Explain the connection between price of financial assets and its interest rate? Que2: Explain what is mean to choice at the marginally and illustrate with three choice that you face today ?
Q: 12. If the quantity of money demanded is less than quantity of money supplied, then the…
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A: The permanent income speculation is a hypothesis of buyer spending expressing that individuals will…
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Q: Q. 18 Dave deposits $2000 into the bank as deposits in 2016. The bank promises him a nominal…
A: Deposited - $2000 Nominal Interest rate = 5% = 0.05 Goods: 2 can of Coca-Cola 5 hamburgers
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A: IS curve denotes the relationship between interest rate and output level in the economy.
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A: The money demand arises as people desire to hold money in the form of cash or bank deposits. People…
Q: Explain the connection between the price of a financial asset and its interest rate. O A. Arising…
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Q: Referring to the two figures, which of the following sequences (numbered arrows) shows the logic of…
A: Interest rate is usually controlled by the central bank of a country. The central bank fixes the…
Q: Assume the following model of the economy: Y = C + I + G C = 120 + 0.5(Y - T) I = 100 - 10r G =…
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A: a. The equilibrium interest rate occurs at the point where the demand for money is equal to the…
Q: C1 C1 = yo (1+r) slope = - (1+r) 1 и'(со) slope = pu'(c1) B* = (cj,c¡) U*= u(cô) + pu(ci) yo CO…
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Q: 2) Yoni spends his income on consumption between two periods - C1 and C2. Both C1 and C2 are normal…
A: a) Budget Constraint: The limit of the opportunity set—all potential permutations of consumption…
Q: a. Derive and graph the IS and LM curves. Use the accompanying diagram to graph the IS and LM curves…
A:
Q: lth at the end of the year. If you hold the wealth as money, you will have y in wealth at the end of…
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A: We are going to define the marginal rate of time preference; the marginal productivity of capital…
Q: For the next two questions, assume that national income (Y) increases from 200 to 400, all else the…
A: Answer-
Q: f the quantity of money demanded is less than quantity of money supplied, then the interest rate…
A: Money market equilibrium would attain at the point where quantity of money demanded is equal to…
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Q: Money Demand) Suppose that you never carry cash. Your pay- check of $1,000 per month is deposited…
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Q: ve Demand For Mo
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Q: Money Supply: M = 8000Money Demand: M= 10,000 – 40,000rwhere money is in billions of dollars and…
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Q: The demand for liquid cash in the economy is based on _____________ Select one: a. Interest rates…
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Q: The LM curve is flatter if the interest elasticity of demand for money- Select one: a. both may be…
A: Here Answer is "High"
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Q: Exercise 2 Suppose that money demand is given by MD= $Y(0.25 – i) where $Y is $100. Also, suppose…
A: Given: Money demand: MD = $Y(0.25 - i) $Y = $100 Money supply: MS = $20
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A: Interest rate plays a very important role in the consumption and investment decision of the people.
Q: Given: Barbara has an income of $2000 this year, and she expects an income of $1100 next year. She…
A: This is the equation of the budget line for intertemporal choice:…
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Q: When the interest rate falls, how does the opportunity cost of holding money and the quantity of…
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Q: Josh is playing blackjack for real money. He has reference-dependent preferences over money: if his…
A: Given information Given value function V(X)=ln(X+1)---X>=0 V(X)=-2ln(-X+1)--- X=<0
Q: Ann has $600,000 that she could consume or leave as a bequest to her daugh- ter. Plotting her…
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Q: If the real interest rate is 1 percent and the nominal interest rate is 3 percent, according to the…
A: A nominal interest rate is the rate of interest before considering inflating into account.
Q: For each of the interest rates in the following table, compute the opportunity cost of holding the…
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Que1: Explain the connection between
Que2: Explain what is mean to choice at the marginally and illustrate with three choice that you face today ?
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- 2) Is the marginal utility of money income uniquely defined? 3) Examine the responses of an electricity consumer to changes in the connection charge and prices of electricity.Q) using concept of ordinal utility theory, derive two demand curves-one that keeps money income constant and another that keeps consumer's utility level constant. Explain it early but not copy paste answer provides give in own words onlys.Question 1 What is the importance of studying economics? Give an example how it can help you. Question 2 What is your observation regarding market/individual demand and supply for customer goods and services during the current crisis of COVID 19? You can use example(s) of any goods to explain your answer. Question 3 5.1) Jane has RM500 a week to spend on clothing and food. The price of clothing is RM25 and the price of food is RM10. The clothing and food pairs in Jane's choice set include ________ units of clothing and ________ units of food. 5.2) Sue is maximizing her utility. Her MUx/Px = 10 and MUy = 40. Then the price of Y must be __________ 5.3) Ted has $600 a week to spend on clothing and food. The price of clothing is $30 and the price of food is $5. What is the equation for Ted's budget constraint, assuming he spends his entire budget? ______________________
- It is October and Sam has won a price of $9000. She has the following two options:• Option A: receiving the entire amount in October;• Option B: receiving the price in three equal installment, that is, receiving $3000 in eachof the following months (October, November, December).Sam decides to distribute her price over time by choosing Option B. Assume that Sam hasconstant marginal utility of money. Prove mathematically that Sam’s preference for Option B cannot be explained by hy-perbolic discounting (the β − δ model). Assume 0 < δ < 1 and 0 < β ≤ 1.(a) Dividing MUX and MUY by their respective prices compute the weighted marginal utility or marginal utility of money expenditure and draw up Table 2 showing diminishing returns for the consumption of the 6 units? (b) Briefly state what you can infer on this equation; MUX/PX = MUY/PY as far as equi marginal principle and managerial economics is concerned? C)Given that MUX/PX and MUY/PY are equal to 6 when 5 units of X and 3 units of Y are purchased. By purchasing these combinations of X and Y, calculate the amount the consumer will spend and derive the maximum satisfaction from combination of these units. (d) Applying the above principle illustrate in terms of a figure, and draw marginal utility curves for goods X and Y. You need to use marginal utility and price i.e. Marginal utility per Kwacha spent on good X = MUX/PX, and that of Y = MUY/PY. The MUX/PX curve should be shown in figure (a) while the MUY/PY curve should be shown in Fig (b). Please do not draw negative…Pls help with below homework. Calculate the value of getting 1 000 000 EURO today and an alternative of getting 1 200 000 EURO in three years if you know that the possible nominal interest rate is 5% if: a) There is no taxation and no inflation. b) Inflation each year is 3% and no taxes. c) Inflation is 2% each year and a tax rate of 30% on interest flows applies. d) What is the difference between relative prices and MRS. e) What is the difference between cardinal and ordinal values of utility? Pls Show each step
- Assume money supply increases at rate z. Explain what seigniorage is. Use formulas. What are the factors that can increase the seigniorage?Consider a consumer that lives only for two periods. He works in period 1 (and gets income Y1) and moves up the corporate ladder in period 2 (and gets income Y1 < Y2). This consumer has the usual preferences over time: u(C1) + βu(C2) 1. Assume this consumer cannot borrow. What is the consumption in period 1 and period 2? Display graphically. Show the corresponding utility curve. 2. Assume that now the consumer is allowed to save or borrow. Write down the new budget constraint. What is the consumption in period 1 and period 2? Display graphically. Could the consumer be worse off? Could the consumer be better off? Draw budget constraints such that for one of them consumer prefers to borrow and for the other - prefers to save. 3. Assume once again that a consumer cannot borrow, but can borrow and immediately sell some MacGuffins, and in the next period, the consumer must buy back the MacGuffins to return to the lender. Assume that MacGuffin t r a d e s a t P1 > 0 in the first period…James has a wage income of $50.000 in the present and $200.000 in the future. His utility is given as U = min (2Cp, Cr) - that is, his utility is the lesser of twice the dollars spent on present consumption or the dollars spent on future consumption. The interest rate is 30%. (A) What is the minimum amount of money James would be willing to accept today to have the interest rate at 40% rather than 30%? Explain and show work (B) What is the maximum amount of money James would pay today to have the interest rate at 30% rather than 40%? Explain and show work
- Refer to Figure 2-13. Which of the followings statements is most accurate about payments for goods and services? Question 5 options: They are received by households in the factor market. They are received by firms in the factor market. They flow in a clockwise direction. They flow in a counterclockwise direction.1. How does a consumer’s optimal choice of goods change if all prices and the consumer’s income double? (Hint: focus on the budget constraint) 2. Output is produced according to a production process given by: Q = 4LK, where L is the quantity of labor input and K is the quantity of capital input. If the price of K is $10 and the price of L is $5, then what is the cost-minimizing combination of K and L capable of producing 32 units of output?Describe the effects of a decrease in the interest rate on present and next period’s consumption if the individual is a net lender (i.e., has savings) after period 1 and the substitution effect is larger than the income effect. Show your answer graphically
