Suppose you were a benign government who wanted to improve Angela’s situation, but without sacrificing the aim of Pareto Efficiency. One policy advisor tells you that all you need to do to achieve this is to improve Angela’s reservation option. Is this correct?

Suppose instead that George decides to lower his price first. If Grace is the market leader (or price leader), how might she choose to respond? Why?

Consider the possibility that government spending increases produc- tivity so that with lump sum taxes after an increase in government spending the original equilibrium level of consumption and leisure is still just affordable. (That is this point lies on the frontier of both the before and after PPFs. Be careful to make sure your drawing has this very unusual feature.) How will an increase in government spending affect consumption, hours worked, output and welfare?

To address the immediate impact of the coronavirus crisis, Mr Biden has vowed to spend "whatever it takes" to extend loans to small businesses and increase direct money payments to families. Among the proposals are an additional $200 in Social Security payments per month, rescinding Trump-era tax cuts and $10,000 of student loan forgiveness for federal loans.Mr Biden's broader economic policies, dubbed his "Build Back Better" plan, aim to please two constituencies that traditionally support Democrats - young people and blue collar workers.               He supports raising the federal minimum wage to $15 (£11.50) an hour - a measure that is popular among young people and that has become something of a totem figure for the party in 2020, and a sign of its move to the left. He also wants a $2tn investment in green energy, arguing that boosting green manufacturing helps working class union workers, who perform most of those jobs.There is also a $400bn pledge to use federal…