Reference no: EM13725381
Intermediate Macroeconomics
Question No. 1
Suppose that you are currently a college senior. You are currently working a part-time job that pays $2,000 per year (call it Y1), but you expect to earn $20,000 next year (call it Y2), after you graduate. Assume that there is no inflation and that the interest rate is 10% per year.
a) You want to smooth consumption such that consumption this year equals consumption next year (that is C1=C2.) Solve for consumption this year and next year. What is your saving (S)? [Hint: in this case S will be negative; you borrow against your future income. You are dis-saving.]
b) Suppose that your current income (Y1) doubles to $4,000 per year. What happens to your current consumption? What happens to your saving? [numbers please]
c) Set Y1 back to $2,000. Suppose that expected income (Y2) doubles to $40,000 per year. What happens to your current consumption? What happens to your saving? [numbers please]
d) Go back to the initial incomes. Suppose that the interest rate suddenly increased to 15%. Solve for consumption this year and next year.
Question No. 2 Life-Cycle Hypothesis
a. Suppose a person expects to live six periods. This person has no accumulated wealth and receives an income of $15 in each of the first 4 periods. After period 4 this person retires and receives no wage income. Assuming this person follows the life cycle consumption function, prepare a table showing income, consumption and saving in each of the 6 years of the person's life. Assume the interest rate is zero for parts a, b and c.
b. Suppose this person wins the lottery in period 1 for $30 (this is equivalent to an increase in wealth). Prepare a second table showing income, consumption and saving in each of the 6 years of the person's life. What is the MPC out of the temporary change in income?
c. Rather than winning the lottery in period 1, suppose this person gets and unexpected salary increase of $10 per year. Prepare a third table showing income, consumption and saving in each of the 6 years of the person's life. What is the MPC out of this permanent change in income?
|
Transmission of infectious diseases
: Without proper precautions, early childhood settings can be prone to the spread of infectious diseases. Review the information in your text on the transmission of infectious diseases.
|
|
Wants to maximise profit in the short run
: a. What price should the company charge if it wants to maximise profit in the short run? b. what price should it charge if it wants to maximise revenue in the short run?
|
|
Define privatize the money supply in the united states
: Would it be possible to privatize the money supply in the United States completely. In doing so, what would be the primary obstacle to overcome in implementing such a policy
|
|
Create a communication plan for your performance
: Create a communication plan for your performance improvement suggestions for three different audience types in the organization
|
|
Intermediate macroeconomics
: Suppose that you are currently a college senior. You are currently working a part-time job that pays $2,000 per year (call it Y1), but you expect to earn $20,000 next year (call it Y2), after you graduate. Assume that there is no inflation and..
|
|
Organizational profile for project option
: Organizational Statement and Overview: We are only as good as our teams. Organizational HR functions have been known to create barriers and extra work for employees, preventing them from achieving organizational goals. We need to be consistent on ..
|
|
Assignment related to java programming
: Question 1: Write a java program to compute the squares of the numbers in the array list like 1, 2, 3, 4... up to 50. Question 2: Write a java program to compute the sum of numbers and average in the array list up to 50.
|
|
The demand for medical care may be supplier
: Some Health Economists believe that the demand for medical care may be "supplier" or physician-induced. State whether under a Fee-for-Service and under a Capitation financing structure physicians will have an incentive to increase or decrease ..
|
|
Discusses the decisions of the federal open market committee
: You should now find a press release from the Board of Governors of the Federal Reserve System, dated December 16, 2009, which discusses the decisions of the Federal Open Market Committee (FOMC) for that date.
|