Match the contribution with the appropriate scholar.Who believed that framing the general equilibrium of the entire microeconomy is better treated one market at a time?v Choose...ModiglianiWho is considered the father of Modern Portfolio Theory?MarshallFisherWho demonstrated why people are either savers or dissavers?KeynesWho provided a general existence proof of a competitive equilibrium?MarkowitzRicardoWho developed the distinction between comparative and absolute advantage?ArrowHotellingWho first developed a working model of options pricing?BachelierSmithWho argued that competition in physical space can result in minimum differentiation?Choose...Who determined that, unlike the neoclassical microeconomic theory of equilibrium, we may be in a state of persistentChoose...disequilibrium in the macroeconomy?Who considered the regard by others as an important driver of human behavior?Choose...Who developed a complete Life Cycle Model of spending and saving decisions over a lifetime?Choose...

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Who believed that framing the general equilibrium of the entire microeconomy is better treated one market at a time? v Choose... Modigliani Who is considered the father of Modern Portfolio Theory? Marshall Fisher Who demonstrated why people are either savers or dissavers? Keynes

Who believed that framing the general equilibrium of the entire microeconomy is better treated one market at a time? v Choose... Modigliani Who is considered the father of Modern Portfolio Theory? Marshall Fisher Who demonstrated why people are either savers or dissavers? Keynes

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter17: Capital And Time

Section: Chapter Questions

Problem 17.2P

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Assume there are no investment projects in the economy that yield an expected rate of return of 25 percent or more. But suppose there are $10 billion of investment projects yielding expected returns of between 20 and 25 percent; another $10 billion yielding between 15 and 20 percent; another $10 billion yielding between 10 and 15 percent; and so forth. a. Cumulate these data and present them graphically using the graph below, putting the expected rate of return (and the real interes rate) on the vertical axis and the amount of investment on the horizontal axis. Instructions: Use the tool provided 'ID' to plot the investment demand curve (plot 6 points total). 30 Tools ID 20 15 10 10 20 30 40 50 60 Investment (billions of dollars) Instructions: Enter your answers as a whole number. b. What will be the equilibrium level of aggregate investment if the real interest rate is: 15 percent: $ billion 10 percent: $ billion 5 percent: $ billion Expected rate of return, percent 25
You invest $1,000 in stocks. Would a macroeconomist call this an investment? Why or why not? An economist would say no, because the minimum threshold for a stock purchase to be considered an investment is $10,000. yes, because there is a concensus amongst Wall St. that this is considered an investment. O yes, because you are purchasing something that may yield more value later. no, because you are just buying an existing asset without creating any new productive capacity in the economy.
Assume that an individual expects to work for 40 years andthen retire with a life expectancy of an additional 20 years.Suppose also that the individual’s earnings increase at a rateof 3 percent per year and that the interest rate is also 3 percent(the overall price level is constant in this problem). What(constant) fraction of income must the individual save ineach working year to be able to finance a level of retirementincome equal to 60 percent of earnings in the year just priorto retirement?
Following the COVID-19 pandemic, central banks have committed to keepingshort-term interest rates low to stimulate economies and financial markets, evenas the recovery gains traction. Discuss the implications of this commitment by thecentral-bank on a Takaful Operator’s investment performance and providerecommendations on how it should restructure its asset classes so to continuemeeting expected returns?
Other things equal, a decrease in the Z factors the equilibrium interest rate and equilibrium output. Select one: O a. increases; increases O b. increases; decreases Oc decreases; decreases O d. decreases; increases
During the 2007–2009 recession, the value of commonstocks in real terms fell by more than 50%. How mightthis decline in the stock market have affected aggregatedemand and thus contributed to the severity of therecession? Be specific about the mechanisms throughwhich the stock market decline affected the economy.
The demand ? (in billions of £) for a bond with coupon rate 5% and face value ?? = 1000, and two years to maturity as a function of its price ? is ? = 4000 − 2?. The supply in (billions of £)asafunctionofthepriceofthebondis ? = 2?+ 400. There is a business cycle expansion, so both supply and demand shifts. After the shift, the new demand curve is given by: ?=4000+?−2? ,whereas the new supply curve is ?=2? + 200. For which values of ? will the interest increase/decrease? Which values of ? are in line with empirical data?
8 of 38 Janelle is an investor looking at the bond market for an investment opportunity. If Janelle knows that 1-year interest rates for the next three years are expected to be 4, 2, and 3 percent, and the 3-year term premium is 1 percent, then the 3- year bond rate will be O A. 2 percent O B. 1 percent O C. 4 percent O D. 3 percent Unsure
Economists John Maynard Keynes and John Hicks argued that, if hedgers tend to holdshort positions and speculators tend to hold long positions, the futures price of an assetwill be below the expected spot price. This is because speculators require compensationfor the risks they are bearing. They will trade only if they can expect to make money onaverage. Hedgers will lose money on average, but they are likely to be prepared toaccept this because the futures contract reduces their risks This is from John Maynard Keynes. My question is i dont understand this statement. Why is the future price of an asset to be below the expected spot price if speculators are the main determinant of the future price, they have a long contract which means they will earn money if the spot price is above the expected spot price
Assume there are no prospective investment projects (1) that will yield an expected rate of return (r) of 25 percent or more, but there are $5 billion of investment opportunities with an expected rate of return between 20 and 25 percent, an additional $5 billion between 15 and 20 percent, and so on. If the real interest rate is 15 percent in this economy, the aggregate amount of investment will be Multiple Choice O O O O $15 billion. $10 billion. $20 billion. $25 billion.
D) Discussing the Equilibrium in the Endowment Economy: In the endowment economy, aggregate consumption must equal aggregate endowment ineach period. Using this condition and the optimal consumption functions derived,discuss how the equilibrium real interest rate rtis determined in this economy. Explainthe role of the real interest rate in ensuring equilibrium in the lending market and why itis necessary for achieving this equilibrium (e) Analyzing the Effect of Changes in Relative Risk Aversion:Given the consumption functions, discuss how changes in the coefficient of relative riskaversion (σ) affect the household’s consumption choices and the sensitivity of these choicesto changes in the real interest rate. Provide an intuitive explanation for your findings.
8 If nco>0 greater than zero do we say nco is positive? When we way nco>0 means that we have foregin money right? And if nco is less than zero do we way nco is negative? If nco is less than zero we call capital inflow Why do we say so? What dose capital out and inflow mean?