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You win a lottery. You have the choice of two ways to be paid. If you pick Payout Scheme X, you get $2,750 today. If you pick Payout Scheme Y, you get three payments: $1,000 today, $1,000 one year from today, and $1,000 two years from today. Which choice has the greater present value if all banks pay 10% interest per year now and in the future?
Now we will analyse how macroeconomic variables fit together and present models which explain the main macroeconomic variables. Using these models we can, for instance, analyse
Q. Explain the classical motivation? The classical motivation: Consumers want to smooth their consumption over time. In good times, consumers know that it is a temporary stat
Q. Determination of all the endogenous variables? Determination of all the endogenous variables in the AS-AD model Determination of P and Y: Prices and
Which of the following is a result of an export subsidy? a. The imposing nation always benefits from an export subsidy. b. The imposing nation suffers a terms of trade loss from an
Can democracy survive if a majority of the citizen pays little or nothing in taxes while benefiting directly from a higher level of government spending? Why or why not?
Factors Responsible for changes in Aggregate Supply We know that changes in input costs such as wages, oil and other input prices will cause changes in aggregate supply. Most
For a single nonprofit provider, describe an output-maximizing model to predict supplier behavior?
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Suppose that quantity demand falls by 30% as a result of a 5% increase in price. What would be the price elasticity of demand for this good?
When a government spends more than it receives in taxes; it runs a budget deficit, which is generally covered by issuing debt obligations to domestic and/or international investors
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