Pearson eText Macroeconomics -- Access Card
Pearson eText Macroeconomics -- Access Card
7th Edition
ISBN: 9780136850014
Author: Hubbard, Glenn, O'Brien, Anthony
Publisher: PEARSON
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Chapter 3, Problem 3.4.17PA
To determine

The market of the hotel rooms during winter and summer.

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Imagine you are a bank manager. Currently, your bank holds $3 million in deposits at a 3% interest rate. However, you need to increase the total deposits to $6 million. The interest rate elasticity of savings is 1.70. What interest rate should you offer to depositors to obtain the required amount, all other things being equal? Use the midpoint method and round to two decimal places throughout your calculations.
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Imagine you are a bank manager. Currently, your bank holds $8 million in deposits at a 4% interest rate. However, you need to increase the total deposits to $10 million. The interest rate elasticity of savings is 40. What interest rate should you offer to depositors to obtain the required amount, all other things being equal?
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