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Problem - A legal consulting firm provides legal advice to business corporations. The firm charges corporate clients for both direct professional time at an hourly rate, secretarial services at $60 per professional labor-hour, and office support charges at 20% of the direct professional costs billed. There are three lawyers in the firm and their rates per professional hour are as follows:
Lawyer
Billing Rate Per Hour
Alex
$640
Bob
$220
Cathy
$100
The firm has just prepared the October bills for two clients, SN Inc. and MR Ltd. The hours of professional time spent on each client are as follows:
Hours per SN Inc.
Hours per MR Ltd.
26
4
5
14
39
52
Required - What amounts did the legal consulting firm bill to SN Inc. and MR Ltd., respectively, for October?
Hubbard argues that the Fed can control the Fed funds rate, but the interest rate that is important for the economy is a longer-term real rate of interest. How much control does the Fed have over this longer real rate?
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