1- Examine the fundamental causes of a nation’s business cycle fluctuations. Also, examine the relationship between total spending by government and consumers in a nation and the location of the countries’ GDP on the business cycle. 2-Suppose you have $200,000 in a bank term account. You earn 5% interest per annum from this account.You anticipate that the inflation rate will be 4% during the year. However, the actual inflation rate for the year is 6%. Calculate the impact of inflation on the bank term deposit you have and examine the effects of inflation in your city of residence with attention to food and accommodation expenses. 3- Use the Aggregate supply and Aggregate Demand Model below to answer the questions that follow. Aggregate Supply and Aggregate Demand Model (i) Examine the influence of government expenditure on investment in a nation. Use Jot Inc. Ltd a multinational construction company in which you are the Chief Exec of the firm that that is highly diversified and recieves funds to construct highways and other government funded projects. Also, explain the factors that cause the Aggregate Demand curve to be downward sloping left to right.

1- Examine the fundamental causes of a nation’s business cycle fluctuations. Also, examine the relationship between total spending by government and consumers in a nation and the location of the countries’ GDP on the business cycle. 2-Suppose you have $200,000 in a bank term account. You earn 5% interest per annum from this account.You anticipate that the inflation rate will be 4% during the year. However, the actual inflation rate for the year is 6%. Calculate the impact of inflation on the bank term deposit you have and examine the effects of inflation in your city of residence with attention to food and accommodation expenses. 3- Use the Aggregate supply and Aggregate Demand Model below to answer the questions that follow. Aggregate Supply and Aggregate Demand Model (i) Examine the influence of government expenditure on investment in a nation. Use Jot Inc. Ltd a multinational construction company in which you are the Chief Exec of the firm that that is highly diversified and recieves funds to construct highways and other government funded projects. Also, explain the factors that cause the Aggregate Demand curve to be downward sloping left to right.

Survey Of Economics

10th Edition

ISBN:9781337111522

Author:Tucker, Irvin B.

Publisher:Tucker, Irvin B.

Chapter13: Inflation

Section: Chapter Questions

Problem 2SQP

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Suppose you purchase a $1,500 TIPS on January 1, 2020. The bond carries a fixed coupon rate of 5.5 percent. Over the first two years, semiannual inflation is 1.5 percent, 1.5 percent, 4 percent, and 3 percent, respectively. What is the principal at the end of month 6?
10. Under the following conditions, estimate the price of an item during year 3 A. If it is estimated that its price at the beginning of the analysis is $8.50 and suffers an inflation of 5.5% per year. B. If it is estimated that its price at the beginning of the analysis is $8.50 and it suffers an inflation in year 1 of 3%, in year 2 of 5% and in year 3 of 2%. C. If it is estimated that its price in the first year of the analysis will be $8.50 and it suffers an inflation of 5% per year. Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.
Suppose Cho is a cinephile and buys only movie tickets. Cho deposits $3,000 in a bank account that pays an annual nominal interest rate of 10%. Assume this interest rate is fixed—that is, it won't change over time. At the time of her deposit, a movie ticket is priced at $15.00. For each of the annual inflation rates given in the following table, first determine the new price of a movie ticket, assuming it rises at the rate of inflation. Then enter the corresponding purchasing power of Cho's deposit after one year in the first row of the table for each inflation rate. Finally, enter the value for the real interest rate at each of the given inflation rates. Hint: Round your answers in the first row down to the nearest movie ticket. For example, if you find that the deposit will cover 20.7 movie tickets, you would round the purchasing power down to 20 movie tickets under the assumption that Cho will not buy seven-tenths of a movie ticket. Number of tickets Cho can purchase options:…
Suppose Cho is a cinephile and buys only movie tickets. Cho deposits $3,000 in a bank account that pays an annual nominal interest rate of 10%. Assume this interest rate is fixed—that is, it won't change over time. At the time of her deposit, a movie ticket is priced at $15.00. For each of the annual inflation rates given in the following table, first determine the new price of a movie ticket, assuming it rises at the rate of inflation. Then enter the corresponding purchasing power of Cho's deposit after one year in the first row of the table for each inflation rate. Finally, enter the value for the real interest rate at each of the given inflation rates. Hint: Round your answers in the first row down to the nearest movie ticket. For example, if you find that the deposit will cover 20.7 movie tickets, you would round the purchasing power down to 20 movie tickets under the assumption that Cho will not buy seven-tenths of a movie ticket. Fill in the annual inflation chart Choices…
Suppose the price level reflects the number of dollars needed to buy a basket of goods containing one cup of tea, one biscuit, and one magazine. In year one, the basket costs $7.00. In year two, the price of the same basket is $8.00. From year one to year two, there is(DEFLATION, INFLATION) at an annual rate of (1.00%, 1.25%, 1.43%, 12.50%, 14.29%) . In year one, $70.00 will buy(0.1,0.11,4.38,8.75,10) baskets, and in year two, $70.00 will buy (0.1,0.11,4.38,8.75,10) baskets. This example illustrates that, as the price level rises, the value of money (RISE, FALL, REMAINS THE SAME) .
Assume that the economy has an annual inflation rate of 5 percent. Are the following investments profitable in real terms? You do not need to explain your answer. (a) A$1,000 face-value bond, which you purchase at a 30% discount, that pays a monthly coupon of$4. (b) A$1 million house the increases in price by$45,000 per year. You do not rent out the house, nor do you undertake renovations. (c) A$1 million house that you renovate for$45,000 over the course of a year, causing the price to increase to$1.1 million. (d) The spot price of silver is$31 per ounce. You purchase 50 ounces of silver for$1,600, in order to compensate the merchant. Over the year, the spot price of silver rises to$34per ounce, and you are able to sell the silver you have at the spot price. (e) You purchase a Non-Fungible Token (NFT) for$98 million. The following year, you are able to sell it for$102.5 million
A. Find the real value of your 40,000 salary for each of the next three year's. year1? year2? year3? b. If you have a cola in your contract, and the inflation rate is 5 percent, what is the real value of your salary for each year? year1? year2? year3?
Consider the following price information: Year 1 Year 2 Cup of Coffee $0.5 $1.00 Glass of Milk. $1.00 $2.00 a. Based on the information given, what was the inflation rate between year 1 and Year 2 b. What happened to the price of coffee relative to that of milk between year 1 and year 2
Suppose you know that cumulative inflation for the period 1926 2010 was 12.34. You also know that the geometric mean for Treasury bills for this period was 3.6 percent. What was the real return for Treasury bills for the period 1926 2010?
Suppose the base year bundle of goods X, Y, and Z is: (X^(b), Y^(b), Z^(b))= (5,700,60) and the base year (vector of) prices is: (Px^(b),Py^(b), Pz^(b))=(1000,5,25) The following year the (vector of) prices is: (Px^(b+1), Py^(b+1), Pz^(b+1))= (1010,5.05,27.50) 1) Compute the inflation using a Laspeyres Price Index, like the original form of the Consumer Price Index(CPI). 2) Compute the inflation index an alternative way. Calculate the price increase for each good separatelyand then take a weighted average of these price increases, using as weights the budget shares spent on eachgood in the base year. For example, for good X use weight Sx^(b)= (Px^(b)X^(b))/(Px^(b)X^(b)+ Py^(b)Y^(b)+Pz^(b)Z^(b)) Please show all work very confused
Please just do question 4 please 3) Suppose that on January 1, 2019 a bank lends $20,000 to a person. The bank and the individual both agree that the real interest rate charged on the loan should be 10% and the loan is going to be totally paid ($20,000 plus interest), in a one-time payment, on December 31, 2020. Suppose the two parties to this transaction can perfectly foresee what the inflation rate for this period is going to be. Given this information, what is the nominal rate the Bank has to charge on this loan? Assume that the CPI is computed at the beginning of each year. According to US inflation data: The historical average CPI for 2019 is - 255.657 The historical average CPI for 2019 is - 258.811 The inflation rate during the period is: (258.811/255.657 -1) *100 = 1.233% Real Interest Rate = Nominal Interest Rate – Expected Inflation Nominal Interest Rate = Real Interest Rate+ Expected Inflation Nominal Interest Rate = 10% + 1.23% Nominal Interest Rate…
Suppose Dina is an avid reader and buys only comic books. Dina deposits $3,000 in a bank account that pays an annual nominal interest rate of 5%. Assume this interest rate is fixed—that is, it won't change over time. At the time of her deposit, a comic book is priced at $10.00. Initially, the purchasing power of Dina's $3,000 deposit is comic books. For each of the annual inflation rates given in the following table, first determine the new price of a comic book, assuming it rises at the rate of inflation. Then enter the corresponding purchasing power of Dina's deposit after one year in the first row of the table for each inflation rate. Finally, enter the value for the real interest rate at each of the given inflation rates. Hint: Round your answers in the first row down to the nearest comic book. For example, if you find that the deposit will cover 20.7 comic books, you would round the purchasing power down to 20 comic books under the assumption that Dina will not buy…