Macroeconomics (Fourth Edition)
4th Edition
ISBN: 9780393603767
Author: Charles I. Jones
Publisher: W. W. Norton & Company
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Chapter 17, Problem 9RQ
To determine
The importance of efficient information in the stock market.
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suppose that Sean, an economist from a university in Arizona, and Yvette, an economist from a university in Massachusetts, are arguing over saving incentives. The following dialogue shows an excerpt from their debate:
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Yvette: You really think households would change their saving behavior enough in response to this to make a difference? Because I don't.
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Chapter 17 Solutions
Macroeconomics (Fourth Edition)
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- What is the main objective and sources of public finance? According to macro economicsarrow_forwardSuppose there is an increase in the interest rate in the financial markets. What effect will this have on income? Use a diagram to support your answer.arrow_forward) A college is considering investing $6 million to add 10,000 seats to its football stadium. The athletic department forecasts it can sell all these extra seats at each game for a ticket price of $20 per seat, and the team plays six home games per year. If the school can borrow at an interest rate of 14%, should the school undertake this project? (Show your math!) What would happen if the school expected a losing season and could sell tickets for only 5,000 of the seats?arrow_forward
- How distortions affect the market of tradable and non-tradable goods and how it affects the financial and economic values of these goods?arrow_forwardComplete the following table. Given Disposable Income and an MPC, calculate the level of consumption and savings.arrow_forwardExplain how changes in interest rates and rates of return on various investment options will affect the amount of money that businesses are willing to invest to increase output.arrow_forward
- what is the meaning of ripple effects and how does it affect an economy?arrow_forwardFind out the value of the multiplier if the MPC is zero?arrow_forwardSuppose a consumer has $1500 in the current time period and $1100 in the future time period.Suppose also that the consumer can borrow and lend freely and, unless otherwise specified, borrowing and lending interest rates are the same. (a) If the interest rate between time periods is 50%, what is the budget constraint between consumption in the present and consumption in the future? (B) If the interest rate at which the consumer can borrow is 75% but the rate at which she can lend is25%, what is the budget constraint? (C) Suppose the interest rate is 50%. If the consumer has to pay a fee of 10% of the loan amount in order to borrow money, what is the budget constraint?arrow_forward
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