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Finding forward and spot rates
1. Implication of IRP. Assume that interest rate parity exists. You expect that the one-year nominal interest rate in the U.S. is 7%, while the one-year nominal interest rate in Australia is 11%. The spot rate of the Australian dollar is $.60. You will need 10 million Australian dollars in one year. Today, you purchase a one-year forward contract in Australian dollars. How many U.S. dollars will you need in one year to fulfill your forward contract?
2. Implication of PPP. Today's spot rate of the Mexican peso is $.10. Assume that purchasing power parity holds. The U.S. inflation rate over this year is expected to be 7%, while the Mexican inflation over this year is expected to be 3%. Wake Forest Co. plans to import from Mexico and will need 20 million Mexican pesos in one year. Determine the expected amount of dollars to be paid by the Wake Forest Co. for the pesos in one year.
Expalin how are the current real stock of money in the U.S. and real interest rates computed.
Express how long would it take for the price level to double if inflation persisted.
Assume that software purchases by businesses are treated as expenses, as they were before November 1999. Calculate GDP using three different approaches: expenditure approach, income approach, and product approach.
Explain the difference among a price floor also a price ceiling. Provide a situation in which a price ceiling may be used.
The demand function for VCRs has been estimated to be Qv = 123 - 1.7Pt + 46 Pm - 2.1Pv -5M, where Qv is the quantity of VCRs,Pt is the price of a videocassette, pmis the price of a movie, Pv is the price of a VCR, and M is income.
Illustrtae what is the profit-maximizing level of price and quantity for this monopolist.
Shelly's preferences for consumption and leisure can be expressed as. This utility function implies that shelly's marginal utility of leisure is C-200 and her marginal utility of consumption is L-80.
Provide an update on the economy-where is unemployment, what is the outlook for the deficit, what are the overall predictions for 2010 - 2012?
Problem - Income Elasticity of Demand, Interpret the following Income Elasticities of Demand (YED) values for the following and state if the good is normal or inferior; YED= +0.5 and YED= -2.5
Compute the own price elasticity of demand at a price of $4. What is the inverse demand curve for the radio station
Illustrate what policy actions have the Federal Reserve taken to confirm that direction.
Elucidate how cost-push inflation might prompt policymakers to take actions that subsequently cause demand-pull inflation.
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