Problem 3 (60 marks) Go to the World Bank's Doing Business database (https://www.doingbusiness.org/en/dat In the Topics' section, select three characteristics of the business environment that will affect the long-run markup, for 20 countries of your choice. First, choose the topic in the drop-down menu. Then, in the upper-right corner there is a button to export to Excel. This will download that data for all the countries in the world. In Excel sheet, select 20 countries of your choice. 1 Now go to the World Bank's DataBank database (https://data.worldbank.org/). Down- load GDP per capita (in PPP) data for the same 20 countries. Again, there is a link on the right to download into Excel (a) Justify your choice of the three indicators and explain how each of them is likely to affect the long-run markup. (10 marks) (b) For each characteristic, create a scatterplot with the characteristic of the business environment (rank) on the horizontal axis, and GDP per capita on the vertical axis. Summarize the relationship between the two variables (if any). (15 marks) (c) Explain why a good business environment may raise GDP per capita. (5 marks) (d) Why might high GDP per capita improve business environment? (5 marks) (e) From your answers to questions (c) and (d), explain the potential challenges when interpreting the relationship between two variables using a scatterplot. (5 marks Using the labour market model diagram (WS and PS) explain how a good business environment may decrease unemployment in the long run. (10 marks) () Using the labour market model diagram (WS and PS) explain how an improvement in business environment may lead to a higher unemployment rate in the long run, [Hint , think of the wage-setting curve). How is it related to labour market institu- (10 marks) tions? Problem 3 (60 marks) Go to the World Bank's Doing Business database (https://www.doingbusiness.org/en/dat In the Topics' section, select three characteristics of the business environment that will affect the long-run markup, for 20 countries of your choice. First, choose the topic in the drop-down menu. Then, in the upper-right corner there is a button to export to Excel. This will download that data for all the countries in the world. In Excel sheet, select 20 countries of your choice. 1 Now go to the World Bank's DataBank database (https://data.worldbank.org/). Down- load GDP per capita (in PPP) data for the same 20 countries. Again, there is a link on the right to download into Excel (a) Justify your choice of the three indicators and explain how each of them is likely to affect the long-run markup. (10 marks) (b) For each characteristic, create a scatterplot with the characteristic of the business environment (rank) on the horizontal axis, and GDP per capita on the vertical axis. Summarize the relationship between the two variables (if any). (15 marks) (c) Explain why a good business environment may raise GDP per capita. (5 marks) (d) Why might high GDP per capita improve business environment? (5 marks) (e) From your answers to questions (c) and (d), explain the potential challenges when interpreting the relationship between two variables using a scatterplot. (5 marks Using the labour market model diagram (WS and PS) explain how a good business environment may decrease unemployment in the long run. (10 marks) () Using the labour market model diagram (WS and PS) explain how an improvement in business environment may lead to a higher unemployment rate in the long run, [Hint , think of the wage-setting curve). How is it related to labour market institu- (10 marks) tions