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nominal exchange rate

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1. Suppose a comparable phone costs 500 USD in the U.S. and 300 EUR in Germany. If the nominal exchange rate is

0.8 EUR per 1 USD, then the real exchange rate in terms of how many German phones can be traded for one U.S. phone is: A. 1.33. B. 1.25. C. 0.60. D. 0.80. 2. The value of net exports is also the value of: A. net saving. B. national saving. C. net investment. D. the excess of national saving over domestic investment. 3. In the 1990s, a presidential candidate in the U.S. proposed tariffs on Japanese, Chinese, and other South American imports. Assume that the U.S. is a small open economy, and use the model of the real exchange rate shown in the diagram above to explain what happens to the following: a.) The real exchange rate b.) The trade balance c.) Imports d.) Exports 4. A trade deficit can be financed in all of the following ways except by: A. borrowing from domestic lenders. B. selling foreign assets owned by domestic residents to foreigners. C. selling domestic assets to foreigners. D. borrowing from foreigners. 5. If the real exchange rate is high, foreign goods: A. are relatively cheap and domestic goods are relatively expensive. B. are relatively expensive and domestic goods are relatively cheap. C. and domestic goods are both relatively expensive. D. and domestic goods are both relatively cheap. 6. If domestic spending exceeds output, we ______ the difference. A. export B. import C. import D. export 7. Assume that in a small open economy where full employment always prevails, national saving is 300. a. If domestic investment is given by I = 400 – 20r, where r is the real interest rate in percent, what would the equilibrium interest rate be if the economy were closed? b. If the economy is open and the world interest rate is 10 percent, what will investment be? c. What will the current account surplus or deficit be? What will net capital outflow be? HTML Editor 8. What is the price of a pair of shoes in Paris if the price in the U.S. is 400 USD and the exchange rate is 1 USD = 0.75 EUR? A. 53 EUR B. 30 EUR C. 533 EUR D. 300 EUR 9. An “open” economy is one in which: A. government spending exceeds revenues. B. the national interest rate equals the world interest rate. C. the level of output is fixed. D. there is trade in goods and services with the rest of the world. 10. If net capital outflow is positive, then: A. exports must be negative. B. the trade balance must be positive. C. exports must be positive. D. the trade balance must be negative. 11. If domestic saving exceeds domestic investment, then net exports are ______ and net capital outflows are ______. A. positive; negative B. negative; negative C. positive; positive D. negative; positive

 
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Happy Hippos (HH) is a manufacturer and retailer of New England crafts. HH is headquartered in Camden, Maine. HH provides services has sales, employees, property, and commercial domicile as follows:

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STATE AND LOCAL TAX – RESEARCH MEMO OPTION 1 Happy Hippos (HH) is a manufacturer and retailer of New England crafts. HH is headquartered in Camden, Maine. HH provides services has sales, employees, property, and commercial domicile as follows: Happy Hippos In-State Activities State Sales Employees Property Services Commercial Domicile Connecticut ü ü ü Maine ü ü ü ü ü Massachusetts ü ü New Hampshire ü Rhode Island ü ü Vermont ü ü ü ü Happy Hippos sales of goods and services by state are as follows: Happy Hippos Sales State Goods Services Total Connecticut $78,231 $52,321 $130,552 Maine 292,813 81,313 374,126 Massachusetts 90,238 90,238 New Hampshire 129,322 129,322 Rhode Island 98,313 98,313 Vermont 123,914 23,942 147,856 Totals $812,831 $157,576 $970,407 HH has federal taxable income of $282,487 for the current year. Included in federal taxable income are the following income and deductions: • $12,000 of Vermont rental income; • City of Orono, Maine bond interest of $10,000; • $10,000 of dividends; • $2,498 of state tax refund included in income; • $32,084 of state net income tax expense; and • $59,234 of federal depreciation. • Maine state depreciation for the year was $47,923 and Maine doesn’t allow deductions for state net income taxes. The employees present in Connecticut, Massachusetts, and Rhode Island are sales people who perform only activities protected by Public Law 86-272. Each of the states is a separate-return state. HH’s payroll is as follows: Payroll State Wages Connecticut $94,231 Maine 392,195 Massachusetts 167,265 Rhode Island 92,391 Vermont 193,923 Total $940,005 HH’s property is as follows: Property State Beginning Ending Rented Maine $938,234 $937,652 Vermont 329,134 428,142 $12,000 Total $1,267,368 $1,365,794 $12,000 a) Determine the states in which HH has sales and use tax nexus. b) Calculate the sales tax HH must remit assuming the following sales tax rates: Connecticut (6%), Maine (8%), Massachusetts (7%), New Hampshire (8.5%), Rhode Island (5%), and Vermont (9%). c) Determine the states in which HH has income tax nexus. d) Determine HH’s state tax base for Maine assuming federal taxable income of $282,487. e) Calculate business and non-business income. f) Determine HH’s Maine apportionment factors using the three-factor method (assume that Maine is a throwback state). g) Calculate HH’s business income apportioned to Maine. h) Determine HH’s allocation of non-business income to Maine. i) Determine HH’s Maine taxable income. j) Calculate HH’s Maine net income tax liability assuming a Maine tax rate of 5 percent. INTERNATIONAL TAX – RESEARCH MEMO OPTION 2 USCo, a U.S. corporation, has decided to set up a headquarters subsidiary in Europe. Management has narrowed its location choice to either Spain, or Ireland, or Switzerland. The company has asked you to research some of the income tax implications of setting up a corporation in these three countries. In particular, management wants to know what tax rate will be imposed on corporate income earned in the country and the withholding rates applied to interest, dividends, and royalty payments from the subsidiary to the USCo. To answer the tax rate question, consult KPMG’s Corporate and Indirect Tax Survey 2014, which you can access at http://www.kpmg.com/Global/en/IssuesAndInsights/ArticlesPublications/Documents/corporateindirect-tax-rate-survey-2014.pdf. To answer the withholding tax questions, consult the treaties between the United States and Spain, Ireland, and Switzerland, which you can access at www.irs.gov (type in “treaties” as your search word).

 
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an economic analysis and a set of policy recommendations

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There is no rush on this one.  It is not due yet.  Thank you for all your work.
Econ 203 Case

Study Workforce Activity

As a sample workforce activity, assume your employer has asked you to develop an economic analysis and a set of policy recommendations. To complete this activity, select a news article dated within the previous two months.

  • Clearly summarize the issue presented in the article
  • Use critical thinking to analyze the issue using economic concepts and theory learned in our class
  • Present two policy recommendations based on this issue
  • Use additional references to back up your arguments
  • Include at least one graph developed in the course. Charts and tables are also encouraged.
  • Use clear and effective writing in your presentation.

Possible concepts include:

  • taxes and consumer or producer surplus (Week 4)
  • demand, supply, and equilibrium price of a particular product (Week 2)
  • elasticity on a particular product  (Week 3)
  • perfect competition and imperfect competition, such as monopolies (Weeks 6-8)
  • labor market, wages, and income inequality (Week 8)
  • poverty and public policy (Week 8)
  • pricing and competition in the high tech sector (Google, Apple, Microsoft, Cell phone providers)

Your paper should:

be a total of 800 to 1200 words,

include a bibliography with at least three references, presented in APA style,

have been spell-checked and grammar-checked using Word’s review utility.

 
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explain, with examples, how decision making and analysis, with the tools from our course, may be of value to you and your future endeavors. Include specific examples such as a company seeking to increase profits would ….

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explain, with examples, how decision making and analysis, with the tools from our course, may

be of value to you and your future endeavors. Include specific examples such as a company seeking to increase profits would ….

 
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