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Irving Fisher's equation of exchange is expressed as
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- Suppose an individual plays a gambling game where it is possible to lose $1.00, break even, win $3.00, or win $5.00 each time she plays. Complete the Statement: In the long run, the player can expect to In the long run, the player can expect to win Blank 1 (win or lose?) Blank 2(Express your answer in two decimal places. Do not include the currency symbol for your answers) for playing the game.Suppose that the central bank in the UK (The Bank of England) decides to raise interest rates because it is worried about high inflation. As a result, interest rates in the UK become higher than interest rates in the REST OF EUROPE. This acts as an incentive for EUROPEAN investors to increase the amount of funds they invest in British (UK) interest bearing assets. In order to increase their purchases of those UK assets, which are priced in PST, EUROPEAN investors have to convert EUR into PST. This conversion, in turn, increases the demand for PST. Based on the above information, please explain what will happen to the EUR–‐‑PST exchange rate. In other words, will the increased demand for PST, make PST gain value (appreciateConsider the specific Macroeconomic model involving: Private sector consumption: C = 2400+0.8(Y-T); Y = GDP, T = Taxes Tax function: T = 125+0.12Y Business sector investment: I =67+0.08r; r = Rate of interest Government spending: G = 788 Exports: X = 192 - 28x; x = Exchange rate Imports: M = 345+0.09Y+2x; Y = GDP, x = Exchange rate Solve this model for the value of the equilibrium GDP (Y*), given that the interest rate is 7%, and exchange rate is $1.18. Please show all work
- we make use of the general monetary model here, where L is no longer assumed constant, and money demand is inversely related to the nominal interest rate. Recall from that earlier question inflation rate in Korea is = 10% and inflation rate in Japan is = 0%. In addition, assume that the bank deposits in Japan pay 2% interest rate (i¥ = 2%). Compute the interest rate paid on South Korean won deposits (iwon). Using the definition of the real interest rate, show that the real interest rate in South Korea (rwon) is equal to the real interest rate in Japan (r¥) Suppose the Bank of Korea decreases the money growth rate from 15% to 10% and the inflation rate falls proportionately (one for one) with this decrease. If the nominal interest rate in Japan remains unchanged, what happens to the interest rate paid on Korean won deposits? Using time series diagrams (impulse graphs), illustrate how this decrease in the money growth rate affects South Korea’s…We make use of the general monetary model here, where L is no longer assumed constant, and money demand is inversely related to the nominal interest rate. Recall from that earlier question inflation rate in Korea is = 10% and inflation rate in Japan is = 0%. In addition, assume that the bank deposits in Japan pay 2% interest rate (i¥ = 2%). a. Compute the interest rate paid on South Korean won deposits (iwon). b. Using the definition of the real interest rate, show that the real interest rate in South Korea (rwon) is equal to the real interest rate in Japan (r¥) c. Suppose the Bank of Korea decreases the money growth rate from 15% to 10% and the inflation rate falls proportionately (one for one) with this decrease. If the nominal interest rate in Japan remains unchanged, what happens to the interest rate paid on Korean won deposits? d. Using time series diagrams (impulse graphs), illustrate how this decrease in the money growth rate affects South…Consider the specific Macroeconomic model involving: Private sector consumption: C = 2400+0.8(Y-T); Y = GDP, T = Taxes Tax function: T = 125+0.12Y Business sector investment: I =67+0.08r; r = Rate of interest Government spending: G = 788 Exports: X = 192 - 28x; x = Exchange rate Imports: M = 345+0.09Y+2x; Y = GDP, x = Exchange rate Solve this model for the value of the equilibrium GDP (Y*), given that the interest rate is 7%, and exchange rate is $1.18.
- The commodity market for a simple two-sector economy is in equilibrium when Y = C + I. The money market is in equilibrium when the supply of money (Ms) equals the demand for money (Md), which in turn is composed of the transaction-precautionary demand for money (Mt) and the speculative demand for money (Mz). Assume a two-sector economy where C = 5 + 0.8Y, I = 100 - 75i, Ms = 250, Mt= 0.3Y, and Mz = 50 - 150i. , find the IS and LM and equliprium in commodity and money markets. 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.I have tried this problem before but I got the second half wrong, How do I shift the graph correctly? Now, suppose that Mexico experiences a sudden bout of political turmoil, which causes world financial markets to become uneasy. Because people now view Mexico as unstable, they decide to pull some of their assets out of Mexico and put them into more stable economies. This unexpected shock to the demand for assets in Mexico is known as capital flight. Shift the NCO curve to illustrate the effect of capital flight. Then, on the graph representing the market for loanable funds, shift the demand curve, the supply curve, or both to reflect the change caused by the shift in NCO. Determine the equilibrium interest rate after capital flight occurs, and enter it into the second row of the table. Then determine the level of NCO that occurs along the new NCO curve at the new equilibrium interest rate.In 2011, the IS curve of the Philippines was estimated as Y=1100−25 i. In the money market the LM curve was computed as i= 0.2/5 Y −24. Solve for the equilibrium interest rate and expenditure(income)
- Jack and Jill both obey the two-period Fisher model of consumption. Jack earns $100 in the first period and $100 in the second period. Jill earns nothing in the first period and $210 in the second period. Both can borrow or lend at the interest rate r. a. You observe both Jack and Jill consuming $100 in the first period and $100 in the second period. What is the interest rate r?How does the introduction of adjustment cost and imperfect competition alter the modelling of investment? “Even now that most monetary policy is conducted by independent monetary authorities, there is still the problem that politicians may pursue fiscal policies that are incompatible with stable inflation”. Briefly discuss this assertion with respect to Ghana.Suppose the price of a basket of goods costs $25 in country x and ¥300 in country y. suppose the price level in country x and y is expected to rise by 5% and 10%,respectively, in next year. If the current interest rate in country X is 10%, what would you expect the interest rate to be in country y?
