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What will happen to the relative value of this period's versus next period's dollar-peso exchange rate?
What will happen to the bond's price? If you happened to be holding this bond, would this help you, hurt you, or not affect you at all?
Suppose the interest rate on the 10-year bond is 12 percent and that the interest rates on 1-year bonds. What must the term premium be on the 10-year bond?
Explain why an increase in U.S. interest rates relative to Canadian interest rates would affect the U.S.-Canadian dollar exchange rate.
Why might the above relationship signal a recession? Why might it not? What will the yield curve for this problem look like?
How well did the Fed anticipate the economic performance of 2010? Explain why economic forecasts are not totally accurate.
Calculate the share of investment in GDP ( IGDP 100). On average, what is the share of investment spending in aggregate demand in the European Union?
What will the rate of investment be in the first year after expected income changes? In the second year?
Should this firm invest (net) in more physical capital? Would your answer change if replacement cost of its physical capital stock at this time was $25 million?
What is the effect of this tax measure on investment in the long run? What is the effect in the current year and in the following year?
Describe how a car rental agency would calculate the price at which it rents cars, and relate your description to the equation for rental cost given in the text
What are the various ways you could accomplish this? Which of your solutions do you favor?
What will happen to the opportunity cost of consuming a set of goods today, as opposed to tomorrow?
If the MPC in the traditional model is .8 and disposable income changes by $10 million, by how much will consumption change?
What is your consumption this year and next year? What is your short-run marginal propensity to consume? Long-run MPC?
What are the two main theoretical objections to the Barro-Ricardo view? In the Barro-Ricardo view, does it make any difference whether the government pays.
Explain why the interest rate might affect saving. Has this relationship been confirmed empirically?
What assumption(s) regarding consumers' knowledge and behavior in the life-cycle- permanent-income hypothesis do we need to change?
What are the problems of excess sensitivity and excess smoothness? Does their existence disprove or invalidate the LC-PIH? Explain.
What is a random walk? How is Hall's random-walk model of consumption related to the life-cycle and permanent-income hypotheses?
The United States, during the 1980s, found its rate of personal saving. What does this hypothesis suggest we should see as this generation ages?
The Fed wants to increase the money supply. What are the main instruments available to it, and how can each, specifically, increase the money supply?
What is the individual's average cash balance? Suppose income rises to $1,800. By what percentage does the individual's demand for money change?
Suppose a firm sells steadily during the month and has to pay its workers at the end of the month. Explain how the firm would determine its money holdings.
Discuss the various factors that go into an individual’s decision regarding how many traveler’s checks to take on a vacation.