Question

1.

A. Suppose imported goods are "normal" goods. What will happen because of the COVID pandemic?

    

		US incomes will fall and there will be less imported from other countries.
		US incomes will fall but there will be more imports.
		US incomes will fall, but imports will not respond.
		US incomes will rise and imports will increase.

B. End of the year bonuses can solve the

		offshoring problem.
		the outsourcing problem.
		the shirking problem.
		the profit maximizing problem.

Answer 1

First option is correct because due to the pandemic the income levels are going to decrease. Because the imported goods are considered as normal goods there will be a positive income effect and decrease in income will decrease in their demand so they will be demanded less.

Shirking problem because the employer can retain employees by allowing them to have bonuses at the end of the year. This will motivate workers to continue to work so that they can have annual bonus at the end and this will reduce shirking..