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(a) In the country of Wiknam, real GDP is fixed by factor endowments and technology and the velocity of money is constant. The money stock grows by 14% per year and the nominal interest rate is 16%. What is the real interest rate?
(b) Now assume that In the country of Wiknam the velocity of money is constant but real GDP grows by 5% per year, the money stock grows by 14 % per year, and the nominal interest rate is 11%. What is the real interest rate?
(c) Suppose that the central bank of Wiknam wants to reduce the long-run rate of inflation to 5% per year If the velocity of money is constant and GDP continues to grow at 5% per year , what must the new rate of money growth be?
(d) Suppose that the velocity of money is not constant but is growing at 1% per year. Real GDP is growing by 5% per year. If the central bank wants to reduce the rate of inflation to 3%, what must be the new rate of money growth? If the real rate if return on capital is 2%, what will be the corresponding nominal interest rate?
Adam, Joe and Estelle constitute the entire market for chicken. Adam's demand curve is given by QA = 100 - 2P Joe's demand curve is given by QJ = 160 - 4P Estelle's demand curve is given by QE = 150 - 5P Using this information, when P = 35 Adam's, Jo..
Illustrate your answer by assuming that with advertising, a firm's demand curve has price elasticity of -1.5 and without advertising, it is -2. If MC is $10, what is the difference in the profit-maximizing price
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The presence of autocorrelation leads to all of the following undesirable consequences in the regression results except:
During this holiday, he gave his first Fireside Chat, a radio address where he explained his policies to the American people in plain language. After the four-day holiday, he still kept one-third of all U.S. banks closed (mostly small farmer banks..
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