potential policy (monetary, physical, exchange rate

In this work, you will analyze potential policy (monetary, physical, exchange rate etc.) responses to a hypothetical event from the perspective of any institution of your choice. You may consider hypothetical events such as the breakup of the Euro, the creation of a Northern and a Southern Euro, the request of a bailout by any country, the exit from the Euro by Greece or Finland. Alternatively, you can analyze the economic implications of such hypothetical event. Make sure you send me all reference papers (use only journal articles that can be found on Google Scholar or Jstor or any popular database) in a zipped file and highlight those sentences related to your citation you used in your own paper (to indicate which specific idea is from which paragraph or sentence). Reference number can be around 10 as long as you truly understand what you read from these references.
Here are some information sources:
– New York Times, Wall Street Journal and Financial Times
– Paul Krugman’s Blog
– Gregory Mankiw’s Blog
– Econbrowser
– The Economist
– RGE Monitor
– The Economist’s Voice
The assignment must be formatted with 1.5-line spacing and must not exceed 10 pages.
This limit excludes reference lists and appendices. Please use Times New Roman font in
12 pt. type and maintain a 1-inch (2.5-cm) side, top, and bottom margin. Finally, make
sure that your write-up is clear and well-organized. Send me plagiarism report.

http://www.economist.com/blogs/freeexchange/2015/03/european-central-bank
Below are some topics we learnt in class
Foreign Exchange Marketv
National Accounts and Balance of Payments
Current Account Model
Sovereign Default
Exchange Rate Determination
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Marginal Productivity and Marginal Cost

Pizza   Work hours   Mworkers Or the change in Work hours   MC (at wage of $20/hour), inputs at $4   MPL: Or the amount that one worker would produce
1   0.300
2   0.675
3   1.144
4   1.730
5   2.609
6   3.927
7   5.904
8   9.860
9   17.770
10   33.590

1. In the short-run, how can Antonio’s increase production?

2. Fill in the table. After the first pizza, what happens to the time needed for each additional pizza? Why? What happens to the marginal product of labor? What happens to marginal labor costs?

3. If ingredients are $4 per pizza and wages are $20/hour, how many pizzas will Antonio’s offer to sell at $13.38/pizza? (Note that you need to fill out the MC column to answer this!)

What are some of the strategies banks have followed to gain market power to raise prices?

Monopoly

1. Show the amount that a monopolist would produce and the price of output.

2. Show consumer and producer surplus for this firm if it behaved as a perfect competitor.

3. Show consumer and producer surplus as a monopolist.

Give arguments for and against anti-trust action to break up large businesses. Do you think that the government should pursue a more aggressive antitrust policy? Do you believe that it is possible to breakup monopolies and other concentrations of market power?
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62

Marginal Productivity and Marginal Cost

1. In the short-run, how can Antonio’s increase production?

2. Fill in the table. After the first pizza, what happens to the time needed for each additional pizza? Why? What happens to the marginal product of labor? What happens to marginal labor costs?

3. If ingredients are $4 per pizza and wages are $20/hour, how many pizzas will Antonio’s offer to sell at $13.38/pizza? (Note that you need to fill out the MC column to answer this!)

What are some of the strategies banks have followed to gain market power to raise prices?

Monopoly

1. Show the amount that a monopolist would produce and the price of output.

2. Show consumer and producer surplus for this firm if it behaved as a perfect competitor.

3. Show consumer and producer surplus as a monopolist.

Correctness of your analysis

It is eighteen months in the future. You have settled into your job after graduation, and your boss, Dixit von Morgenstern, is a bit of a game theory aficionado. When she took game theory in college, her professor did not teach the class how to find all the mixed strategy Nash equilibria of a game, and Dixit is intrigued by this idea. She is traveling for the month, and wants you to explain the method so that she can study it while she is on a long flight between cities.

In this paper, you will use the method we learned in class on March 4 to find all the mixed strategy Nash equilibria of the game you are assigned. You will clearly write up all the steps and your conclusions in a memo to Dixit. Make sure to formally state all equilibria at the end of the memo!

The memo should be typed using 12-point Times New Roman or other standard font, in single-spaced block format (do not indent paragraphs, but do skip lines between paragraphs). You will need to include several matrices. You may either type them into the document as tables, embed images of handwritten matrices in the document, or leave space and draw them in by hand.

Your letter will be graded on the following:
•   Economic Content: Correctness of your analysis (accurately using the method to check all possibilities); clarity and accuracy of your explanation
•   Use of the example assigned to you (matrices shown on the next page).
•   Organization: How clearly your analysis is organized in the memo overall (did you use a logical progression of steps to get to the set of solutions?) and within each step.
•   Mechanics: The correctness of your grammar, punctuation, spelling, etc.; using a consistent voice and tone throughout the document. Careful proofreading is crucial: Mechanical errors will definitely have a negative impact on your grade.
•   Format: proper block-style memo format; font and margins; placement of matrices

Hints: Dixit has the same amount of game theory knowledge as you do, except that she doesn’t know this specific method. Thus, you don’t need to explain concepts like opponent’s indifference or what it means to play a mixed strategy. However, you do need to tell her what you are doing. (For example, you might say something like “Column’s best reply to each of Row’s choices is circled in red, and Row’s best reply to each of Column’s choices is circled in blue. As you can see, the game has two Nash equilibria in pure strategies.”)

When you start looking at situations where at least one player mixes, things get a little more complicated! Once you have established a way of checking for an equilibrium in a specific situation, you can refer back to the first time you solve a similar case to shorten the explanation, but you need to do this in a crystal clear way. One way of doing this is to number each case carefully. However, don’t actually skip any cases without talking about them at all. (You might say something like “Use the same method here as in Case 4. Since Row’s expected payoffs are different for each of his pure strategies (10 ? 5 ? 2), Row mixing over A, B and C is ruled out.”) If something is substantively different about a case than what you’ve already done, though, you need to go into detail about it!

Be sure to let me know if you have questions about this assignment. I also strongly encourage you to get feedback on a draft of your paper by signing up for a consultation with the Howe Writing Initiative (http://www.miamioh.edu/hwi ). Finally, remember that papers are to be the product of your own independent work. See the syllabus for links to the FSB Honor Code and the University’s academic honesty policy.

(1)                         NOTE) in all matrices, the payoffs
are ordered (ROW, COLUMN)
COLUMN
D   E   F
A   -1, 2   0, 3   -1, 3
ROW   B   3, -4   0, -2   -1, -3
C   0, 3   -2, 1   3, 4

(2) (5)

COLUMN               COLUMN
D   E   F               D   E   F
A   3, 5   4, 2   4, 1           A   1, 3   2, 5   1, 5
ROW   B   5, 7   7, 6   0, 7       ROW   B   5, -2   2, 0   1, -1
C   2, 0   3, -1   4, 3           C   1, 4   0, 1   5, 6

(3) (6)

COLUMN               COLUMN
D   E   F               D   E   F
A   2, 4   3, 6   2, 6           A   -2, 5   0, 2   -1, 1
ROW   B   6, -1   3, 1   2, 0       ROW   B   3, 1   5, 2   6, 1
C   2, 5   1, 2   6, 7           C   4, 5   1, 2   6, 5

(4)

COLUMN
D   E   F
A   7, 3   2, 4   1, 4
ROW   B   0, 2   1, 3   3, 4
C   7, 5   1, 4   5, 0

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