1. Suppose that the political-military conflict between Russia, Europe, and the United States reaches a severe level. This tension has caused people in these countries to drastically reduce their consumption. Use the closed-economy classical model to analyze long-term effects on the world economy. 1.1. Analyze the impact on output, aggregate price level (Price), real interest rate (Real interest rate), real consumption (Real consumption), real investment (Real investment), real trade. Real wage, Real rental price and Real fiscal balance (15 points) 1.2. Describe the process that occurs (5 points)

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T/F  Opportunity cost is the cost of nest best foregone.

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A local insurance company offers both home and auto insurance to four types of customers with the reservation prices listed in the figure below. Assume for simplicity that there is only one consumer of each type. Home Auto Bundle Customer A $90 $67 $157 Customer B Customer C Customer D $117 $87 $204 $103 $77 $180 $83 $52 $135 If the firm were to sell home and auto insurance separately, it would charge $83 for home insurance, $52 for auto insurance, and earn a combined revenue of $540. Determine the revenue the firm would receive if it used a pure bundle. Comparing the revenue of the pure bundle to the revenue of selling home and auto insurance separately, we can conclude that the reservation prices of the consumers must: O A. have no correlation B. be positively correlated C. be negatively correlated D. be serially correlated

7) Manager B Effort Level Chance of success Cost of effort High Effort 0.6 100,000 Routine Effort 0.5 60,000 What is the minimum bonus that will entice high effort?   1. 40,000   2. 260,000   3. 300,000   4. 400,000   5. 520,000   6. 60,000   7. 100,000   8. 0 6) Manager A Effort Level Chance of success Cost of effort High Effort 0.6 300,000 Routine Effort 0.5 260,000 What is the minimum bonus that will entice high effort?   1. 40,000   2. 260,000   3. 300,000   4. 400,000   5. 520,000   6. 60,000   7. 100,000   8. 0 5) ABC Instrument, a manufacturer of precise scientific instruments, relies heavily on the efforts of its local salespeople. Selling an instrument requires either luck, high effort, or some combination of the two. A salesperson who chooses to work hard has a 40 percent chance of selling an instrument in a given year while a salesperson who chooses…