Ann has $600,000 that she could consume or leave as a bequest to her daugh ter. Plotting her consumption (C) on the horizontal axis and the bequest (B) 3B on the vertical axis, Ann finds that her indifference curves have slope Distrusting banks, she keeps her wealth in the form of gold. Thus her wealth earns no interest but is protected from inflation. Her bequest to her daughter - is (a) $150,000 (b) $200,000
Q: C = 60 + 0.75Y. so suppose that income (Y) is $600. Determine the following values: structions: For…
A: In economics, the marginal propensity to consume (MPC) is defined as the proportion of an aggregate…
Q: assume elsa has current income of $50000 and expects income of $60000 next period. interest rate is…
A: Given that: Income in period 1 (m1) = 50000Income in period 2 (m2) = 60000r = 6% or 0.06 she…
Q: 3 e) Rate of net investment I= 120t4 find the total investment K when Ko=35 [value of "t" is not…
A: The investment is the addition to the capital stock in the economy. The total investment is the…
Q: Sally will eam S33,000 this year and $42,000 next year. The real interest rate is 25% between this…
A: The intertemporal budget constraint explains us about how an individual buyer takes consumption…
Q: Suppose a handbill publisher can buy a new duplicating machine for $ 500 and the duplicator has a…
A: In the question, the handbill publisher can buy a new duplicating machine that would help to cost to…
Q: 6) Consider the following IS-LM model: C = 200 +0.25YD I = 150+ 0.25Y -1000i G = 250 T = 200 M -…
A: The IS-LM model basically refers to a Keynesian macroeconomic model that illustrates how the market…
Q: 2. Suppose, • C=0.8(1-t)Y • t=0.25 • | = 900 – 50i • G=800 a) What is the equation for IS curve b)…
A: Answer: (a). To find the equation for the IS-curve let use the following equilibrium condition…
Q: Currently, the general price level is 150.00 and people expect it to increase to 156.00 next year.…
A: here we calculate the price of bond as follow-
Q: An economy has full-employment output of 6,000. Government purchases, G, are 1,600. Desired…
A: Equilibrium is reached where production equals aggregate expenditure, that isY= C + I + G
Q: Assume you are 20 year old, with zero initial wealth, planning to work until the age of 50 and…
A: Under intertemporal hypothesis person earns money in his working age and consume that money in his…
Q: thetical economy, no investment projects are undertaken when the real interest rate is 12 percent or…
A: We have: If rate of interest is 12% or more, then the quantity of investment is 0 If rate of…
Q: How do changes in interest rate affect expected consumption? Interprete the effect of interest rate…
A: Precautionary Savings: This is a part of saving that is saved for consumption or use at a time of…
Q: . Given the consumption function, C=0-75 Y and the investment function, I 110-0:25 i, then the…
A:
Q: 2) Yoni spends his income on consumption between two periods - C1 and C2. Both C1 and C2 are normal…
A: a) Budget Constraint: The limit of the opportunity set—all potential permutations of consumption…
Q: lth at the end of the year. If you hold the wealth as money, you will have y in wealth at the end of…
A: Opportunity cost of Holding Assets as Money : It is been told that the opportunity cost of holding…
Q: ssume a set of well-behaved (i.e. strictly monotone and strictly convex) intertemporal indifference…
A: To understand the above stated problem firstly we state the intertemporal budget constraint faced by…
Q: A consumer's income in the current period is y = 100 and income in the future period is y'= 120. He…
A: A.
Q: Judy lives for two-periods. Her utility from consumption in periods 1 and 2 is given by U(C1,C2)=C1…
A:
Q: L4. In a certain economy, its national desired saving (S) and investment (1) are defined as…
A: (Q) The good market of a closed economy is at its equilibrium whereat its desired saving equals to…
Q: In the IS curve, if Y falls for any given level of the real interest rate ________. saving…
A: Hello. Since your question has multiple parts, we will solve the first question for you. If you want…
Q: at +4 Ct myt-1 24 act-1 P, c is consumption, i is investment, m and a are multipl wn a difference…
A: DISCLAIMER “Since you have asked multiple question, we will solve the first 3 question for you. If…
Q: Assume that Clem is an individual who has current income of $26.898 and expected future income of…
A: Given: Current Income: $26,898 Expected Future Income: $59,968 Current Wealth: $6,295 Expected…
Q: Suppose there was a change in the tax laws to encourage savers to save more and as a result, assume…
A: According to this theory, the demand (DL)for loanable funds and the supply (SL) of loanable funds…
Q: A consol is a bond that pays a fixed nominal payment each year forever. Let's assume that payments…
A: The formula is: Price=Annual paymentInterest rate=10000.05=20000 The price is $20000
Q: Assume that Clem is an individual who has current income of $26 898 and expected future income of…
A: Given, Income in period 1 = Y1 = $26,898 Income in future or period 2 = Y2 = $59,968 Wealth in…
Q: Complete the accompanying table with disposable income (DI) and consumption (C) schedules for a…
A: “Since you have posted a question with multiple sub-parts, we will solve the first three sub-parts…
Q: Suppose the marginal product of capital is MPK=2-0.001K, the capital stock depreciates at 20% rate,…
A: Given information Marginal Product of Capital (MPk) = 2 - 0.001k Capital stock depreciation rate =…
Q: Suppose that permanent income is calculated as the average of income over the past five years – that…
A:
Q: you define your permanent income as the average income this and the past 4 years’ incomes and you…
A: *Answer:
Q: An economy has full-employment output of 1,400. Government purchases are 280. Desired consumption…
A: Saving is the amount which is occur when an individual reduce his consumption in present to provide…
Q: 1. TRUE / FALSE: Household decisions depend on the real values for wages and rent rather than the…
A:
Q: An economy has government purchases of 2000 (G=2,000). Desired national saving and desired…
A:
Q: Suppose the marginal product of capital is MPK=2-0.001K, the capital stock depreciates at 20% rate,…
A: Given information Marginal Product of Capital (MPk) = 2 - 0.001k Capital stock depreciation rate =…
Q: For an IS/LM model of an economy with the following equations: C = 200 + 0.8Yd | = 220 - 25i = 240…
A: The IS-LM model is the demonstration of how the goods market and the asset market interact. The IS…
Q: 5. As a hypothetical case, suppose the typical individual has a utility function expressed as U = (C…
A: The utility function assesses a consumer's well-being or happiness due to the consumption of…
Q: Suppose that conditions in the economy are such that the after-tax expected real interest rate is…
A: Meaning of Inflation: The term inflation refers to the situation under which there is an excessive…
Q: Judy lives for two-periods. Her utility from consumption in periods 1 and 2 is given by…
A: We have a utility function, UC1, C2 =C110-N11 C2N+111If N =0UC1, C2 =C11011 C2111 a) At the optimal…
Q: Bora's income in the current period is y=200, and income in the future period is y'=250. He pays…
A: Consumer theory studies the behaviors of consumers, how consumer spends their limited income given…
Q: Economics Assuming that the government intends to adopt a ride-sharing scheme to solve the problem…
A: Perpetual Gain for infinite periods = 60 Initial Cost : C0 = 1000 Perpetual Cost = 0 Interest rate…
Q: Consider an economy as described in clas and is frther characterized by C =cY, with e=0.75, T=…
A: Given:C= 0.75*YT=0G=250NX = 250I = 500 -5000*r From (C) part r = 0.06 (a) Income equilibrium of…
Q: A consumer's income in the current period is y = 100 and income in the future period is y'= 120. He…
A: Consumer income is the cash that a consumer procures from one or the other work or venture, for…
Q: Suppose that you eam $250 in year 1 and will eam $448 in year 2. If you borrow mòney against your…
A: Given information: Earning in Year 1 = $250Earning in Year 2 = $448 If money is borrowed against…
Q: If the nominal interest rate is 7%, inflation is 4%, and the risk premium is 1.5%, what is the MP…
A: Let's show concider given Nominal interest rate = 7% Inflation = 4 Answer and explanation given…
Q: P.2.4 Find the value of MPC if the value of the MPS is given as 0.37.
A: Economics as a study is based upon the idea that the resources which are available with the…
Q: Suppose that Annie's real income this year is $150 and next year it will be $100. Assume that the…
A: Incomes Y1=150 and Y2=100 And r=0.1
Step by step
Solved in 2 steps
- How should an increase in inflation affect the interest rate on an adjustable-rate mortgage?4. Eleanor makes year-end deposits of 500,000 the first year, 550,000 the second year, 605,000 thethird year, and so on increasing the next year’s deposit by 10% of the deposit in the preceding yearuntil the end of the 10th year. Ronald makes equal year-end deposits of 720,00,000 each year for 10years. A.) Is the gradient of Eleanor’s payments increasing or decreasing?B.) If interest on both funds is 12% compounded annually, who will be able to save more atthe end of 10 years.Assume that Abdullah has RO 44 to spend on Energy drinks and Protein Bars each month and that both goods must be purchased whole (no fractional units). Energy drinks cost RO 8 and Protein Bars cost RO 3 each. Abdullah's preferences for Energy drinks andProtein Bars are summarized by the following information: Energy drinks Protein Bars No. per Month MU/P No. per MU/Py TU MU TU MU Month 1 42 1 18 78 33 3. 108 3 45 4 132 4 54 60 150 162 63 168 66 a. Fill in the figures for marginal utility and marginal utility per dollar both Energy drinks and Protein Bars. b. Are these preferences consistent with the law of ckminishing marginal utility? Explain briefly. c. Given the budget of RO 22, what quantity of Protein Bars and what quantity of Energy drinks will maximize Joe's level of satisfaction? 56
- 3. An investor wants to be able to buy 4% more goods and services in the future in order to induce her to invest today. During the investment period prices are expected to rise by 2%. Which statement(s) below is/are true? 1. 4% is the desired real rate of interestII. 6% is the approximate nominal rate of interest requiredIII. 2% is the expected inflation rate over the periodA. I onlyB. II onlyC. III onlyD. I and II onlyE. I, II, and III are trueAssume that Abdullah has RO 44 to spend on Energy drinks and Protein Bars each month and that both goods must be purchased whole (no fractional units). Energy drinks cost RO 8 and Protein Bars cost RO 3 each. Abdullah’s preferences for Energy drinks and Protein Bars are summarized by the following information: Energy drinks Protein Bars No. per Month TU MU MU/Px No. per Month TU MU MU/Py 1 42 1 18 2 78 2 33 3 108 3 45 4 132 4 54 5 150 5 60 6 162 6 63 7 168 7 66 Fill in the figures for marginal utility and marginal utility per dollar both Energy drinks and Protein Bars. Are these preferences consistent with the law of diminishing marginal utility? Explain briefly. Given the budget of RO 22, what quantity of Protein Bars and what quantity of Energy drinks will maximize Joe’s…hich theory of consumption best explains the consumption behavior of consumers of our economy? Question No: 02 [Marks: 10] If the State Bank started printing large quantities of Pakistani Rupees (Rs), what would happen to the number of Pakistani Rupees a dollar could buy? Why? Question No: 03 [Marks: 10] Deseribe the difference batuuean foreian diract investmet and foraion nortfolie invastment Who is mora likelu to
- 2. is it possible for total saving to fall when people beome more thirfty?Explain how does adecrease in the current income y affect the consumer’s consumption-saving decision. In particular,explain: 1) How will current consumption c, future consumption c′, and savings s change; 2) Arethere any substitution effect or income effect. Make sure you draw two figures, one for the borrowersand one for the lendersQuestion 4 Explain how does a decrease in the current income y affect the consumer's consumption-saving decision. In particular, explain: 1) How will current consumption c, future consumption c', and savings s change; 2) Are there any substitution effect or income effect. Make sure you draw two figures, one for the borrowers and one for the lenders.
- Assume that in 2016, the followng prevals n the Republic of Nurd Goverment spending (0) 50 Not taxos (T)- 50 Planned investment - S30 Assume that househoids in Nurd censume 75 percent of heir income, they save 25 percent of their income. Thun, the consumption function and saving function of Nurd re C-075Y, and S=025Y. where disposabile income YY-T Determine the equilitrium level of income Equilibrium income =$(Enter your reaponse as an integer.)Dhorkas owns a small restaurant. She has labourer who she pays GHC 12,000 per year, pays annual rent of GHC 5,000 for her shop, and spends GHC 20,000 per year on the materials she uses for the preparation of her meals. She has GHC 40,000 of her own money which she used to purchase gas cylinder and stove, refrigerator, microwave, and blender and so forth. If she had invested the money in a treasury bill she would earn GHC 4,000 per year. She has been offered GHC 15,000 per year to work as a cook in AIT. She said her entrepreneurial abilities are worth GHC 3,000 per year. Total annual revenue from pottery sales is $72,000. Calculate Dhorkas’ explicit and implicit costs and the find her accounting and economic profits. Explain why the implicit cost will constitute Dhorkas’ normal profitAssume an economy with 600 consumers. Each consumer has income in the current period of 70 units and future income of 80 units and pays a lump-sum tax of 10 in the current period and 25 in the future period. The market real interest rate is 12%. Of the 600 consumers, 400 consume 70 units in the future, while 200 consume 20 units in the future. a. Determine each consumer's current consumption and current saving. For the group of consumers that consume 70 units in the future, current consumption is and current saving is For the group of consumers that consume 20 units in the future, current consumption is, and current saving is (Round to two decimal places as needed.)