Part A

1. In response to the coronavirus pandemic, the U.S. personal savings rate (personal saving as a percentage of disposable personal income) hit a historic 33% in April 2020.

What are the impacts of a rising savings on the U.S. pandemic-hit economy?

2. A young hoodlum heaves a brick through the window of a baker's shop. The shopkeeper runs out furious, but the boy is gone. A crowd gathers, and begins to stare with quiet satisfaction at the gaping hole in the window and the shattered glass over the bread and pies.

After a while the crowd feels the need for philosophic reflection. And several of its members are almost certain to remind each other or the baker that, after all, the misfortune has its bright side. It will make business for some glazier. As they begin to think of this they elaborate upon it. How much does a new plate glass window cost? Two hundred and fifty dollars? That will be quite a sum. After all, if windows were never broken, what would happen to the glass business? Then, of course, the thing is endless. The glazier will have $250 more to spend with other merchants, and these in turn will have $250 more to spend with still other merchants, and so ad infinitum (that is, the so-called multiplier effect).

Some people might come along and say that there is a silver lining in all of this: "broken windows" are good for business because it is going to create jobs. However, this assertion seems counterintuitive.

Source: Henry Hazlitz, "Government Spending Brings Jobs and Prosperity", in "Excuse Me, Professor: Challenging the Myths of Progressivism", Edited by Lawrnece W. Reed, 2015.

Can "broken windows" make the economy grow? Why?

Part B

1. Describe how the beer industry resembles an oligopoly and explain the conflict between MillerCoors and AB InBev, the maker of Bud Light. 2. Which four beer manufacturers were part of the "Beer Alliance?" Explain why beer demand has fallen.

3. The alcohol industry is highly demand driven, which do you think is more difficult for beer manufacturers, reviving beer demand or diversifying its product offering by producing substitutes like distilled spirits/liquor and wine?

file:///C:/Users/User/Downloads/Super%20Bowl%20Ad%20Threatens%20to%20Derail%20Beer%20Alliance%20-%20WSJ.pdf

4. Explain why American retailers like Toys R Us and Dean & Deluca survive in Japan. 5. In terms of consumer tastes and preferences and population density, explain why the brick-and-mortar retailer Tower Records maintains a strong presence in Japan

6. Read "Amazon is giving Nike a run for its money" (1 minute read.) and answer the following questions: How has Amazon contributed to the decline of the traditional brick-and-mortar stores (it's not explicit in the article, but you should be able to infer it from the article)? And how do you think this has influenced American culture positively and/or negatively?

https://www.bloomberg.com/news/articles/2019-12-10/in-japan-dead-american-brands-get-a-second-chance