QUESTION #1
Preface:
Suppose Maria’s parents want to pay for her undergraduate education at Bard College, which is a small liberal arts school in Upstate New York. Suppose that tuition costs $35,000 for the 1st year. Maria’s parents are willing to pay up to $40,000 for the 1st year of tuition.
Maria’s parents have $35,000 in an FDIC insured certificate of deposit (CD) that contractually pays 5% over the course of the next year. Another bank will give Maria’s parents a $35,000 student loan at 3% interest with no money down. The loan is only for 1 year and the interest payment and principal payment are due at the end of the year.
Instructions:
Use the information in the preface to answer the following questions in an essay format:
1) Should Maria’s parents take out a student loan, or should they pay the tuition with the balance in their bank account? Explain and defend your reasoning as to why Maria’s parents should either take out a student loan or pay the tuition with the balance in their bank account. Please make sure that you utilize concepts from the course to defend your answer.
2) Is there any risk or variability in the outcomes of their decision? Explain your reasoning.
Your essay needs to be a minimum of two paragraphs with size 12 font. You can include equations in your response if it aids your explanations.
QUESTION #2
Boskin Commission Inflation Essay Questions
The Senate Finance Committee created the Boskin Commission in 1996, which consisted of five prominent economists, to report on any biases in the Consumer Price Index (CPI). The Boskin Commission concluded that the CPI overstated inflation by 1.1 percentage points, meaning that if the official CPI stated inflation rate was 3.0%, then the true rate of inflation was 1.9% (3.0%-1.1%) in the eyes of the Boskin Commission.
The following tables detail the average nominal yearly wages of workers with only a high school degree and the average real wages (2016 dollars) for the years 1980-2016. The first table’s CPI is based on the Bureau of Labor Statistic’s CPI data and the second table is based on the Boskin Commission’s CPI.
Instructions:
Use the information in the preface to answer the following questions in an essay format:
1) How would the 1.1 percentage point reduction in the CPI inflation rate revise or change the level of wages in the United States? Were individualâs incomes higher or lower than what economists previously had thought under the Bureau of Labor Statisticsâ (BLS) prior formulation of the CPI?
2) How would the 1.1 percentage point reduction in the CPI inflation rate revise or change the rate of real wage growth in the United States over the previous decades? Why would it revise or change the rate of real wage growth?
Sample Solution
w migrants forced Australia from exclusive British immigration to include Southern Europe and the Baltic region (van Krieken, 2012). This however, does not mean that they were treated equally. Immigrants from British and Northern-Europe were given assisted passage and full citizenship upon arrival while those from Southern and Eastern Europe had trouble with passage and were often treated as second-class citizens (van Krieken, 2012). This allowance of further immigration was not a shift towards multiculturalism, but rather the expectation was that migrants would simply forget their background and become âjust like usâ with the mere passage of time van Krieken, 2012). The problem with assimilation was simply that it did not work so the policy changed from 1966-1972 to a policy of integration, allowing immigrants to keep their own culture within the larger Australian culture (van Krieken, 2012). Although the white Australia policy was ended in 1973, and the Racial Discrimination Act was passed in 1975, the issue of racial and cultural discrimination remains in Australia. In her article, Pruitt tells of a young immigrant woman who never felt that she belonged and as a white migrant from a European non-English speaking background, this young woman had attempted to âpassâ for what she understood to be authentically Australian â a white, native English speaker â throughout her childhood (Pruitt, 2015). Moreover, a survey taken in 2013 revealed a notable increase in reported experience of discrimination based on ethnic origin, skin color, and religion, with the highest reported levels since annual surveys began in 2007 (Pruitt, 2015). It is important that the underlying issues of anti-immigration sentiment and racism be addressed in order for Australia to be considered a multicultural society.>
w migrants forced Australia from exclusive British immigration to include Southern Europe and the Baltic region (van Krieken, 2012). This however, does not mean that they were treated equally. Immigrants from British and Northern-Europe were given assisted passage and full citizenship upon arrival while those from Southern and Eastern Europe had trouble with passage and were often treated as second-class citizens (van Krieken, 2012). This allowance of further immigration was not a shift towards multiculturalism, but rather the expectation was that migrants would simply forget their background and become âjust like usâ with the mere passage of time van Krieken, 2012). The problem with assimilation was simply that it did not work so the policy changed from 1966-1972 to a policy of integration, allowing immigrants to keep their own culture within the larger Australian culture (van Krieken, 2012). Although the white Australia policy was ended in 1973, and the Racial Discrimination Act was passed in 1975, the issue of racial and cultural discrimination remains in Australia. In her article, Pruitt tells of a young immigrant woman who never felt that she belonged and as a white migrant from a European non-English speaking background, this young woman had attempted to âpassâ for what she understood to be authentically Australian â a white, native English speaker â throughout her childhood (Pruitt, 2015). Moreover, a survey taken in 2013 revealed a notable increase in reported experience of discrimination based on ethnic origin, skin color, and religion, with the highest reported levels since annual surveys began in 2007 (Pruitt, 2015). It is important that the underlying issues of anti-immigration sentiment and racism be addressed in order for Australia to be considered a multicultural society.>
