Que 1.

Answer ALL the parts. Post a CLEAR AND STEP BY STEP EXPLANATION. Do not post incomplete solutions

Consider a two-period small open endowment economy populated by a large number of households with preferences described by the lifetime utility function ln C1+(10/11)lnC2 , where C1 and C2 denote, respectively, consumption in periods 1 and 2. Suppose that households receive exogenous endowments of goods given by Q1 = Q2 = 10 in periods 1 and 2, respectively. Every household enters period 1 with some debt, denoted B0, inherited from the past. Let B0 be equal to -5. The interest rate on these liabilities, denoted r0, is 20 percent. Finally, suppose that the country enjoys free capital mobility and that the world interest rate on assets held between periods 1 and 2, denoted r*, is 10 percent. Compute the equilibrium levels of consumption, the trade balance, and the current account in periods 1 and 2.

Que 2.

Question 16 (1 point)

Question 16 Unsaved

The actual budget deficit of the federal government in 2009 was about $1.4 trillion. On the basis of this information, it:

Question 16 options:

can be concluded that the economy was faced with serious inflation in 2009.

cannot be determined whether the government engaged in expansionary or contractionary fiscal policy in 2009.

can be concluded that fiscal policy was expansionary in 2009.

can be concluded that fiscal policy was contractionary in 2009.

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Question 17 (1 point)

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Government Spending Tax Revenue GDP

Year 1 $450 $425 $2,000

Year 2 $500 $450 $3,000

Year 3 $600 $500 $4,000

Year 4 $640 $620 $5,000

Year 5 $680 $580 $4,800

Year 6 $600 $620 $5,000

Answer the question using the following budget information for a hypothetical economy. Assume that all budget surpluses are used to pay down the public debt.

Refer to the data. The budget deficit in year 3 is:

Question 17 options:

$3,060 billion.

$295 billion.

$100 billion.

$175 billion.

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Question 18 (1 point)

Question 18 Unsaved

Discretionary fiscal policy refers to:

Question 18 options:

the changes in taxes and transfers that occur as GDP changes.

intentional changes in taxes and government expenditures made by Congress to stabilize the economy.

any change in government spending or taxes that destabilizes the economy.

the authority that the president has to change personal income tax rates.

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Question 19 (1 point)

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Suppose the federal government had budget surpluses of $80 billion in year 1 and $120 billion in year 2 but had budget deficits of $10 billion in year 3 and $40 billion in year 4. Also assume that it used its budget surpluses to pay down the public debt. At the end of these four years, the federal government's public debt would have:

Question 19 options:

decreased by $150 billion.

decreased by $200 billion.

increased by $150 billion.

increased by $50 billion.

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Question 20 (1 point)

Question 20 Unsaved

Answer the question on the basis of the following sequence of events involving fiscal policy: (1) The composite index of leading indicators turns downward for three consecutive months, suggesting the possibility of a recession. (2) Economists reach agreement that the economy is moving into a recession. (3) A tax cut is proposed in Congress. (4) The tax cut is passed by Congress and signed by the president. (5) Consumption spending begins to rise, aggregate demand increases, and the economy begins to recover.

Refer to the information. The administrative lag of fiscal policy is reflected in events:

Question 20 options:

1 and 2.

2 and 3.

3 and 4.

4 and 5.

ii.

TWEET Manufacturing Corporation makes bird cages. They have a 4% share of the total market of the one million cages that are sold each year. TWEET markets to the retailers through a network of wholesalers. Retailers keep 25% of the retail selling price of $100 per cage. The wholesalers get 12%. Other information: Each cage costs $35 to make and package. The annual operations expense is $600,000/year. Their 4 sales representatives are each paid a $2,000 per month base salary, plus 8 10% commission on the units they personally sell Price elasticity research has indicated that unit sales for TWEET would increase by 25% if the prices was reduced to $75 and $40,000 was added to the promotions budget. In order to get the price down, they decided to make the cage out of a lighter weight material. This will save $10. They will also remove the free package of bird seed that was costing $5, add 1 more sales rep and double the commission for all sales reps. Compute Yearly Profit. Which ides will maximize their profit? SHOW YOUR WORK IN THE TABLE BELOW SCENARIO #1 SCENARIO #2 Selling Price Fixed Costs Variable Costs/Unit GPCMUnit BEP In Units # of units to be sold TR FC VC TC Profit