. Specically, there is a xed probability In that A+l r: A; and a probability 1 ,9 that A+1 = 11*. Assume initially that the adverse shock Lasts for a single period and then reverts to its constant prior value. This possible future adverse productivity shock is the only source of uncertainty in the economy. {a} Set up the Bellman equation and derive rst order conditions for households. Use recur sive notation: dropping time subscripts, and denoting future values with primes. Solve for the agent's Eulecr equation in consumption and for the equilibrium relationship be tween consumption and leisure. {b} Assume that the rm pidts the capital stool: and labor to maximize prots and solve for rst order conditions on both capital and labor. [ell List the equations of the model determining the non-stochastic steady-state values of the variables with A xed at its initial value. and solve for steady state values of G, KK,E,r,w. {d} Linearize the Euler equation and the laborleisure choice about this steady state for which A: = A, letting lowercase letters with hats denote percent deviations from this steady state1 for all variables except 1". which denotes the level deviation, not the percent deviation. \f3'. Consider the following version ofa Lucas tree model. \"Felhre of the representative agent is given by 3::(E'ulicj1 "{cl, utolsi u'llollz, u\"I{-==J~'_I i=1} where E; denotes consumption. There are two types of trees in this economy. The rst is a safe tree which produces d dividends each period. The second is a risky tree which produces 2d dividends with probability [LE and no dividends with probability ILE. The dividends from both trees are not storable. The economy starts o with each household owning one such tree. Let P: be the price at time t of a title to all future dividends from a safe tree and p; the price of all future dividends from a risky tree. Let 13:1 = .R;1 [II-g} be the timet price of a riskfree discount bond that pays one unit of consumption at time t+ 1. Finally, let It denote the consumer's nancial resources which she allocates between riskfree bonds {to}, safe stoclcs [sill , risky stocks {8:} and consumption Es}- [all \"Write down the consumer's problem in recursive form {Bellman equation] and nd the rst order conditions. \"'rite expressions for the bond Euler equation and for the stock Euler equation. {b} \"Phat is the equilibrium value for consLmiption in periods when risky dividends are high'lI In periods when risky dividends are low? Label each with superscripts h. and 1. [cl Use the values for equilibrium consumption in your rst order conditions to take the expectations writing out the rst order conditions in terms of probabilities of each state and the marginal utility of consumption in those states. Label the future price of each type of stock with an additional superscript1 31,: to denote its value when the price is high versus Low. Rearrange your rst order conditions to express prices of both stocks and the price ofbonds l-RtI} on the lefthand side. {d} tVill the interest rate [not the price of bonds} be higher or lower ifthe current period is one with high dividends? Explain. {e} Now: recognize that the current price of stocks is state-dependent and is not explicitly dependent on time. Therefore: pi'h = p31 and. so forth. Drop the time subscripts and solve for the state dependent prices of each stock price, where the state is high or low dividends. {f} Compare your solutions for the prices of the risky and safe asset for the highincome state and determine whether the risky asset or the safe asset has the higher price. Explain