(c) Suppose there is no operation cost of the insurance rm and the loading factor is zero o = 0, show that agents will have zero savings. (d) Under what conditions about o, would agents choose to have zero annuities? (e) If o = 0, how would the elimination of the annuity market aect welfare (ex-ante utility of agents)? (f) If agents optimally choose to have zero annuities, would the elimination of the annuity market aect welfare (ex-ante utility of agents)?

Competitive markets in each period for capital, the consumption good, labor and money. There is a government that has to meet the exogenous sequence of per capita expenditures, gt : To do so, it issues new money and buys output from the market. Its policy instrument is the nominal money growth rate, ; such that Ht = (1 + )Ht1: There are no cash transfers to households. The government injects money entirely by purchasing goods in the goods market for newly generated cash. (a) Using Mt+1 as period t nominal money demand, Pt as the period t price of the consumption good, rt as the rental rate on capital and wt as the wage paid per eective unit of labor, write down and solve the households problem. (b) Solve the problem faced by the rms and, write down the market clearing conditions, the government budget constraint and the transversality condition. (c) Dene a monetary equilibrium and solve for the equations that characterize the equilibri

Indian business leaders are engaged in frantic last-minute lobbying to persuade ministers not to hit their sectors with import tariffs as the government struggles to stabilise the fast-dropping rupee. New Delhi is expected to announce the details of a plan to shore up its battered currency within days, which Arun Jaitley, the finance minister, said last week would include curbs on "non-essential" imports. The government's plans would make India the latest country to turn to protectionist measures in an attempt to boost its economy. Pakistan imposed import restrictions yesterday as it battled to restore its depleted reserves of foreign currency, while the US and China are engaged in a trade war. Mr Jaitley's announcement on Friday came after the rupee dropped to its lowest ever level against the dollar, hit by worries about emerging economies generally, and specifically by concerns over India's widening current account deficit. The deficit grew to $15.8bn, or 2.4 per cent of gross domestic product, during the April-to-June quarter, New Delhi announced this month. The rupee has lost about 12 per cent against the dollar this year. Officials are now drawing up a list of items that could fall under the new restrictions, with gold, textiles, electronics and telecoms equipment all reportedly under consideration. But business groups are urging the government to limit the number of goods that will be targeted, warning the measures inadvertently risk hurting exports. "You cannot target such a broad base of things," said one business leader who did not want to be named. "Many of these goods are used as inputs into exported goods, or in widely used domestic items. It would have the opposite effect to what they want to achieve." Telecoms companies, for example, import about 90 per cent of their network equipment, including receivers, antennas and routers. They say it would not be possible to buy such items domestically. Rajan Mathews, director-general of the Cellular Operators Association of India, said: "Mobile operators cannot immediately substitute their imports for domestically made goods. "If they have to pay more for these items, mobile users will pay more. If they cannot buy them, they will hold back on developing mobile infrastructure." One of the most sensitive items reportedly under consideration is gold, which is used across India as a common means to store wealth, and is also used extensively in jewellery exports. Colin Shah, vice-chairman of the Gems and Jewellery Export Promotion Council, said: "While they want to bring in import curbs, they also want to increase exports." He noted that the import duty on gold and silver had already been raised from 2 to 10 per cent over 15 months from March 2012. Analysts warned that restrictions on steel imports would damage industries such as construction and car making. Amit Dixit, an analyst at Edelweiss Securities, said: "[Steel import restrictions] would be a boon for steelmakers but downstream industries would definitely suffer." Officials must also be careful not to break World Trade Organization rules. India is already under pressure at the WTO, having been challenged by the US over six different export subsidy schemes, worth a total of $7bn. an PDF GENERATED BY PROQUEST.COM Page 1 of 3 economics professor at Jawaharlal Nehru university. Mr Dhar said these rules could be bent, but only if there was an impending crisis. "We still have enough foreign currency to cover eight months' worth of imports," he said. "That is not likely to be bad enough for the WTO."

1. Discuss why the Indian government levied new tariffs on a wide range of imported goods. Can any of the trade theories explain the government's underlying motivation?

2. Discuss how the new tariffs would damage local manufacturing in India. Use an industry to illustrate your answer.

3. Based on the article, suggest strategies for multinational companies with India as a) the top export market and b) the key overseas manufacturing site in facing the new tariff

PLEASE MAKE SURE TO INCLUDE REFRENCES

Introduction

Imagine that you are a financial manager researching investments for your client. Think of a friend or a family member as a client. Define their characteristics and goals such as an employee or employer, relatively young (less than 40 years) or close to retirement, having some savings to research the stock of any U.S. publicly traded company that you may consider as an investment opportunity for your client. Your investment should align with your client's investment goals. (Note: Please ensure that you are able to find enough information about this company in order to complete this assignment. You will create an appendix, in which you will insert related information.)

Instructions

Your final financial resg and be completed in two parts. This assignment only covers the first part. This assignment requires you to use at least five quality academic resources and cover the following topics:

Rationale for choosing the company in which to invest. Ratio analysis. Stock price analysis. Recommendations. Refer to the following resources to assist with completing your assignment: [4:05 AM, 11/7/2021] Flo: This exercise is designed to test your knowledge and skills in shopping for auto insurance and demonstrate how insurers price and underwrite this coverage. You may obtain quotes from or or or any other insurance company's website you prefer. You will be asked to provide certain information in order to obtain a quote. You should be prepared to answer the questions accurately. (One suggestion: You may want to create a new email for this project in order to avoid tons of emails later.) Please use the coverage provisions listed below when you are asked questions about the coverage you want. Finally, you must answer the questions about your shopping experience below and attach a PRINTOUT of ALL the quotes (2 quotes by 3 questions = 6 quotes in total) you received in PDF file. (You DO NOT need to really purchase an auto policy, and the school will not be responsible for your premiums. Please answer the questions below in your project report and they must be presentable and legible).

Underwriting Information:

Name:____________ Age: ____________ Year/Make/Model: ________

Coverage:

Liability Limits: 50,000/100,000/25,000 Medical Payments: $10,000 Uninsured/Underinsured Motorists: 50,000/100,000 Comprehensive Deductible: $500 Collision Deductible: $250 Decline any other coverage

1. What were the amount of the quotes you received from the insurance companies (you must obtain quotes from at least two insurance companies' website)? If the quotes you received differ, why might they vary (be specific)?

2. After you have received quotes based on the above coverage choices, change your comprehensive deductibles to $1000, collision deductible to $500, and obtain revised quotes. (1) How do the quotes change and why? (2) What are the costs and benefits of having low deductibles versus high deductibles?

3. Starting with the second quotes you received (i.e. with the $1000 comprehensive deductible and $500 collision deductibles), change your liability limits to 100,000/300,000/50,000 and your Uninsured/Underinsured limits to 100,000/300,000. (1) How do the quotes change and why? (2) What are the costs and benefits of the increase in policy limits? (3) How does the premium change of lower deductibles compare with the premium change of increased limits? Which one, deductible or coverage amount, is more expensive? (4) What does this imply about optimizing your expenditures on auto liability insurance (given a budget)?

This exercise is designed to test your knowledge and skills in shopping for auto insurance and demonstrate how insurers price and underwrite this coverage. You may obtain quotes from or or or any other insurance company's website you prefer. You will be asked to provide certain information in order to obtain a quote. You should be prepared to answer the questions accurately. (One suggestion: You may want to create a new email for this project in order to avoid tons of emails later.) Please use the coverage provisions listed below when you are asked questions about the coverage you want. Finally, you must answer the questions about your shopping experience below and attach a PRINTOUT of ALL the quotes (2 quotes by 3 questions = 6 quotes in total) you received in PDF file. (You DO NOT need to really purchase an auto policy, and the school will not be responsible for your premiums. Please answer the questions below in your project report and they must be presentable and legible).

Underwriting Information:

Name:____________ Age: ____________ Year/Make/Model: ________

Coverage:

Liability Limits: 50,000/100,000/25,000 Medical Payments: $10,000 Uninsured/Underinsured Motorists: 50,000/100,000 Comprehensive Deductible: $500 Collision Deductible: $250 Decline any other coverage

1. What were the amount of the quotes you received from the insurance companies (you must obtain quotes from at least two insurance companies' website)? If the quotes you received differ, why might they vary (be specific)?

2. After you have received quotes based on the above coverage choices, change your comprehensive deductibles to $1000, collision deductible to $500, and obtain revised quotes. (1) How do the quotes change and why? (2) What are the costs and benefits of having low deductibles versus high deductibles?

3. Starting with the second quotes you received (i.e. with the $1000 comprehensive deductible and $500 collision deductibles), change your liability limits to 100,000/300,000/50,000 and your Uninsured/Underinsured limits to 100,000/300,000. (1) How do the quotes change and why? (2) What are the costs and benefits of the increase in policy limits? (3) How does the premium change of lower deductibles compare with the premium change of increased limits? Which one, deductible or coverage amount, is more expensive? (4) What does this imply about optimizing your expenditures on auto liability insurance (given a budget)?

3. (2 points) Jack is an exponential discounter with = 1, = 1/2. When will Jack do the problem set? Explain in words why Jack and Amy do the problem set at different times. 4. (3 points) Bob is a fully naive hyperbolic discounter with = 1 4 , = 1, and = 1. That is, Bob is present-biased, but he does not take into account his future present bias when making decisions. When will Bob do the problem set? 5. (2 points) On day 0 (before day 1), if you ask Bob when he'll get the problem set done, what will he predict - assuming that he is too busy on day 0 so that day 0 itself is not an option? 6. (3 points) Carol is a fully sophisticated hyperbolic discounter with = 1 4 , = 1, and = = 1 4 . That is, Carol is present-biased, but she fully takes into account her future present bias when making decisions. When will Carol do the problem set? Explain in words why Carol and Bob do the problem set at different times. 7. (4 points) Marlon is a partially naive hyperbolic discounter with = 1 4 , = 1, and = 4 . Marlon is 5 present-biased and has illusions about his amount of present bias at future periods. When will Marlon do the problem set? (Hint: According to the partial naivet model, at each period Marlon predicts his future behavior to be that of a fully sophisticated hyperbolic discounter with discount factor . Suppose now that a big snowstorm is announced for days 3 and 4. Doing the pset during the snowstorm is even worse because everybody else can go skiing/snowshoeing. Only Marlon is unaffected because he misses the warm weather of Sicily and hates going out in the snow, thus we will ignore him for this question. For everyone else, the instantaneous utility costs of doing the problem set in periods t = 1, 2, 3, 4 is now 9, 20, 84 and 88, and everyone perfectly anticipates these utility costs from Day 0. 8. (2 points) When will Bob do the problem set? 9. (2 points) Does the snowstorm affects Bob's long-term utility, as evaluated by his period t = 0 self? In what direction? No action can be taken in period t = 0 - think of period t = 0 as a very busy day. 10. (2 points) When does Carol do the pset? How is her long-term utility (from day 0) affected by the snowstorm? Why? Now suppose that a Californian tech startup, SnowBiz, can trigger or prevent a snowstorm for a fee. 11. (2 points) On day 0, SnowBiz goes and asks Bob whether he wants to pay them to create the snowstorm described in question 8. Is Bob willing to pay anything for this snowstorm? What could SnowBiz do to increase his willingness to pay? 12. (2 points) On day 0, SnowBiz goes and asks Carol whether she wants to pay them to prevent the snowstorm. How much is Carol willing to pay? Assume that 1 util in day 0 is worth 1 dollar. 13. (2 points) Why are things so different for Carol and Bob? Think of the snowstorm as a commitment device. Why is it the case that it helps Bob but it hurts Carol? What is the lesson here about commitment devices?

Question 1: Estimating Yearly Discount Factors (10 Points) In this question you should assume that is defined for a year and that a year is 365 days. You should also assume that is defined for a time unit of a day, so that anything that is in the future for the purpose of the question is discounted by (be it a day from now or a year from now), times the relevant amount of (i.e. time in years). Paul is a human being. Richard is a behavioral economist trying to understand Paul's preferences. Richard asks Paul: how much money tomorrow makes you indifferent with 10 dollars right now? Paul answers: 11 dollars. 1. (2 points) First, Richard makes the assumption that Paul has very simple preferences over time: he assumes that Paul is an exponential discounter. What is Paul's implied yearly discount factor given his answer? 2. (2 points) Next, Richard assumes that Paul is a quasi-hyperbolic discounter with = 0.91. What is Paul's implied yearly discount factor given his answer? When Richard gets back to his office, he regrets not having asked Paul: how much money two years from now makes you indifferent with 100 dollars one year from now? 3. (2 points) What would Paul have answered if he was in fact an exponential discounter? 4. (2 points) What would Paul have answered if he was in fact a quasi-hyperbolic discounter with = 0.91? 5. (2 points) After this thought exercise, what do you think is a more plausible model of Paul's time preferences (or of anyone who is indifferent between 10 dollars right now and 11 dollars tomorrow)? Problem 2: Optimal laptop policy in class (20 Points) In Lecture 1, I introduced a policy problem: "What is the socially optimal policy regarding laptops (and other electronic devices) in 14.13?" I'll refer to this in shorthand as the 'laptop policy.' Note that we are only deciding about the laptop policy for our own course, 14.13. Assume that all other courses have their own (independent) laptop policies. For the purposes of this problem set, let's use a Utilitarian criterion for social optimality (where the targets of the Utilitarian analysis are MIT students). In other words, the socially optimal laptop policy is the policy that maximizes the average welfare of all MIT students. As you analyze the laptop problem, remember that you are contemplating any possible laptop policy in 14.13, not necessarily the one that was actually chosen. 1 1. (5 points) Explain why a laptop policy in 14.13 has potential welfare implications for MIT students who end up dropping the class rather than only for the ones who actually enroll in the class. Why might we concern ourselves with students who do not end up enrolling in the class? Why does the existence and behavior of these non-enrollees influence the socially optimal laptop policy? Let us now consider the following potential polices: (a) Laissez-faire, i.e. no restrictions - let students do whatever they wish to do. (b) Ban laptops for everyone. (c) Make the no-laptop section the default and allow students to opt out (of the no-laptop section). (d) Make the laptop section the default and allow students to opt out (of the laptop section). (e) Set up an active choice between the laptop and no-laptop sections. 2. (10 points) Select your most and least preferred policy and discuss, for each of them, one classical economics and one psychological reason for or against them, as opposed to the course actual policy. 3. (5 points) How would you go about measuring the effects of your preferred policy relative to the course's actual policy or other potential policies? Assume that you have unlimited resources for this policy evaluation exercise. Question 3: Procrastination of 14.13 problem sets (30 Points) Amy, Jack, Bob and Carol are students in 14.13. Suppose the deadline for their first problem set is approaching it is due in 3 days from today, so they can do the problem set on any of four days, t = 1, 2, 3, 4 (where t = 1 is today). The instantaneous utility costs of doing the problem set in periods t = 1, 2, 3, and 4 are 9, 20, 30, and 40 utils, respectively, as shown in Table 1 (note that all these are negative). Assume that the problem set takes only one day to complete, late submissions are not an option, and the world ends if the problem set is not finished at all, i.e. at the beginning of day t = 4, if the problem set is finished by then, the student will begin, finish, and turn it in on day t = 4. Period t u(Psett = 0) u(Psett = 1) 1 0 -9 2 0 -20 3 0 -30 4 0 -40 Table 1: Instantaneous utility of (not) doing the problem set Each student's utility function is as follows: ( P4 t u(Psett) + u(Pset ) for 1 t 3, =t+1 Ut = (1) u(Psett) for t = 4. where u(Psett) is the (negative) instantaneous utility of doing the problem set on day t with Psett = 1 if the student works on the problem set in period t and Psett = 0 if the student does not work on the problem set in period t. 1. (2 points) Briefly explain this utility function. What do the parameters and measure? What do we typically assume about these parameters? 2. (2 points) Amy is an exponential discounter with = 1, = 1, i.e. she does not discount the future at all. When will Amy do the problem set?

Problem 1: Solve the Merton Consumption problem assuming that () = ln() Do not set = 1 as we did in class. Instead, solve the problem from scratch assuming () = ln() When you guess the value function, try this functional form: () = ln() + constant Problem 2: True/false/uncertain. Quality of explanation determines grade. 1. The variance of () (0) increases linearly with if is any Ito Process.