User Account

All Pages

Real interest rate if people instead are risk averse

Assignment Help Macroeconomics
Reference no: EM131270488

Consider a two-period OLG model. Population grows at a net rate of 2.5percent and the fiat money stock expands at 4.55 percent per period. Agents can holdfiat money with complete safety or to lend to someone who may never repay the loan.The chance of such a default is 10 percent. What net real interest rate will be charged to the borrower if people are risk neutral? What is the corresponding (net) nominal rate?What can you say about the level of the real interest rate if people instead are risk averse?

Reference no: EM131270488

Questions Cloud

Establishing a pricing strategy : Pricing is one part of the value equation in developing a marketing program. Discuss the methods available to marketers for establishing a pricing strategy. Analyze why each would be selected. Use at least one resource (cited in APA format) to sup..
Complete a truth table for the gate : A three-input AND-OR (AO) gate shown in Figure 1.42 produces a TRUE output if both A and B are TRUE, or if C is TRUE. Complete a truth table for the gate.
Create a class whose main method creates three arrays : Create a class whose main method creates three arrays. The first array will contain five kinds of flowers - petunia, pansy, rose, violet, and carnation.
Large scale bakery is laying out new production process : A large scale bakery is laying out a new production process for its packaged bread, which it sells to several grocery chains. it takes 12 minutes to bake the bread. how large of an oven is required so that the company is able to produce 4200 units of..
Real interest rate if people instead are risk averse : What net real interest rate will be charged to the borrower if people are risk neutral? What is the corresponding (net) nominal rate?What can you say about the level of the real interest rate if people instead are risk averse?
What ways have you kissed the earth with your feet lately : Which made me think of all of you and the journey we are on together to learn to preserve our beautiful planet. It also inspired me to share my favorite quote with you: "Walk as if you are kissing the earth with your feet" - Thich Nhat Hanh, Vietn..
Write java application that calculates the minimum for quiz : Write a Java application that calculates the minimum, maximum, and average for each quiz. Print the output results in a table format using a text area. Use loop and if statement control structures as well as Array data structure.
Explain why bcd might be a useful way to represent numbers : In a binary coded decimal (BCD) system, 4 bits are used to represent a decimal digit from 0 to 9. For example, 3710 is written as 00110111BCD.
Responsibility for maintaining ethical corporate governance : What steps can a corporation take to prevent agency problems and (b) in recent merger history, can you identify the role between management performance and takeover actions? (c) Does the financial manager have a greater responsibility or a lesser res..

Reviews

Write a Review

Macroeconomics Questions & Answers

  Inflation targeting be a good policy

Why might it be difficult for the Fed to formally adopt inflation targeting?  Would inflation targeting be a good policy for the Fed in the present economic environment

  In using the taylor rule

In using the Taylor Rule as a guideline for monetary policy, what are the pros and cons of using forecasted values of inflation and output rather than observed values of these variables?

  Describe the present economic crisis situation in europe

Describe the present economic crisis situation in Europe.  Why has it been so difficult for the Europeans to find a solution to this problem?   Comment on what implications the crisis may have for the rest of the world if Europeans are not able to ag..

  Long-term federal government budget problems

Question:. Explain why there are long-term Federal government budget problems. Explain why the base-line forecast of the CBO is misleading.

  Derive and compare demand curve

Question based on Derive and compare demand curve,  Derive Ambrose's demand function for peanuts. How does it compare with Johnny's demand curve for peanuts?

  Problem based on utility function

Problem based on  Utility Function - Problem,  Answer and explain the following using a diagram which is completely labeled.

  Laffer curve : tax rate and tax revenue

Question based on Laffer Curve : Tax Rate and Tax Revenue,  Do raising tax rates necessarily raise tax revenue? What factors affect how tax revenue changes when tax rates change?

  Problem - income elasticity of demand

Problem - Income Elasticity of Demand,  Interpret the following Income Elasticities of Demand (YED) values for the following and state if the good is normal or inferior; YED= +0.5 and YED= -2.5

  Positive balance of payment

Question Positive Balance of Payment: "Things will look good for the US if we could just get to where we are consistently running a positive Balance of Payments."

  Effect of recession on the investment curve

Comment on the effect of a recession on the investment curve (only) and on the level of savings, investment, and the equilibrium real interest rate in the financial crisis that hits United States first starting in fall 2007.

  Affect of falling domestic investment on trade surplus and

How will a fall in domestic investment affect the trade surplus and net capital outflows in the domestic economy, the trade deficit and capital inflows in the rest of the world.

  Crises in the banking sector and bank run

Banking crises crisis decreases depositors' confidence in the banking system. What would be the effect of a rumor about a banking crisis on checkable deposits in such a country?

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd