Study Notes

Topics: United States dollar, Foreign exchange market, United States Pages: 2 (495 words) Published: March 19, 2013
Someone said, "An unskilled worker in a wealthy country has a conflicted soul: globalization reduces his wage, but globalization also makes many manufacturing goods cheaper. So they like globalization, and they don't."

Which of the following represents the stage where economic integration is most complete? Economic Union

People with mid-level skills are now encouraged to move from the source country to the destination country. Since line B is above the black line for middle-skilled people, people with medium level skills now have an incentive to migrate to the destination country.

The US Immigration Reform and Control Act of 1986
made it illegal for employers to knowingly hire/recruit undocumented immigrants. provided amnesty to illegal immigrants who came to the United States before 1982 (and lived in the US continuously). essentially encouraged undocumented immigrants to obtain fake green cards.

A country has a labor demand curve: W = 100 - 2L where W is the real wage and L is the employment of labor. Labor supply is fixed at 5. Assume that employers get to keep all revenue after thay have paid off their labor. Assuming that national income = employers' income + labor income, national income for this country is: Draw the curve. With W on the vertical axis and L on the horizontal axis, the intercept is 100. Setting Supply = demand, W = 100 - 2(5) = 90.

The national income trapezoid = employer income + labor income = (100+90)*(5)/2  = 475 The correct answer is: 475.

Suppose the three month interest rate in Europe is 2 percent, but the three month interest rate in the United States is 3 percent. The spot rate of euro is $1.10, but three month forward rate of euro is $1. Based on this information what can you predict about the foreign exchange market? spot price of dollar may appreciate. Because If you keep your $1 in the US, you get: $1.03. If you convert to euro, you get (1/1.10)(1.02) euro which is reconverted to dollar to get $0.91. People...
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