Assurhe Country X 's economy is currently in equilibrium at full employment and the banking system in Country X has limited reserves. (a) If Country X's net exports decrease, what will happen to the price level in Country X? Explain. (b) Draw a correctly labeled graph of the money market, and show the effect of the change in the price level identified in part (a) on the nominal interest rate..

1. ast Creek Lightning With the rising demands of a successful hockey program, the chief of police in
Fast Creek, Greg Frazier, wants to develop a two-year plan that involves a request for additional
resources. The Fast Creek police department currently has 26 sworn officers. The size of the force
has not changed over the past 15 years, the following changes have prompted the chief to seek
more resources: The size of local recreational programs, especially hockey, has increased. Traffic
and parking problems have increased. More portable, expensive computers and equipment with
high theft potential are dispersed around the various public buildings. Alcohol and drug problems
have increased. The size of the surrounding community has doubled. The police need to spend
more time on education and prevention programs. The hockey arena is located in Fast Creek, a
small town in south-central Saskatchewan. A large university and also a college are situated
nearby. During the summer months, the student population in Fast Creek and the surrounding
towns is around 10,000. The number swells to 25,000 during fall and spring semesters. Thus,
demand for police and other services is significantly lower during the summer months. Demand for
police services also varies by: Time of day (peak time is between 10:00 p.m. and 2:00 a.m.). Day
of the week (weekends are the busiest). Weekend of the year (on hockey weekends, thousands of
extra people come to town). Special events. Hockey home games are especially difficult to staff.
All 26 officers are called in to work double shifts. More than 40 law enforcement officers from
surrounding locations are paid to come in on their own time, and a dozen RCMP officers lend a
hand free of charge (when available), provided they have a view of the game. Twenty-five
students and local residents are paid to work traffic and parking. During the last year, overtime
payments to police officers totaled over $220,000. Other relevant data include the following: The
average starting salary for a police officer is $80 000. Work-study and part-time students and local
residents who help with traffic and parking are paid $12.00 an hour. Overtime is paid to police
officers who work over 40 hours a week at a rate of $62.00 an hour. Extra officers who are hired
part-time from outside agencies also earn $75.00 an hour. There seems to be an unlimited supply
of officers who will work when needed for special events. With days off, vacations, and average
sick leave considered, it takes five persons to cover one 24-hour, seven-day-a-week position. The
schedule of officers during fall and spring semesters is: Weekdays Weekend First shift (7:00 a.m.
to 3:00 p.m.) 5 4 Second shift (3:00 p.m. to 11:00 p.m.) 5 6 Third shift (11:00 p.m. and 7:00 a.m.) 6
8 Staffing for hockey home games and special events is in addition to the preceding schedule.
Summer staffing is, on average, half that shown. Chief Frazier thinks that his present staff is
stretched to the limit. Fatigued officers are potential problems for the police force and the
community. In addition, neither time nor personnel has been set aside for crime prevention, safety,
or health programs. Interactions between police officers and members of the community are often
negative in nature. In light of these problems, the chief would like to request funding for four
additional officers, two assigned to new programs and two to alleviate the overload on his current
staff. He would also like to begin limiting overtime to 10 hours per week for each officer.
Discussion Questions: Which variations in demand for police services should be considered in an
aggregate plan for resources? Which variations can be accomplished with short-term scheduling
adjustments? Evaluate the current staffing plan. What does it cost? Are 26 officers sufficient to
handle the normal workload? What would be the additional cost of the chief's proposal? How
would you suggest that he justify his request? How much does it currently cost the community to

2. provide police services for hockey games? What would be the pros and cons of completely
subcontracting this work to outside security agencies? Propose other alternatives.