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1. Show that for an economy where the growth rate of GDP is zero, to keep its debt-GDP ratio constant, the government must run a primary surplus equal to the interest payments on its outstanding debt.
2. Explain how an acceleration of the GDP growth rate could have contributed to the fall in the debt-GDP ratio during the 1990's.
3. Consider the money supply model that we discussed in class. (a) Show that we can express the money multiplier m =M/B as m =cr+1/cr+rr. (b) What is the value of m under 100% reserve banking? (c) What is the value of m if depositors keep all their cash in their bank accounts as deposits? Provide some intuition for your result. (d) Describe how bank failures during a financial crisis could adversely affect the money multiplier.
4. Consider the unemployment model. (a) Show that U/L =1/(1+f /s) . (b) Imagine that the government provides new funding for re-training programs to re-train former workers displaced by workplace automation. Explain how this might impact the unemployment rate, referring to the equation above.
to be successful leaders in the global business world of the 21st century managers must consider economic trends
The EZ Credit Company offers to loan a college student $5500 for school expenses. Repayment of the loan will be in monthly installments of $237.57 for 30 months. The total repayment of money is $7,127.10, which includes the original $5500, $1,248.45 ..
Illustrate what will happen to the equilibrium quantity also price of a product in a competitive marketplace when the increase in demand exactly offsets the decrease in supply.
Suppose that your firm's marginal cost of producing a pencil is 5 cents and the average cost of producing a pencil is 3 cents. If your firm is interested in minimizing average total costs, what should your firm do?
An investment has a beta of 1.0. The risk free rate is 2% and current market return is 8%? What is the required return?
uppose that, for a host of reasons, part of the world suddenly becomes more uncertain (think of wars, political instability, economic crises, etc.). Refer to this group of more uncertain countries as UC. Analyze the effect of this increase in uncerta..
The Pilot Pen Company has decided to use 15 test markets to examine the sensitivity of demand for its new product to various prices, as shown in the following table. Advertising effort was identical in each market. What is the price elasticity of dem..
A bond that matures in 19 years has a ?$1,000 par value. The annual coupon interest rate is 12 percent and the? market's required yield to maturity on a? comparable-risk bond is 14 percent. What would be the value of this bond if it paid interest? an..
The economy has two sides. One side is the aggregate demand side. Elucidate the relationship between the price level and the quantity demanded of Real GDP.
Beloit Co. is a manufacturer of? mini-doughnut machine makers. Early in 2015 a customer asked Beloit to quote a price for a? custom-designed doughnut machine to be delivered by the end of 2015. Once? purchased, the customer intends to place the machi..
Explain how you think these trends have affected our overall economic well-being (think unemployment, wage rates, etc.) in recent years.
Throughout the company’s franchises, the probability is 0.60 that a meal lwill be served with in 45 seconds. What is the expected number of coupons a counter employee will receive when serving the regional manager?
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