Already have an account? Get multiple benefits of using own account!
Login in your account..!
Remember me
Don't have an account? Create your account in less than a minutes,
Forgot password? how can I recover my password now!
Enter right registered email to receive password!
Suppose I borrow $200,000 for one year at a fixed nominal interest rate of 7 percent.
(a) What is my nominal repayment next year?
(b) Suppose that at the time the loan was made, both the lender and I believed that the (ex-ante) rel interest rate on the loan would be two percent. Suppose the actual inflation rate over the life of the loan turns out to be 4 percent. What is the ex-post real interest rate? Does the inflation rate help me at the expense of the lender, or help the lender at my expense?
(c) Re-do question (b) assuming that the inflation rate turns out to be 5 percent and 6 percent.
(d) Given that the lender and I agreed that the ex-ante real interest rate should be 2 percent, what nominal interest rate would I have been charged if the lender and I had expected inflation over the life of the loan to be 10 percent? 3 percent? 0 percent?
(e) Inflation increased enexpectedly during the 1970s. Explain why this helped someone who bought a house using a 30-year mortgage with fixed nominal interest rates in 1965, but not someone who bought a house using a 30-year mortgage with a fixed nominal interest rate in 1980.
Suppose a monopolist has a constant marginal cost of $20 per unit, and a fixed cost of $100. The demand curve for the product of the monopolist is given by P=100-Q, and its corresponding marginal revenue is given by MR=100-2Q, where Q is the amount o..
How much profit does an unregulated monopolist earn? How much profit would be earned if MC pricing were imposed?
Assume a linear town with 100 potential costumers that are uniformly distributed on a unit mile. What are the prices each store will charge for hamburgers? What would their profits be? (b) Intuitively, would both stores be happy with their price and..
You are the head of the central bank and you want to maintain 2 percent long - run inflation, using the quantity theory of money. If the real GDP growth is 4 percent and velocity is constant, what must the growth rate of money be to the inflation tar..
Better Buy is having a sale this weekend on digital cameras. Its two most popular models are on sale but their sales are not independent. If the price of one increases, the sales of the other increases. In economics this is referred to as substitutab..
Derive the total supply function of X for the industry assuming that the industry operated under perfect competition.
The law in Ruba says no worker shall be paid less than nine slugs per hour.
As newly appointed “Energy Czar,” your goal is to reduce the total demand for residential heating fuel in your state. You must choose one of three legislative proposals designed to accomplish this goal: (a) a tax that would effectively increase the p..
At 3% unemployment which is likely to happen The Federal Reserve should:
You have just arranged for a $1,780,000 mortgage to finance the purchase of a large tract of land. The mortgage has an APR of 8 percent, and it calls for monthly payments over the next 22 years. However, the loan has an eight-year balloon payment, me..
Which one of the subsequent was not a contributing cause of the decline in investment also thus the recessionary expenditure
You are given the following figures on economic base: primary employment: 10,000; Secondary employment 30,000 A) Determine the ration B) a New Factory engaged in primary employment is moving into the base and intends to employ 250 persons. What are t..
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!
whatsapp: +1-415-670-9521
Phone: +1-415-670-9521
Email: [email protected]
All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd