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West Bubble makes ordinary soap bars that are sold for 5 guilders each. East Bubble makes deluxe soap bars that are sold for 100 florins each. The real exchange rate between West and East Bubble is two ordinary soap bars per deluxe soap bar.
a. What is the nominal exchange rate between the two countries?
b. During the following year West Bubble has 10% domestic inflation and East Bubble has 20% domestic inflation. Two ordinary soap bars are still traded for a deluxe soap bar. At the end of the year what has happened to the nominal exchange rate? Which country has had a nominal appreciation? Which has had a nominal depreciation?
During the current year, sales total $2,000,000, income is $84,700 per capita, advertising is $500,000, and competitor advertising is $300,000. Previous period levels were $77,000 (income), $400,000 (advertising), and $400,000 (competitor advertis..
A major advantage of production function is that it can be easily transformed into a linear function, and thus can be analyzed with the linear regression method.
a) In this economy, compute private saving, public saving, and national saving b) Find the equilibrium interest rate. c) Now suppose that G rises to 1,250. Compute private saving, public saving, and national saving.
Market research at Apple Corporation has shown that the demand function for its new iPhone is as follows: QA = 3 - 0.02PA + 0.0002I + 0.01PS where QA is the quantity demanded (in thousands) of iPhones, PA is the price of an iPhone, I is consumer i..
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company has issued a 10-year bonds, with a face value of $1,000,000 in $1,000 units. Interest at 8% is paid quarterly. if an investor desires to earn 12% nominal interest (compounded quarterly) on $10,000 worth of these bonds,
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suppose you purchase a corporate bond with a 0-year maturity, a $1000 par value, a 10% coupon rate, and semiannual interest payments. This means that you receive a $50 interest payment at the end of each six-month period for 10 years (20 times).
the general price inflation in our economy, the purchasing power of the dollar shrinks with the passage of time. If the average general inflation rate is expected to be 7% per year for the foreseeable future, how many years will it take for the do..
A firm has a production function f (k; l) = pkl. Suppose that in the short run the quantity of capital that the firm has to use is fixed at the level of 9 (and so k = 9), but when producing zero the firm can fully recover the cost of capital
Suppose a monopolist faces the following demand curve P = 596 - 6Q. Marginal cost of production is constant and equal to $20, and there are no fixed costs. a) What is the monopolist's profit maximizing level of output
A distillation column is purchased for $300,000. The firm finance 40% of the investment with its own resources, and the rest with a loan to be repaid in 10 equal semiannual payments at an interest rate of 6% compounded semiannual. (Hint recall tha..
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