This document describes a case study involving ethical issues in clinical supervision. A licensed mental health professional, Lily, went on medical leave but allowed her supervisee, Jack, to continue seeing clients without supervision. Jack took on a new client experiencing psychosis without being able to contact Lily for guidance. The client was later arrested after an incident and filed a complaint against Jack and Lily with the licensing board. Lily accused Jack of practicing without consent and terminated their supervisory relationship, while Jack filed a complaint against Lily for lack of supervision during her leave. The case examines the ethical responsibilities of supervisors and supervisees.

1. ECON 352 Intermediate Macroeconomics
Purdue University
Problem Set 4
Soojin Kim
Spring 2015
Due beginning of class on April 23 (Thursday)
1. Short-Run Phillips Curve Assume that an economy is
governed by the Phillips curve:
π = Eπ − 0.5(u− 0.06),
where π is the inflation rate, Eπ is the expected inflation rate,
and the natural rate of
unemployment is 6%. Also, note from Okun’s law that 1
percentage point of unemployment
translates into 2 percentage points of lost output.
Suppose that today, π = 0.05 and Eπ = 0.05. The government
wants to lower inflation to
2%.
Assume that people have adaptive expectations.

2. (a) How much cyclical unemployment does the economy have to
experience to have inflation
rate of 2%?
(b) What is the sacrifice ratio?
Assume that the government announced its plans to lower
inflation before the
workers and firms form their expectations. The workers and
firms form their
expected inflation by the following rule:
Eπ = απa + (1− α)π−1,
where π−1 is the inflation rate in the previous period, π
a is the announced inflation,
and α ∈ [0, 1] is the weight workers and firms put on the
announcement (credibility
of the government).
(c) Suppose that households and firms fully trust the
government, and thus α = 1. How
much cyclical unemployment does the economy have to
experience to have inflation
rate of 2%?
(d) Suppose α = 0.5. How much cyclical unemployment does the
economy have to experi-
ence to have inflation rate of 2%? What is the sacrifice ratio?

3. (e) How does α affect the sacrifice ratio?
1
2. Short-Run Phillips Curve How does an adverse supply shock
change the short-run tradeoff
between inflation and unemployment? Illustrate how Phillips
curve shifts with an adverse
supply shock.
3. Small Open Economy Consider a small open economy
described by the following equations.
Y = C + I +G+NX
Y = 5000
G = 1000
T = 1000
C = 250 + 0.75(Y − T )
I = 1000− 50r
NX = 500− 500ε
r = r∗ = 5
(a) In this economy, solve for national saving, investment, the
trade balance, and the equi-

4. librium exchange rate.
(b) Suppose now that G rises to 1250. Solve for national saving,
investment, the trade
balance, and the equilibrium exchange rate. Explain what you
find.
(c) Now suppose that the world interest rate rises from 5 to 10
percent (with G 1000). Solve
for national saving, investment, the trade balance, and the
equilibrium exchange rate.
Explain what you find.
4. Mundell-Fleming Suppose that the price level relevant for
money demand includes the
price of imported goods, which in turn depends on the exchange
rate. That is, the money
market is described by
M
P
= L(r, Y ),
where
P = λPd + (1− λ)
Pf
e
.

5. Here, Pd is the price of domestic goods in domestic currency
and Pf is the price of foreign
goods in foreign currency. Thus,
Pf
e
is the price of foreign goods in domestic currency. The
parameter λ ∈ (0, 1] is the share of domestic goods in the price
index P . Assume the Pd and
Pf are sticky in the short-run.
(a) Graph the LM∗ curve on Y − e plane.
(b) What is the effect of expansionary fiscal policy under
floating exchange rates in this
model? How is it different from the benchmark Mundell-
Fleming model discussed in
class?
2
(c) Suppose that political instability increases the country risk
premium θ so that r = r∗ +θ.
What is the effect on the equilibrium exchange rate and
aggregate income in this model?
How is it different from the benchmark Mundell-Fleming model
discussed in class?

6. 5. Intertemporal Choice Consider a consumer whose preferences
over consumption today and
consumption tomorrow are represented by the utility function
U(c1, c2) = ln c1 + β ln c2,
where c1 and c2 and consumption today and tomorrow,
respectively, and β is the discounting
factor. The consumer earns income y1 in the first period, and y2
in the second period. The
interest rate in this economy is r, and both borrowers and savers
face the same interest rate.
(a) Write down the intertemporal budget constraint of this
consumer.
(b) Write down the optimization problem of the consumer.
(c) Solve for the optimal consumption in period 1 and period 2,
i.e. c∗ 1 and c
∗
2 as a function
of y1, y2, r, and β.
3
For this assignment, you will refer to the Course Case Study.
Reread the case study, looking specifically at issues related to
clinical supervision. Examine the ACA's ethical guidelines
related to the issue of supervision in Section F and answer the
following questions:

7. · Explain the ethical issues related to the supervisor.
· Explain the ethical issues related to the supervisee/student.
· Examine the influence of your own personal values as it
relates to the issues presented in the case.
· Compare the violations to the APA's ethical standards and
describe the similarities or differences in the ethical code using
the following websites:
· www.apa.org
· www.counseling.org
· Imagine you are a member of the ACA ethics committee.
Describe the recommendations you have for the supervisor.
· Describe the recommendations you have for the
supervisee/student.
Save the paper as
AU_PSY430_M4_A2_LastName_FirstInitial.doc and submit it
to the M4 Assignment 2 Dropbox by Wednesday, April 22,
2015. Your response should be at least 2 pages long.
Assignment 2 Grading Criteria
Maximum Points
Described the ethical issues related to the supervisor.
10
Described the ethical issues related to the supervisee/student.
10
Explained how your own personal values relate to the issues
presented in the case.
20
Compared the ethical standards of the APA and the ACA to
analyze the differences and similarities.
20
Described recommendations for the supervisor.
10
Described recommendations for the supervisee/student.
10
Wrote in a clear, concise, and organized manner; demonstrated
ethical scholarship in accurate representation and attribution of
sources; displayed accurate spelling, grammar, and punctuation.

8. 20
Total:
100
Course Case Study
Lily began supervising an intern, Jack. A few months after
supervision began; Lily discovered that she would need to go on
medical leave. Because the leave would only be for about six
weeks and she was the only licensed mental health professional
in the office, she and Jack decided that he would be fine
working without her involvement until she got back. He would
simply keep all the reports she needed to sign on her desk, and
she would sign them all when she returned. Jack felt very
competent in his ability to carry on while Lily was out until he
conducted an intake assessment on a client who seemed to be
having some breaks from reality. Jack was unsure how to
determine if there really was psychosis occurring and what to
do about it. He tried to contact Lily but was unable to get in
touch. Anxious, he searched online for ideas on how to work
with the new client and tried out a few techniques during
sessions. He reassured himself that no matter what he did,
ultimately Lily was responsible anyway.
A week before Lily returned to work, the client was arrested as
he tried to “fly” off a building, convinced that he could fly
without difficulty. Upon being taken into custody, the client’s
demeanor concerned the police officer and he was taken to the
emergency room where an evaluation was conducted. It was
determined that he was indeed experiencing psychosis, and
antipsychotic medication was started. Once the client was
stable, he filed a complaint against Jack and Lily with the state
licensing board and
threatened legal action. Understandably, Jack was scared and
Lily was angry. She accused Jack of practicing without her

9. consent, stating that he was to have continued with the clients
he had when she left, not accept new ones. She subsequently
informed him that she would no longer be his supervisor. Jack
was furious that he was put in the position to make decisions on
his own and did not receive support from his supervisor. Jack,
in turn, filed a complaint against Lily due to lack of
supervision.