Nominal GDP last year was $28,909 billion. Contracts on the futures markets are currently selling for $513. What is the market's prediction for nominal GDP this year?
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- The prime interest rate is the rate that banks charge their best customers. Based on the nominal interest rates and inflation rates in Table 19.10, in which of the years would it have been best to be a lender? Based on the nominal interest rates and inflation rates in Table 19.10, in which of the years given would it have been best to be a borrower?Suppose the Federal Reserve begins to Increase the supply of money at an Increasing rate. What Impact would that have on GDP, unemployment, and inflation?Construct the price index for a fruit basket in each year using 2003 as the base year.
- Consider an economy called Xanadu for which desired aggregate consumptiondepends on income, Y. and the real interest rate, r, according toCd =100+0.7Y - 200r.Xanadu's GDP is Y = 1000 and government spending on goods and services is G=180. Xanadu's desired future capital stock is given byK* = 140 - 100ucwhere luCdenotes the user-cost of capital. The price of capital is PK =2, thephysical depreciation rate is d =0.1 and the existing capital stock is K0= 50. Trapital stock between any period t and the following period t+1 evolves accordng toKt+1 = It+(1-d)Kt where It the level of investment. Assume throughout that net factor payments from abroad (NFP) is equal to zero.Suppose instead that Xanadu is a small open economy facing a world interest rate of 1%. It follows that Xanadu's current account position is equal toA) -16B) -51C) -6D) -8Those are the production numbers for 3 different years for country B (50pts) Year Price of Bananas $ Quantity of bananas kg. Price of backrubs $ Quantity of backrubs 1 1.00 5 6.00 5 2 1.00 5 6.00 7 3 2.00 10 6.00 9 Calculate real and nominal GDP for year 1, 2 and year 3 when base year is year 1. Compute inflation in country B from period 1 to period 2. Compute inflation rate from period 1 to 3 Compute inflation rate from period 2 to 3 Calculate GDP with Chain weighted method for period 3. Compare the result with the answer in part a.o Calculate the constant flows based on year zero of the following current data o What is the real rate of the flows if the market rate is 18% o In constant pesos, what is the value of the flows in 2015
- Hula hoop fabricators cost 100 $ each. The Hi-Ho Hula HOOP Company (HHHHC) is trying to decide how many of these machines to buy. HHHHC expects to produce the following number of hoops each year for each level of capital stock shown. Number of Fabricators Number of hoops produced per year 0 0 1 100 2 150 3 180 4 195 5 205 6 210 Hula hoops have a real value of 1 $ each. HHHHC has no other costs of Fabricators. Find the expected future marginal product of capital (MPKf) in terms of Dollars for each level of capital. If the real interest rate is 12 % per year and the depreciation rate of capital is 20 % per year, find the user cost of capital. How many fabricators should HHHHC buy? Repeat part (b) for real interest rate of 8 % per year. Repeat part (b) for a 40 % tax on HHHHC sales revenue. A technical innovation doubles the number of hoops a fabricator can produce. How many fabricators should HHHHC buy when the real interest…Scenario 2Suppose the marginal product of capital is MPK=2-0.001K, the capital stock depreciates at 20% rate, the tax rate on revenues is 20% and price of capital is assumned to be 1. Furthermore, the economy has full-employment level of output of 5000, government purchases are 1000. Desired consumption is given by C^d=3000-2000r+0.1Y, where Y is output and r is expected real interest rate. Initial level of capital is 1000.Refer to Scenario 2. what is the expression for desired gross investment ? A) I^d=950-1250r B)I^d=950+1250r C)I^d=1750-1250r D)I^d=1950-1250r.A new factory in a small town has an annual payroll of $6 million. It is expected that 60% of this moneywill be spend on the town will by factory personnel. The people in the town who receive this money areexpected to spend 60% of what they receive in the town, and so on.(a) What is the total of all this spending (called the “total economic impact”) of the factory on the towneach year?(b) How much additional spending will be generated by a 10 million dollar tax rebate if 60% of allincome is spent?
- a) The consumption function of UAE ix C100+0.5Y. The Private business sector has made on investmentof 100 million dirham to expand their business. How much national income will change in the UAE economy? Assume there is no government or foreign sector.magine an economy where the overall price level has been rising over the last twenty years. (No exceptions!) Which of the following statements would be correct for this economy?The nominal GDP must be larger than the real GDP for any given year in that twenty year period. The nominal GDP must be lower than the real GDP for any given year in that twenty year period. The growth rate of the nominal GDP must be lower than the growth rate of the real GDP for any given year in that twenty year period. The growth rate of the nominal GDP must be higher than the growth rate of the real GDP for any given year in that twenty year period.(a) Suppose the price level in an economy rises while the money wage rate remains constant. What happens to the quantity of real GDP supplied. How will this affect the aggregate supply or aggregate demand curve? What if the potential GDP increases? Which aggregate curve is affected and how? (b) Real GDP Consumption Planned Investment Government Purchases Net Exports $1,000 $1,000 $100 $150 -$50 2,000 1,900 100 150 -50 3,000 2,800 100 150 -50 4,000 3,700 100 150 -50 From the table data provided, answer the following questions. The numbers in the table are in billions of dollars. Show all calculations. a. What is the equilibrium level of real GDP? b. What is the Marginal Propensity to Consume? c. What is the multiplier value in this economy? d. If potential GDP is $4,000 billion, is the economy at full employment? If not, what is the condition of the economy? e. If the economy is…