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Small office complex
I am considering purchasing a small office complex that will generate a gross in rents of $600,000 per year. Because of lont-term leases, rental income is not expected to change over the next 20 years. Next year, expenses will be $200,000. Thereafter, however, expenses are expected to grow with inflation at 4% per year. Investors usually demand a 10% (nominal) rate of return on such investments. In 20 years, I could sell the apartment complex for $2 million (which includes the effects of 20 years' inflation). Ignoring taxes, how much should I be willing to pay today for the office complex?
Assume that the nominal wage rate equals 60. In the short-run, aggregate demand and aggregate supply are equal at a price level of 1.0.
Explain how the Central Bank can set the nominal interest rate in the money market. In addition, explain how it can use expansionary monetary policy to boost GDP if the economy is in a recession.
The price per unit remains $7.50 in both scenarios. Does the labour analyst's argument hold? Explain why or why not, and use data to prove your point. (Hint: calculate total costs in both circumstances).
The following quotations are from an article in the Financial Times on November 9, 2007:
Describe (with appropriate figure) short run and the long run impact of immigration on native labour market when the immigrants and natives are complements.
Show the weekly relationship among output also number of workers for a factory with a fixed size of plant.
Illustrate what has been, also what will be, the short run and long run impact of the Federal fiscal policy which has been followed in the past few years.
Suppose the Federal Reserve lowers its target for the federal funds rate six times in seven months while the European Central Bank leaves its target for short term interest rates unchanged.
Describe (in a sentence or two) the short run profit maximization condition when labour is the only variable input? What will happen to the labour demand if price of the output goes up?
Engineers at national research laboratory built a prototype automobile which could be driven 180 miles on single gallon of unleaded gasoline. They estimated that in the mass production the care would cost 40k for each unit to build.
The largo publishing house uses 400 printers and 200 printing presses to produce books. A printer's wage rate is $20, and the price of the printing press is $5,000.
Illustrate fiscal policies also monetary policies which would be appropriate at this time.
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