Name and Surname: Vusal Gahramanov

PUBA:3602- ( Section: 20129)

Instructions:
 You can take 24 hours to complete this exam, but it must be completed
solely by yourself. Deadline: May 29 2020, 23:59
 The exam is open book, open note. You are allowed to use any materials
during the exam.
 Good luck!
 
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Signature (Your name): Vusal Gahramanov
Problem Points Points Earned
Possible
i.  Research problem 5  
ii. Motivation 5  
iii. Operational measures 5  
iv. Quick policy analysis 5  
v.  Symmetry 10  
vi. Theory 10  
 
Questions:
 
i. What is the research problem / question?
Response: One of the most important problems is bartering. The trouble
with bartering is that it can be challenging to locate a workable trade.
Often the person who wants what you offer isn't going to own the thing
that you want. Economists have named in his book Economic existence in
a prison: Louisiana State Penitentiary rendered Angola the unusual case in
which a trade would carry out the "double coincidence of wanting," as
Richard Davies described the issues with the barter, and how money
solved them. There are four separate roles played by capital. First of all,
money is an exchange medium, something that everyone accepts and
 "lubricates the exchange action." Secondly, it's a "measure"-the way rates
are set now. Thirdly, it is a "norm" from which potential rates will be set.
Finally, it's a means of 'storing' interest – it may transfer economic capital
over distances or over time. Research problem is that in prison economic
environment will be given, if not, how does economic existence take place
in prison condition?

ii. What is the motivation (i.e., why is this important)? 

Response: Angola 's government workforce operates on a separate scale
from external environment. Pay in the penitentiary ranged from 2 cent to
20 cent per hour for years, say inmates. While recent reforms lift this, most
of those Richard Davies spoke of picking greens or other basic farm work
earning only 4 cent per hour, giving them a $1.60 weekly salary. At this
rate of pay a convict has to work 181 hours to earn $7.25, the US federal
minimum hourly wage. Those on the lowest pay scales may be demoted
quickly. One lifer clarified how he lost his trustworthy position and
lowered his salary to the bottom of the scale after he was convicted of
stealing a tool from the garage, which he insisted he didn't. Whatever the
fact, he should anticipate a 4 cent increase annually for good behaviour – it
could take him many years to get back to the higher stage. Job in Angola is
difficult, obligatory and not lucrative. That is my motivation.
iii. What are the operational measures in this text? 
Response: Prisons have a rich tradition of having informal currencies
invented. Tobacco is the most apparent prison money – often sellable and
readily divisible. In Angola underground trading ran on it for a century.
Yet smoking was outlawed in 2015, and contraband was turned into
nicotine and cigarettes. An aggressive new drug called mojo – a type of
synthetic cannabis – started to infiltrate the prison around the same time,
and many men became hooked. They rocked the underground economy.
Its currency was now illegal, yet, demand for this new drug was enormous.
The prison economy's foundations had shifted: what many men wanted has
changed, as has the way they could pay for it.
 iv. Explain the quick policy analysis from the prisoner’s
perspective.

Response: Inside the prison the use of dollars is a puzzle. Anyone

undertaking a big narcotics activity would need to change huge cash
amounts, but dollar bills are something that can be tracked by sniffer dogs,
so any computer transactions can be monitored. It turns out that none of
those threats are posed by cocaine traffickers and criminals, so Louisiana
jails have a spectacular digital currency breakthrough. "Cash is contraband
but people have cash," explained the former prisoner, "but it's not cash like
cash in hand. It is insurmountable. It bases everything on numbers. People
make dots pay each other back.
v. Explain the symmetrical approach in the text.

Response: As a currency swap, I guess the Symmetrical solution will be

barter. Since bartering causes trouble here. The barter question is the
traditional one that economists have talked about for decades, which is this
thing: the double correlation of power. Therefore, for a barter to operate,
for a trade economy to work, you have to be willing to locate someone that
gives anything that you want.
vi. Which theory can best explain the results of the aforementioned story?

Response: Ultimatum Game theory is the best explaination. The game Ultimatum is a
game of exchange of behavioral economics which is played through numerous trials. The
situation places two people 's monetary interests into close association. There's an amount of
money in a standard Ultimatum game that can be split between two players, a proposer and a
respondent. A sum of 10 dollars is often used. The proposer is placed in control of the money
and has to make an offer to the responder. If that offer is accepted, both the proposer and the
respondent will each receive their agreed amounts. If they disagree, and the respondent
refuses the offer of the proposer, therefore no one can obtain any income.