ECN 320 HW8

PART I: SHORT RESPONSE

Directions: Please provide detailed and elaborate responses to the following questions.  Your responses should be a minimum of 1 to 2 paragraphs and should include examples from the reading assignments or personal experience, if possible.

1.      Would you consider becoming a payday lender?  List the reason why you would and why you would not.

2.      As a financial officer of a large corporation, you find that the company has been underpaying the Internal Revenue Service by tens of millions of dollars a year. As a whistle blower, you will probably receive a payment of $10 million within a few years. If a large investor offers to pay you a substantial amount of money today in exchange for your future award from the IRS, what would be the minimum amount for which you would settle? Explain how you arrived at that figure.

3.      Are prices high because rents are high, or are rents high because prices are high? Use an example to illustrate your answer.

4.      What are usury laws? Why do economists hate them?

5.      Explain why a dollar today is worth more than a dollar you will have in the future.

6.      Why is the supply of loanable funds upward sloping? Why is the demand for loanable funds downward sloping?

7.      Outline the main theories of profits.  Which one(s) do you subscribe to?

PART II: JOURNAL ACTIVITY

Web Field Trip

Directions: Please visit the following website:

·         CNN Money

Then answer the question below.  Please provide detailed and elaborate responses and ensure that your responses are a minimum of 100 words each and include examples from the reading assignments or personal experience, if possible.

1.      Which were the five most profitable corporations in 2011, and how much profit did each of them earn?