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Find exports data for two countries and the world in 10 sectors of your choice (be careful at the unit of measure, which has to be homogeneous).
Calculate the Balassa index (idem, page 1685 eq.1-3) for each economy/sector (you will have 10 values for each economy)
What are the major policy conclusions of classical economics? Explain how these
policy conclusions follow from the key assumptions of the classical theoretical
system.
Within the classical model, analyze the effects of an increase in the marginal
income tax rate. Explain how output, employment, and the price level are affected.
Consider cases in which the increased revenue produced by the tax increase
results in a decline in bond sales to the public and in which it results in lower
money creation.
Explain how the interest rate works in the classical system to stabilize aggregate
demand in the face of autonomous changes in components of aggregate demand
such as investment or government spending.
Classical economists assumed that velocity was stable in the short run. But
suppose that, because of a change in the payments mechanism—for example,
greater use of credit cards—there was an exogenous rise in the velocity of money.
What effect would such a change have on output, employment, and the price level
within the classical model?
Explain how aggregate demand is determined within the classical model. What
would be the effects on output and the price level of a drop in money supply?
What are the differences between the Fisherian and Cambridge versions of the
quantity theory of money?
Consider the effects of a government employment subsidy whereby the
government paid 10 percent of the wages of newly hired workers. How would
employment and output be affected by the program in the classical model? What
would be the effect on the position of the aggregate supply schedule.
Suppose that due for example to reconstruction after a war, the capital stock of a
nation increases. Use the graphical framework to illustrate the effect that the
increase in the capital stock would have on output, employment, and the real wage
in the classical model.
Provide examples of demand-side factors that would not affect the level of output
and employment.
