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A: False
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A: a True
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- Describe the following term in your own words. Q.2.1 InvestmentSuppose a handbill publisher can buy a new duplicating machine for $ 500 and the duplicator has a 1-year life. The machine is expected to contribute $ 550 to the year's net revenue. Instructions: enter your anwer as a whole number. What is the expected rate of return? (in percentage) If the real interest rate at which funds can be borrowed to purchase the machine is 8 percent, will the publisher choose to invest in the machine? Will it invest in the machine if the real interest rate is 9 percent? if it is 11 percent?Long run real interest rates are expected to increase. An accountant and an MBA student (who just finished his course of Managerial Economics) were interviewed regarding the effect of this increase. Keeping all else constant, their answer would likely differ. How do you guess the interviewed will answer: Does the difference in response matters? If yes, why? If not, why not?
- Malaysians are at their worst financial position in 2022 compared with the last five years, and thelooming recession may push them to the brink with dwindling savings coupled with theaftermath of the Covid-19 pandemic. A recent survey by Malaysian financial services websiteRinggitPlus revealed that 70 per cent of Malaysians saved less than RM500 per month (S$153)in 2022 or did not save at all. “This is compared with 52 per cent of Malaysians saving less thanRM500 monthly in 2021, the largest year-on-year increase since 2018,” the RinggitPlusMalaysian Financial Literacy Survey 2022 showed....Mr Patrick Tay, deals partner, economicsand policy at Malaysia PwC, is not surprised by the decline in savings in 2022. “One reason forthe depleted savings is low wages and higher inflation. But another key reason is that Malaysiansare spending more post-pandemic on holidays or other leisure expenses because some may feelthat they saved during the pandemic, and it is fine to now spend this year…How do changes in interest rate affect expected consumption? Interprete the effect of interest rate on expected consumption in the light of precautionary savings.APPLIED ECONOMICS Topic: Intertemporal Choice Levinn’s utility function is expressed as the following: U= C1 C2 0.3 where C1 is his first periodconsumption and C2 is his second period consumption. His income in the first period is$2500 and interest rate is at 10%. If at equilibrium, Levinn is neither a borrower nor a lender,then what is his expected income in the second period? Do not copy from others
- A university student was bequeathed $2,000 upon graduation at age 20 years. This person was hired by one of the largest global tech companies soon after graduation with an expected annual income of $250. Assume that the retirement age is 65 years and life expectancy is 85 years in the country in which the student resides. Given that this country has zero real interest rate and consumption smoothing is optimal for all individuals: Derive an expression for the person’s lifetime resources clearly describing each term. Calculate the value of the person’s lifetime resources. Derive an expression for the person’s consumption function clearly describing any new terms included. Derive an expression for the person’s average propensity to consuming. State the theory on which you based the calculations in parts i., ii. and iii. above.True or false, with explanation Suppose the bank deposit has 30% annual interest rate. It implies that the purchasing power of depositors increases by 30% after one year.D7 You run an oil company that wants to extract an oil reserve. The total stock of oil in the reserve is 600 barrels. You must sell all of the oil in two time periods, so the quantity extracted will be q1 +q2 = 600. The price per barrel you can sell the oil for is pt = 710 − 1 2 qt in each period. The cost of extracting a single barrel is not constant, but increases as more oil is extracted in a period, c(qt) = 1 2 qt. If the interest rate is 5%, how much oil will you extract in periods 1 and 2 if you wanted to maximize profits.
- APPLIED ECONOMICS Topic: Intertemporal Choice Levinn’s utility function is expressed as the following: U= C1 C2 0.3 where C1 is his first periodconsumption and C2 is his second period consumption. His income in the first period is$2500 and interest rate is at 10%. If at equilibrium, Levinn is neither a borrower nor a lender,then what is his expected income in the second period? Show the graph if possibleQ4 a) When the demand of output decides how much to produce which type of demand prevails in the economy? B) Why investment is negatively related to interest rate?c) Give the equilibrium in the market for loans?Find the value of the change in the stock if the Closing stock is 122 and the Opening stock is 102? In an economy
