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Different nations answer the what, how, and for whom questions differently. China for instance, builds dams using many workers and only a little capital equipment.
The New England Soap Company is considering adding some processing equipment to the plant to aid in the removal of impurities from some raw materials. By adding the processing equipment, the firm can
Venus Computer can produce 23,000 personal computers a year on its daytime shift. The fixed manufacturing costs per year are $2 million and the total labor cost is $9,109,000.
What are the four sources of market failure? Explain how each of them causes individual profit- and utility-maximizers to make decisions that may be privately optimal but are socially suboptimal. What
Jasmine’s Snack Shop sells two brands of potato chips. She produces them by buying them from a wholesale supplier. Brand X costs Jasmine $1 per bag, and Brand Y costs her $1.40.
What is the prospective rate of return after taxes if straight-line depreciation can be used to write off these assets for tax purposes in 8 years?
The annual income from a rented house is $12,000. The annual expenses are $3000. If the house can be sold for $145,000 at the end of 10 years, how much could you afford to pay for it now, if you consi
Sally Stanford is buying an automobile that costs $12,000. She will pay $2000 immediately and the remaining $10,000 in four annual end-of-year principal payments of $2500 each
Pine Village needs some additional recreation fields. Construction will cost $225,000 and annual O&M expenses are $85,000. The city council estimates that the value of added youth leagues is about
An asset with a 8-year ADR class life costs $50,000 and was purchased on January I, 2001. Calculate any depreciation recapture, ordinary losses, or capital gains associated with selling the equipment
An engineer wishes to have $5 million by the time he retires in 40 years. Assuming 15% nominal interest, compounded continuously, what annual sum must he set aside?
Every college student had the problem of selecting the college or university to attend. Was this a simple, intermediate, or complex problem for you? Explain.
Desoto seated in a Barcelona cafe drinking absinthe. The painting was done in 1903 and valued then at $600. If the painting was owned by the same family until its sale in 1995, what rate of return did
A friend was left $50,000 by his uncle. He has decided to put it into a savings account for the next year or so. He finds there are varying interest rates at savings institutions
A student bought a $75 used guitar and agreed to pa for it with a single $85 payment at the end of 6 months Assuming semiannual (every 6 months) compounding, what is the nominal annual interest rate?
In Keynes’s analysis of the speculative demand for money, what will happen to money demand if people suddenly decide that the normal level of the interest rate has declined? Why?
Many economists are worried that a high level of budget deficits may lead to inflationary monetary policies in the future. Could these budget deficits have an effect on the current rate of inflation?
The more credible the policymakers who pursue an anti-inflation policy, the more successful that policy will be. Is this statement true, false, or uncertain? Explain your answer.
A bank advertises it pays 7% annual interest, compounded daily, on savings accounts, provided the money is left in the account for 4 years. What effective annual interest rate do they pay?
If the Fed sells $2 million of bonds to the First National Bank, What happens to reserves and the monetary base? Use T-accounts to explain your answer.
If a country wants to keep its exchange rate from changing, it must give up some control over its money supply. Is this statement true, false, or uncertain? Explain your answer.
Compare the use of open market operations, discounting, and changes in reserve requirements to control money supply on the following criteria: flexibility, reversibility, effectiveness, and speed of i
Compare the monetary base to M2 on the grounds of controllability and measurability. Which do you prefer as an intermediate target? Why?
Classify each of the following as either an operating target or an intermediate target, and explain why.
Because the public can see whether a central bank hits its monetary targets almost immediately, whereas it takes time before the public can see whether an inflation target is achieved