4 documents
Aldo061991
Economics.docxEconomics
Question 1
1. Because of COVID and the impact of measures to combat it, the Federal Reserve has lowered its benchmark interest to .25%. What affect is this intended to have on the American economy? How might it affect the global economy?
2. Say the Federal Reserve drop the benchmark interest rate below zero, to a negative rate. What are the potential advantages and disadvantages?
3. There is growing concern that the costs of the current restrictions and lockdowns around the United States could be greater than that COVID itself. As a managerial economist, how would you seek to identify and quantify these costs enough to give an estimate?
Each answer should contain two or more paragraphs. All work must be your own. To that end do not copy the questions along with the answers, as it affects the SafeAssign score.
Question 2
1) A firm leases manufacturing equipment to customers for a 5 year period. At the end of the 5 years customers can buy the equipment at the residual value, which is 40% of the original purchase price. If customers do not buy the equipment the firm sells it at auction. On average, they lose $6,000 on each piece of equipment. What can they do differently to either breakeven or profit on auction sales? Base you answer on adverse selection or any of the other reading for this week.
2) Your firm has hired you to write a detailed memo on how companies can construct workplaces where the most beneficial option for the company is to work in the best interest of its employees and the most beneficial option for the employees is to work in the best interest of the company. Base your memo on chapter 21 from the book, along with other relevant material from this week.
3) You own a firm with multiple divisions and are considering two bonus systems. One is based on how division performance compares to other divisions within the firm. The other is based on how the entire firm performs in comparison to other firms. Discuss the advantages and disadvantages of each and choose one - with a clear explanation of why.
