The relationship between China and the United States is often in the news. To refresh your memory, here are four facts about the Chinese economy: China manages its exchange rate with the dollar. China runs a trade surplus with the United States. The Chinese central bank owns a large number of U.S. Treasury bills. Individual Chinese residents are not free to invest their savings in foreign countries as they would like. Any movement away from a managed exchange rate would probably include a relaxation of these restrictions. Now evaluate the following claims below with three to five sentences for each. You should also feel free to use graphs or equations where appropriate. Your goal is to discuss why the claim is true, partially true, or not true at all.

1. (5 points) "Cheap imports from China come a steep cost - lost jobs and lower wages for American workers.

2 (5 points) "Over time, the Chinese government can maintain an unfair trading relationship with the United States by pegging its currency to the dollar at a low level."

3. (5 points) "In the long run, if China continues to peg its currency to the dollar at an abnormally low value, it may incur a significant increase in its price level."

4. (5 points) "The only way for the United States to close its bilateral trade deficit with China is to either raise national savings in the U.S. or reduce investment in new plant and equipment in the U.S."

5. (5 points) "Because China has a fixed exchange rate, it is unable to conduct discretionary monetary policy."

7. Explain various types of price elasticity of demand with the help of diagrams.

8. Describe the two conditions necessary for attaining equilibrium for a firm in the shortrun.

9. Discuss the conditions of price discrimination under monopoly.

10. Explain the innovation theory of profit.

11. What are the diseconomies of scale? Explain with illustrations

12. Discuss the different concepts of national income, How is national income estimated.

13. Compare and contrast the Classical and Keynesian Theory of income, output and employment.

14. Distinguish between quantitative and qualitative methods of credit control. Discuss quantitative methods elaborately.

15.Critically examine the principle of maximum social advantage.