Consumer has utility function In(c1)+beta'In(c2), where beta=1. Interest rate i=0%. (NOTE!) Income y1=10 and y2-50. Gov't gives consumer a free stimulus check of $20 in the first period. Assume consumers are NAIVE, then in the first period the consumer will consume c1=
Q: Exogenous factors are the O a) variables that are not important in a model. O b) variables inside a ...
A: The model that depicts processes of the economy through a set of variables and a set of logical rela...
Q: Assume that you are a manager for Haworth —one of the major manufacturers of office furniture. You r...
A: Haworth will maximize its profits at the level where the employment level of inputs is such that the...
Q: Noninvestment-grade bonds are bonds that receive a Standard & Poor's (S&P) bond rating of _or lower....
A: 17) The credit rating agencies have categorized bonds and investments into various categories based ...
Q: Provide a definition of “technological capability” and “social capability”, and describe the differe...
A: In an economy, capabilities explains the ability of the society to deal with the specfiic issue to i...
Q: What happens to employment in country A after minimum wage is introduced?
A: Labor Force refers to the total number of workers that are willing to work at the given wage levels ...
Q: Table linking output to inputs Units of Labor Input Quantity of Output Marginal Product Marginal Cos...
A: Marginal product is the additional product gained when one more unit of variable factor is employed....
Q: A firm has a production function of Q = KL + L, where MPL = K + 1 and MPK = L. The wage rate (W) is ...
A: A production function shows the relationship between the factors of production and the quantity prod...
Q: should the GDP per capita in the united states be higher than Canada's
A: GDP of the country helps in the measurement of total goods and services produced by the firms/indivi...
Q: Which of the following economists is credited with developing the notion of "economic time?" Marbury...
A: An economist's involvement in development involves assessing statistics such as GDP and consumer con...
Q: Suppose you put $500 into a bank account today. Interest is paid annually and annual interest rate i...
A: The formula to find future value from present value is, FV = PV (1 + r)n
Q: 1. Would you consider spending to make a school or an office building earthquake-proof a good invest...
A: 1 In order to create the earthquake resistant in the building and the schools is to build an undergr...
Q: If the economy starts at full employment but investment exceeds saving, then the economy will move i...
A: When AD is above or below the AD required for full employment level equilibrium then it creates infl...
Q: An apartment in a building had a cost of 66,000 JD in 2010. The cost of the apartment was 99,750 JD ...
A: The consumer price index is the ratio of the price of good 1 to the price of good 2. It means as the...
Q: Demonstrate the Effects of an Adverse Oil Price Shock Rise using the Aggregate Demand – Aggregate Su...
A: The whole supply of goods and services produced within an economy at a certain overall price in a gi...
Q: 5. A businessman borrows from the bank an amount of P200,000 to be repaid at the end of 3 years by a...
A: The real rate of return is the annual percentage of profit gained on an investment adjusted for infl...
Q: Diminishing marginal product is also known as a) net investment. b) diminishing returns. c) deprecia...
A: Net investment is the difference between total amount of money spend on capital and the depreciation...
Q: CASH FLOW DIAGRAM Calculate the capitalized cost of a project that has an initial cost of P8,000,000...
A: Solution given below,
Q: 6. Because of the peso devaluation, a car costing P150,000 is to be purchased through a finance comp...
A: An effective interest rate is the return on a savings account or other when the effects of accumulat...
Q: 2) Indicate the type of cost which is not variable cost: a) Workers' wage. b) Material used in produ...
A: Production cost is the monetary value incurred in the process of production. It includes two cost fi...
Q: Give examples of preference relation that is monotone but not continuous and is representable by a u...
A: In Microeconomics and Consumer Behavior, monotonicity of any preference relation refers to the consi...
Q: Financial capital includes Q A. money, stocks, and bonds, which are capital because they provide bus...
A: Answer: Financial capital refers to the money, stock, bonds, and other sources of funding that provi...
Q: 5. Candace was eating French fries and talking on the phone as she sped through traffic on the way t...
A: Here, the given situation explains the careless behavior of Candance at the road due to which she sl...
Q: Now suppose that droughts in the Southeast and floods in the Midwest substan- tially reduce food pro...
A: The United States central banking system is called the Federal Reserve System (abbreviated as Fed or...
Q: Assess the effects of Price ceiling. please provide with graph n detail answer
A: Price ceiling means fixing maximum price which will be lower than the equilibrium price. Please find...
Q: Julia and Julia is a small, owner-operated bakery. The owner of Julia & Julia is considering two alt...
A: A rate of return is the net addition or loss of a speculation throughout a predetermined time span, ...
Q: Suppose market demand for oil is Q(P)=100–0.75P where Q is billions of barrels (BBL)or oil per year ...
A: In economics, revenue maximization refers to the theoretical concept that the firms take up for sell...
Q: 3. The effect of negative externalities on the optimal quantityof consumption Consider the market fo...
A: Equilibrium quantity and price is where the demand(private value) is intersecting with supply(privat...
Q: Why does the demand curve for loanable funds slope downward from left to right? Oa) Interest rates o...
A: The demand curve for loanable funds shows the relationship between the amount of the loanable funds ...
Q: Consumer has utility function ln(c1)+beta*ln(c2), where beta=1. Interest rate i=50%. Income y1=10 ...
A:
Q: When the inflation rate is expected to exceed the target rate by a significant margin, the SARB will...
A: Inflation is typically defined as a broad measure, such as the overall increase in prices or the cos...
Q: A two-firm coal cartel that produces at a constant marginal cost of £22 faces a market inverse deman...
A: The correct answer is given in the second step.
Q: The bonds sold by the U.S. government to pay for the national debt are called a) Treasury securities...
A: US government uses open market operations which includes buying and selling of securities to influen...
Q: Question 5 In an OLG model with money: Each gen picks 12 banans when young, 0 bananas when old. Cent...
A: The OLG model is the natural framework for the study of: (a) the life-cycle behavior (investment in ...
Q: A technological advancement will cause O a) the production function to shift downward. O b) the prod...
A: Production function creates a relationship between input and output of goods.
Q: Does Switzerland have a increasing unemployment rate and if there is what are the possible approache...
A: Unemployment rate is a measurement of the number of people who are not working in an economy but ar...
Q: Suppose that in Japan, without a tariff 10,000 cars will be sold per year at an equilibrium price of...
A: Given: Without tariff: 10,000 cars will be sold per year at an equilibrium price of $20,000 With tar...
Q: A company has determined that the price and the monthly demand of one of its products are related by...
A: Given information: The demand function for company's product: D=375-P0.5 .... (1) Fixe...
Q: * 20. In a closed economy without investment and government spending, C = 1000 + .5YD, and taxes T=5...
A: Given C = 1000 + 0.5Yd Taxes = 50 As economy has no investment and government spending the level of ...
Q: Consider a game between 2 payers (Ann and Bill) where each chooses between 3 actions (Up, Middle and...
A: For the following game : Number of players - Ann & Bill Strategy set of Ann = Strategy set of B...
Q: ABC
A: The Consumer Price Index (CPI) is a measure of an economy's overall price level. The CPI is made up ...
Q: Taking the data of the following table answer 4 through 5. Indicators of Puerto Rico, 2009 (Income i...
A: The Gross products mean the total market valu of goods which was produced domestically during the ye...
Q: What is the status of the Doha Round of table negotiations? Identify the key stumbling block of this...
A: The negotiations has collapsed in the 29 July with respect to the issues and the existence in betwee...
Q: Using the supply and demand functions below, derIve the demand and supply curves if Y = $55,000 and ...
A: Given:- Demand, Q=8.5-P+0.01Y Supply, Q=9.6+0.5P-0.2Pc Y=$55,000(thousand) Pc=$13 Please find the im...
Q: Find the present worth today in real value corresponding to the cur- rent values shown below for a 4...
A: Given inflation rate = 4 % Interest rate = 4 % Real interest rate = nominal rate – inflation rate = ...
Q: 5. The gross domestic product is: a. 86,157.5 b. 88,404.5 c. 92,925.9 d. 95,708.2 e. 82,808.5
A: The gross domestic product of a country is a measure of its economic output.Countries with higher GD...
Q: Consider the competitive market for a good. Consumers have quasilinear preferences that yield the ma...
A: Given; Demand function; q=15-p2 Supply curve; q=2p a) At equilibrium; Dema...
Q: Consider a strategic interaction between firms 1 and 2. In Stage 1, firm 1 chooses the level of adve...
A: Aggregate demand function : P = 6a - q1 - q2 In a simultaneous profit maximizing game both firms ...
Q: All other things being equal, an decrease in the oil price will cause: a. the AD to shift up to the ...
A: The aggregate demand is the total value of all the goods and services that are being produced in an ...
Q: Discuss what is meant by the long run in economics. When does the long run occur?
A: A long run is a span of time during which a manufacturer or producer can make manufacturing decision...
Q: D A: FLKHN) A:F(L,KH,N) 7- Suppose the U.S. economy is producing at point A on Production Function 1...
A: Production function refers to the function that gives the relation between the factors of production...
Step by step
Solved in 2 steps
- Suppose the economy is characterized by the following behavioral equation: Y = C + I + G + (X-M) Equilibrium condition C = 2000 -f' 0.75Yd Consumption equation I = 4000 Investment expenditure G = 4100 Government Expenditure X = 2800 Export M = 400 + 0.25Y Import equation T = 100 + 0.3Y Tax equation Yd = disposable IncomeRequired: Derive Balance of Payment (BP) curve and explain why it slopes upwards Compute equilibrium national income and Imports for the economy. Differentiate between the closed-economy model and the open economy modelSuppose that •y =100 (income today) • y' = 150 (income tomorrow) • r = 10% (interest rate on bonds) t = 10 (taxes today) %3D • t' = 10 (taxes tomorrow) What is the lifetime budget constraint for the consumer? c + c'/1.1 = 250 c + c'/1.1 = 230 c + c' = 217.27 c + c'/1.1 = 217.27Consider a consumer that lives only for two periods. He works in period 1 (and gets income Y1) and moves up the corporate ladder in period 2 (and gets income Y1 < Y2). This consumer has the usual preferences over time: u(C1) + βu(C2) 1. Assume this consumer cannot borrow. What is the consumption in period 1 and period 2? Display graphically. Show the corresponding utility curve. 2. Assume that now the consumer is allowed to save or borrow. Write down the new budget constraint. What is the consumption in period 1 and period 2? Display graphically. Could the consumer be worse off? Could the consumer be better off? Draw budget constraints such that for one of them consumer prefers to borrow and for the other - prefers to save. 3. Assume once again that a consumer cannot borrow, but can borrow and immediately sell some MacGuffins, and in the next period, the consumer must buy back the MacGuffins to return to the lender. Assume that MacGuffin t r a d e s a t P1 > 0 in the first period…
- Help meAnya has a two-period horizon. She has the utility functionu (c1,c2) = 2ln(c1) + ln(c2), where cj is her consumption in period j. Her income is Mj in period j. Assume that M1= 7,000 and M2=9,600. The interest rate at which she can borrow and lend is 20%. (i) Find the equation for Anya’s budget line. (ii) Find her optimal bundle. (iii) Explain whether her utility would rise or fall if the interest rate were to fall slightly. (iv) Now suppose that the interest rate is again 20% and Anyahas M1= 0 and M2= 18,000.Explain why her optimal bundles here and in (ii) are related as they are. *just answer part iv.Anya has a two-period horizon. She has the utility functionu (c1,c2) = 2ln(c1) + ln(c2), where cj is her consumption in period j. Her income is Mj in period j. Assume that M1= 7,000 and M2=9,600. The interest rate at which she can borrow and lend is 20%. (i) Find the equation for Anya’s budget line. (ii) Find her optimal bundle. (iii) Explain whether her utility would rise or fall if the interest rate were to fall slightly. (iv) Now suppose that the interest rate is again 20% and Anyahas M1= 0 and M2= 18,000.Explain why her optimal bundles here and in (ii) are related as they are.
- Suppose that the economy is characterized by the following behavioral equations: C = 180 + 0.80YD /= 140 G = 160 T= 110 Equilibrium GDP (Y) = 1960. (Round your response to two decimal places.) Disposable income (Y,) = 1850. (Round your response to two decimal places.) %3D Consumption spending (C) = | (Round your response to two decimal places.)Consider a closed economy with consumption, production, and government. The representative consumer always desires a consumption bundle where the quantities of consumption and leisure are such that C=al and a = 1. Show the following on your answer sheet. [1] Suppose that w = 0.75, profit = 8, and T= 6. Determine the consumer's optimal choice of consumption and leisure, showing every step of your calculation. [2] Illustrate the consumer's equilibrium from part [1] in a diagram.Suppose that we have an economy with many identical households. There is a government that exogenously consumes some output and pays for it with lump sum taxes. Lifetime utility for a household is: U =InCt +ßlnCt+1 The household faces two within period budget constraints given by: Ct + St = Yt – Tt Ct+1 =Yt+1 -Tt+1 +(1+rt)St Use the Euler equation and intertemporal budget constraint to derive an expression for the consumption function. The government faces two within period budget constraints: (1) G_t + SG_t = T_t (2) G_(t+1) = T_(t+1) + (1 + r_t)SG_t In equilibrium, what must be true about S_t and SG_t?
- Explain the difference between the policy preferences function and the indirect utility function.Consider a consumer that lives only for two periods. He works in period 1 (and gets income Y1) and moves up the corporate ladder in period 2 (and gets income Y1 < Y2). This consumer has the usual preferences over time: u(C1) + βu(C2) Assume that now the consumer is allowed to save or borrow. Write down the new budget constraint. What is the consumption in period 1 and period 2? Display graphically. Could the consumer be worse off? Could the consumer be better off? Draw budget constraints such that for one of them consumer prefers to borrow and for the other - prefers to save.Suppose that the economy is characterized by the following behavioral equations: C = 150 + 0.90YD 1= 130 G = 150 T= 90 Equilibrium GDP (Y) = (Round your response to two decimal places.) Disposable income (Yp) = (Round your response to two decimal places.) %3D Consumption spending (C) = (Round your response to two decimal places.) %3D