Consider the Australian economy in 2017. At this time Australia economic growth was primarily being driven by a mining boom built on China's demand for Australian coal and iron ore. Assume that the Australia economy can be represented using a 4-sector multiplier model and the following hypothetical information: (All amounts are expressed in $m) c0 = 700, I = 1,500, G = 2,000, X = 1,200, c1 = 0.7, t = 0.15 and m = 0.095 a) What is the equation for aggregate demand (AD) in the Australian economy in 2017? (2 marks) b) Calculate the equilibrium value of income (GDP) in the Australian economy in 2017 and represent this on a fully labelled multiplier model diagram. Label all relevant axes, axis-intercept points, equilibrium points and curves on your graph. (4 marks) c) Assume that in 2018 the Australian economy experiences a decrease in demand for its coal from China due to a trade war between these two countries so that in 2018 the value of Australian exports is $1,000m. Write down the equation for AD in the Australian economy in 2018 and calculate the level of equilibrium GDP in 2018. (3 marks) d) Represent the situation described in c) in a multiplier model diagram. Show on a diagram and describe in words, the first two rounds of the multiplier process following the decrease in export spending. Include in your answer the relevant calculations for these two rounds of the multiplier process. (8 marks) e) What was Australian government's budget outcome for 2017 and 2018? Has the Australian government's budget position improved, deteriorated or not changed between 2017 and 2018. (3 marks)

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Mark wants to maximize his expected utility. His preferences are represented by the utility function U(y) = y 1 2 where y is a monetary payoff. Mark is offered the following bet on the toss of a coin by Amanda; If the coin comes up tails Amanda pays Mark 1, 000 If the coin comes up heads Mark pays Amanda 1, 000 Mark's initial capital is 10, 000 which he retains in its entirety if he does not take the bet. 1. What is Mark's expected utility if he accepts the bet? 2. Will he accept the bet? Explain your answer. 3. Is Mark risk averse, risk neutral or risk loving? Explain your answer.

At each node in the game the player can either move down, which means the game stops, or move right, which means that the game is passed to the other player. The two cycle game is depicted in Figure 1. Trinny's pay-off is given first. R R R D D D (2,2) (1,0) (0,2) (3,1) T1 S1 T2 Figure 1: 1. Solve the game by backward induction 2. Show that the outcome is inefficient. 3. If the game was extended to 100 cycles, with the pay-offs increasing in a similar manner, as represented in Figure 2, how would this affect the outcome of the game?

Assume an entrepreneur has two projects to choose. Both require $100 investment. Assume the entrepreneur is risk-neutral.

Safe project: returns $140 for sure

Risky project: Returns $ 200 with 50% chance and $50 with 50% chance.

A. Calculate total Expected return on each project for the entrepreneur

B. What is his net return (i.e. his profit = Expected return minus his investment) if he had his own money to invest in a project? Which project will he choose?

C. What is his net return if he borrows from a bank with limited liability at 10% interest rate? (in this example in the low payoff state he will pay $50 to the bank as his liability is limited to what he has in his business)? Which project will he choose?

D. What is Bank's expected return in each case (assume 10% interest rate)? Which project will bank prefer?

E. What is social net return on each project (i.e. entrepreneur's return and bank return)? Which project is optimal from societal point of view?

F. If bank required collateral of $100, what would be entrepreneur's return in each case? Which project will entrepreneur choose?

G. If 50% of all borrowers are safe and 50% are risky, what interest rate bank will need to charge to break even if no collateral is required?

Suppose that there are 2 countries deciding whether to submit a proposal to host an international sporting event. It costs k > 0 to submit a proposal and the value of hosting the event to both countries is v > k. If country i (i = 1 for country 1 and 2 for country 2) submits a proposal then i must also choose the size of a bribe bi 0 to pay. The bribe is paid regardless of whether country i wins or not. When both countries submit a proposal, the country that pays the biggest bribe wins the right to host the tournament, and in the event that the bribes paid are the same size, each country wins with probability 1/2. If just one country submits a proposal that country wins and if no country submits a proposal then no one hosts the tournament.

(a) Are there any pure Nash equilibria of this game?

(b) Find a symmetric mixed strategy Nash equilibrium in which each coun- try submits a proposal with probability 0 < p < 1 and, when submit- ting a proposal, each firm submits a bribe drawn from a continuous1 CDF F, with F(0) = 0, F(v k) = 1 and that is strictly increasing in the interval [0, v k]. Find F and p.

The objective of this activity is to understand the labor data of Puerto Rico. You should read the most recent report from the Department of Labor and Human Resources that is included in the assignment. (www.trabajo.pr.gov). Based on the data in the report, you must answer the questions given about the relevant aspects of that period.

Questions:

A. How jobs are distributed by educational level and by occupational group

B. Present the change in the unemployment rate from the month and the previous year.

C. Present the labor participation rate and its most recent changes.

Question 1

Explain the difference between a change in supply (or demand) and a change in quantity supplied (or demanded).

Question 2

I was wondering what some examples of future expectations may be from the citizens? For example, may future expectations of the water usage going up or the water prices lower? I understand that you said that the sellers anticipate a cheaper price but why would that cheaper price be necessary for the future? If you could add some details about that I would love to read your input on that. Nonetheless, you have answered these questions wonderfully.

Let US be the home country and Canada be the foreign country. Suppose that Canada experiences a temporary decline in their real GDP. Assume all else is constant.

Consider the FX market and the money market diagrams we learned within the asset approach to exchange rate determination and answer the following questions accordingly. Explain when the questions ask you to explain. Do not include graphical illustrations in your submitted answer but feel free to draw them on a paper as they will help you develop your answer.

[5 points] What happens in Canada money market following the policy change? Explain any changes in the graph. [5 points] What happens in the FX market following the policy change? Explain any changes in the graph. What happens to [5 points] How does the equilibrium spot exchange rate E$/CD change? Why (3 points)?