Q1. Suppose that the government imposed a $1 tax each time someone used the atm. how would this effect output and the price level in the short and long run?
Q2. Outline the possible outcome for teachers if the school year is extended to 11 months instead of 9 months. Discuss the role of incentives.
Q3. Suppose the interest rate on 6-month treasury bills is 7 percent per year in the United Kingdom and 4 percent per year in the United States. If today's spot price of the pound is $2.00 while the 6-month forward price of the pound is $1.98. By investing in U.K. treasury bills rather than U.S. treasury bills, and covering exchange rate risk, U.S. investors earn an extra return for the 6 months.