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(a) In the country of Wiknam, real GDP is fixed by factor endowments and technology and the velocity of money is constant. The money stock grows by 14% per year and the nominal interest rate is 16%. What is the real interest rate?
(b) Now assume that In the country of Wiknam the velocity of money is constant but real GDP grows by 5% per year, the money stock grows by 14 % per year, and the nominal interest rate is 11%. What is the real interest rate?
(c) Suppose that the central bank of Wiknam wants to reduce the long-run rate of inflation to 5% per year If the velocity of money is constant and GDP continues to grow at 5% per year , what must the new rate of money growth be?
(d) Suppose that the velocity of money is not constant but is growing at 1% per year. Real GDP is growing by 5% per year. If the central bank wants to reduce the rate of inflation to 3%, what must be the new rate of money growth? If the real rate if return on capital is 2%, what will be the corresponding nominal interest rate?
Consider an industry in which chief executive ocers (CEOs) run rms. There are two types of CEOs: exceptinal and average. There is a fixed supply of 100 exceptional CEOs and an unlimited supply of average CEOs. Any individual capable of being a CEO..
A university planner wants to determine the proportion of spring semester students who will attend summer school. She surveys 32 current students discovering that 12 will return for summer school.
Moving along the demand curve, quantity demanded decreases 8 percent when price increases 10 percent .a. The price elasticity of demand is calculated to be. b. Given the price elasticity calculated in part a, demand is (elastic, inelastic, unitary e..
Explain difference between profit maximization and shareholder wealth maximization and determine which of these is a more comprehensive statement of a firm's economic objectives?
what uniform price will he charge and how much profit will he earn. The following figure shows the demand and marginal revenue for a monopolist, who has many buyers with different valuations of the good.
Suppose the above government is producing $600 of real GDP, whereas the potential real GDP (or full-employment real GDP) is $700. How large is its budget deficit Its cyclically adjusted budget deficit
There are 168 hours in a week. Of these, about 60 hours will go to sleeping (more or less). That leaves 108 hours for which we have a choice in terms of how we will spend that time. Let's assume that we will spend the 108 hours in either work or l..
Maintenance expenditures for a structure with a 20-year life will come as periodic outlays for overhaul of $4,000 at the end of the 5th year, $6,000 at the end of the 10th year, and $7,500 at the end of the 15th year. With interest at 8%, what is ..
Below is a table with total data for a firm in a perfectly competitive industry. Quantity Total Cost 0 100 10 220 15 300 20 360 25 450 30 600 35 770 40 960 What is the marginal cost and average total cost for the firm at each level of output
John Smith, C.E.O. of A.B.Co. is attempting to estimate the quantity of his product that will be demanded during April. At the current price of $20.00, A.B. Co. is selling 100,000 units per month. Mr. Smith has been informed th..
Suppose the following equations are true: Production Function: Q = K1/3L2/3, which means MPK = 1/3K-2/3L2/3,MPL = 2/3K1/3L-1/3 MRTS = 2(K/L) Total Cost = rK + wL r = .2 w = $5
A perfectly competitive market is in long-run equilibrium. At present there are 100 identical firms each producing 5,000 units of output. The prevailing market price is $20. Assume that each firm faces increasing marginal cost.
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