1. Assume that the economy is in a steady state and there is an unexpected permanent increase in the rate of depreciation δ. Using the appropriate diagram show: a. What is the best response to this change? b. Does consumption initially increase or decrease?
Q: Assume that we can estimate a project's cash flows as follows:
A: Given: n Expected Flow (An) Estimate of Standard Deviation Present Value of the cash flow 0…
Q: 1. A Volvo car dealer wishes to sell a 1995 Volvo 740 GLE to a customer for $10,000.00 which…
A: Price of a car = 10000 a down payment = 20% so the loan amount is 80% of the price =…
Q: Payday loans can be a benefit because?
A: A payday loan is a short-run, high-interest loan that is normally due on the borrower's next payday.…
Q: An insurance company offers a "standard contract" to employees of a company with a premium of $200…
A: A fair insurance contract for a customer is one in which the premiums paid are equivalent to the…
Q: Kate's money income is $350, the price of X is $4, and the price of Y is $6. Given these prices and…
A: Marginal Rate of Substitution (MRS), which is the rate at which a consumer is willing to trade one…
Q: Consider a closed economy in which the population grows at the rate of 1% per year. The per-worker…
A: The Solow Growth Model is an exogenous economic growth model that examines at how population growth,…
Q: Probably the most important source of capital is human capital. For example, most medical doctors…
A: Human Capital: Human capital is an intangible asset or quality not involved in the balance sheet of…
Q: According to the rule of 70, real GDP per capita will double in about 17.5 years if it grows…
A: The rule of 70 is a quick way to estimate the time it takes for a variable to double, given its…
Q: You have been tasked with developing a research report based on an economy of your choice anywhere…
A: Economic fundamentals refer to the basic elements or principles that underlie the functioning of an…
Q: Suppose now the government passes a law that significantly increases the minimum wage. This change…
A: The natural rate of unemployment is the sum of the frictional unemployment rate and the structural…
Q: 3. Let V be a variable representing the value that consumers who want grass-fed beef put on the…
A: The given information: Let V be a variable representing the value that consumers who want grass-fed…
Q: The "pizza connection" refers to the observation that in a major city, the cost of a slice of pizza…
A: CPI refers to an important economic metric. CPI Calculates the average change in prices paid by…
Q: Find the value of Pand F in the cash flow diagram. Use uniform series capital recovery factor &…
A: Uniform series capital recovery factor : (P/A , i% , n ) Where ,i = interest rate , n = number of…
Q: 1) Suppose that Player A can take two actions, either Up or Down. Player A is thinking to choose…
A: Since you have asked multiple questions, we will solve the first question for you. If you want any…
Q: Consider the following Stata output for the model of house prices:…
A: In the regression results if the P-Value is greater than the significance level then the explanatory…
Q: Suppose a country's labor force is 147.5 million (of whom 128.2 million are employed). What is the…
A: The unemployment rate is a measure of the percentage of the labor force that is currently unemployed…
Q: True/ False Government always works in the welfare of the economy.
A: Introduction ; In economics, government refers to the entity that has the responsibility and…
Q: A potential project is currently under review. An initial investment of $87,000 would be necessary…
A: The annual worth (AW) technique is frequently employed when contrasting alternatives. Over the…
Q: Choose a country of your choice and answer the following questions: I) is there any income…
A: Income is the money received by a person or institution during a certain time period, usually a…
Q: Australian authorities faced significant health and economic policy challenges during the COVID- 19…
A: The Keynesian model is an economic model that emphasizes the role of government intervention in…
Q: Sophia is a contestant on a game show and has selected the prize that lies behind door number 3. The…
A: The Monty Hall problem is a classic probability puzzle. In this problem, the player is asked to…
Q: of loans would amount to
A: A new deposit of $900 billion is made in the banking system. And the reserve requirement ratio is…
Q: The Digital Electronic Quotation System (DEQS) Corporation pays no cash dividends currently and is…
A: Intrinsic Value of Share: The intrinsic value of a share implies the fair value of a share relies on…
Q: Answer ALL questions. Each question carries ONE (1) mark. State whether each of the following…
A: Opportunity cost is the cost of an alternative that must be forgone in order to pursue a certain…
Q: A general has the two possible pure strategies, sending all of his troops by land or sending all of…
A: According to game theory, a pure strategy is a clear-cut course of action that a player decides to…
Q: Health Econ 365 Part C Appalled by the answer to the previous questions, you set your scientist to…
A: Healthcare economics is the study of how resources are allocated and utilized in the healthcare…
Q: True/ False The economy should always run on its full capacity of production.
A: The process of developing or manufacturing things and services is referred to as production. It…
Q: Find the periodic payments PMT necessary to accumulate the given amount in an annuity account.…
A: Present value is the value of investment in today's dollar. Future value is the value of investment…
Q: A two-person game in which each person has access to only two possible strategies will have at most…
A: Nash equilibrium is a concept in game theory that describes a state in which each player in a game…
Q: Consider a society made up of three people-Dan (D), Erin (E), and Fred (F). The society must choose…
A: Libertarians: O > R > CConservatives: R > C > OProgressives: C > R > O…
Q: The demand curve facing a competitive firm e following graph illustrates the market for large moving…
A: A perfectly competitive firm is a price taker, which means it takes the price determined by the…
Q: What are the two types of fiscal policy and what timing problems potentially Drovido are associated…
A: Fiscal policy is a government's use of taxation, government spending, and transfer payments to…
Q: Assume an American firm takes a long position on British Pound call options. The premium is $0.05,…
A: A call option is a derivative that offers the right to purchase the underlying asset at a…
Q: Draw a well labeled graph (similar to graph 10.3 on page 283 from textbook) showing the point of…
A: The extra output that is created when one more unit of labour is employed while keeping all other…
Q: Suppose consumers and businesses become more optimistic about future economic conditions, causing…
A: The following graph shows the aggregate demand (AD1) and aggregate supply (AS) curves for a…
Q: Suppose the money market for some hypothetical economy is given by the following graph, which plots…
A: The money demand curve illustrates the quantity of money demanded at each interest rate, keeping…
Q: We have a random sample of workers from a large firm. In 2017, the firm ran a training program. Some…
A: A linear regression equations shows the linear relationship between the dependent variable and one…
Q: In the following table, fill in the column labeled Value of Money. Price Level (P) Value of Money…
A: The money demand curve is downward sloping. The money supply curve is vertical in nature.…
Q: 3) Briefly describe the "tit-for-tat" strategy? Suppose two players play the prisoners' dilemma game…
A: b. GPA is not a strong signal for future employees that work in the productive sector. It is because…
Q: A company earns $18 annually. You discount its future profits by 2% a year due to your impatience…
A: Discount rate is the interest rate used to calculate the present value of future cash flows. It…
Q: Consider a market with two firms and a demand function p = 1 - Q. Note the price and quantity cannot…
A: Given that; The demand function for the market is given by p=1-Q, where p is the price and Q is the…
Q: What lump sum of money must be deposited in a bank account at present time so that Php 500 per…
A: Given: Monthly withdrawal amount=Php 500 Number of years=5 First withdrawal scheduled= 6 years from…
Q: provide 2 reasons for why the recent behavior of inflation is bad for the economy and why it is bad…
A: Inflation can have significant effects on an economy and can behave in different ways depending on…
Q: Qa=99-2Pc + 1Psb - 2Pcm +0.19 Q₁ =30+Pc-1P-0.2P-0.4Pr
A: Demand Function: Demand is a function of the price Qd=f(P) Inverse Demand Function: Price is a…
Q: Suppose the government decides to tax subway tickets, instead. The following graph plots the yearly…
A: Equilibrium in the market occurs at the intersection of the demand and supply curves. At the…
Q: critically discuss the lagal framework and elements of the Itegrated Development Plan (IDP) process…
A: The Integrated Development Plan (IDP) is a strategic plan that is developed by municipalities in…
Q: These are Macroeconomic questions a. Farmers in Country A grow $150 worth peanuts which are sold to…
A: To calculate the GDP of Country A and B, we can use the value of final goods approach and the…
Q: Cost Schedule for Firm X: Output Total Fixed Cost Quantity 0 1 2 3 4 5 $21,500 $20,000 $1,500 $240…
A: Marginal product is the change in total product due to an additional input used. Marginal cost is…
Q: How long will it take for an investment with an annual rate of return of 6% compounded annually to…
A: Present value is the value of investment in today's dollar. Future value is the value of investment…
Q: Given the information in the table below, what is country A's real aggregate product in B$ at…
A: The Aggregate Production Function is a concept in macroeconomics that describes the relationship…
1. Assume that the economy is in a steady state and there is an unexpected permanent increase in the rate of
a. What is the best response to this change?
b. Does consumption initially increase or decrease?
Step by step
Solved in 3 steps with 1 images
- 2) The below five graphs show the development of key macroeconomic variables over the scope of three years in a certain country. Use them to draw an IS-LM-PC graph that captures the development in this country. Explain carefully what has happened. G Y t 3) China currently (2016) has a household saving rate of about 36 %. It has never been below 27 % in the last 30 years. What role do you think this high saving rate has for China's economic success? It has been argued that the low standard of living in many less developed countries depend on their poor institutions. Explain carefully what kind of "institutions" this argument refers to. 4) 5) The Swedish Fiscal Policy Council discusses public debt policy in a low interest environment in their latest report. The argue that "there are strong arguments in favour of low public debt despite low interest rates. For private operators, it may be rational to increase debt in a low interest rate climate, but this is not necessarily the case for…What is the contribution of banana leaves plate or biodegradable plates to the economy?Explain.For this question, assume that all price levels are fixed. Now suppose that there is a real depreciation. This real depreciation will cause which of the following to occur? Question 4Answer a. None of the answers b. a reduction in exports c. an increase in imports d. a reduction in net exports e. a reduction in demand for domestic output
- 16 100% 3 7 4 Consider the economic model: Yt Ct + it Ct myt-1 act-1 where y is GDP, c is consumption, i is investment, m and a are multipliers. (i) Write down a difference equation for y (ii) Find the condition under which the steady state exists, and find the steady state solution (iii) Find the condition under which the system converges to the steady state (iv) Find the condition under which y will show sinusoidal (cyclical) pattern (This occurs when the roots of the characteristic equation are complex "6²-4ac < 0") ERMT Problem Paper 01 28°C Light rain || || 3 hpHow do you think your life is affected by macro economic forces? Provide examples as well. Just a summary please:) 1 and a half paragraphWhat is stagflation?
- A.9 Obtain the golden rule savings rate for an economy with a production function F(K,N) KN. How does an increase in the depreciation rate affect the golden rule savings rate?Reported profits often are surprisingly high in a recession, when economic growth is low. The best explanation for this is: A. Annual profits are a one year snapshot, and when new corporate investment is low, there is not enough depreciation on new projects to offset profits on old projects. B. Corporations raise prices in bad times to make up for lost sales, leading to high profits. C. Corporate losses in bad times are used as write-offs, allowing corporations to avoid taxes and thus have high profits. D. All of the above are equally likely explanations.2. Consider the following macroeconomic model: Y = F(K.N) FK > 0, FN>0, FKK. FNN 0 FN (K, N) N" (w/p), N'>0 N" I(r = n), I' 0 N" = N I C+I+G+6K M/p = m, 0 M+B P where Y is real GDP, K is the capital stock, N is employment, w is the money wage, Nis the supply of labor, p is the price level, r is the interest rate, is the anticipated inflation rate, I is investment, C is consumption, G is government expenditure, T is net taxes. The endogenous variables are Y, N, w/p, r, p, C and I. The exogenous variables are M, B, K,G.T, . Let dk=0, and M+B> 0 i.e. public has positive net holdings of government assets. Assume the open-market operations constraint dM+dB = 0, so any change in the nominal money supply is engineered through an open market operation. In this economy, show that a change in the nominal money supply eventually has effects on the real variables of the economy (i.e. nomey is not a veil in this system). In your answer, you must show all your arguments analytically and also…
- QUESTION 2 Consider the closed-economy market-clearing model. Assume that the marginal propensity to consume is 0.8. Tax revenue decreases by $5 billion, while output and government spending remain the same (a) Calculate the dollar change in consumption. (b) Calculate the dollar change in national saving. (c) Does the equilibrium real interest rate increase, decrease, or stay the same? n toolhar nress ALT+F10 (PC) or ALT+FN+F10 (Mac).3) In the macroeconomic model below, Y is aggregate output, C is aggregate consump- tion, Io is aggregate investment, Go is government spending, T is the total amount of taxes collected by the government, and t is income tax rate. The variables Y, C, and I are endogenous, Go, Io, and t are exogenous, and a, b, and k are parameters. Y=C+ Io + Go C=a+b(Y-T) T=k+tY (a > 0,6€ (0,1)) (k>0, t€ (0,1)) Calculate the determinant of the coefficient matrix A associated with this system of equations. The determinant of the coefficient matrix A is: 1-b.+ bt a) A b) A-1-b-bt + a c) |A|=b+t d) A1+a+b-t e) |A| =Go+b+t f) A-Io-b+t 8) A = Go + Io +b-t3) In the macroeconomic model below, Y is aggregate output, C is aggregate consump- tion, Io is aggregate investment, Go is government spending, T is the total amount of taxes collected by the government, and t is income tax rate. The variables Y, C, and I are endogenous, Go, Io, and t are exogenous, and a, b, and k are parameters. Y = C + Io + Go C = a + b(YT) T=k+tY (a > 0, b = (0, 1)) (k > 0, t = (0, 1)) Calculate the determinant of the coefficient matrix A associated with this system of equations. The determinant of the coefficient matrix A is: a) |A| = 1-b+ bt b) |A| = 1-b-bt + a c) |A| = b + t d) |A| = 1+ a + b - t e) |A| = Go +b+t f) A = Iob+t g) A = Go + Io +b-t
