Suppose an economy where nominal interest rate is 20%, expected inflation is 10%, rate of depreciation is 10%, capital stock as of the previous period is 50, the flexible accelerator model holds, and the relationship between capital stock and its value of marginal product is depicted in the table below:
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- Consider the market for loanable funds. Suppose the demand for loans is given by i= 100-3Q+π, and the supply of loans is given by i= -20+Q+, where π represents inflation. In the case of T-5, what is the equilbrium quantity of loans and what is the corresponsing interest rate? O Q*=30, i*=5 O Q*=30, i*=15 O Q*=35, i*=10 O Q*=35, i*=2Assume there are only two producing sector Y & Z in an economy. Calculatea) Gross value added at market price by each sector b) National income from the followings:Items Amount in CroresNet factor income from abroad- 20Sales by Y= 1000Sales by Z= 2000Change in stock of Z= -200C Closingstock of Y= 50 Opening stock of Y= 100Consumption of fixed capital by Y & Z= 180Indirect taxes paid by Y & Z= 120Purchase of raw material by Y= 500Purchase of raw material by Z= 600Exports by Z= 70The output produced in bushels and the prices of this output ($/bushel) over the last three years for Seth Johnson, a farmer in Amarillo, Texas, are as follows: Year Output (bushels) Price ($/bushel) 2010 70,000 $3.20 2011 75,000 $2.90 2012 80,000 $3.50 Let the base year be 2011. What is the price index for 2012? Select one: O a. 1.094 O b. 0.829 O c. 1.207 O d. 0.914 e
- Consider the market for loanable funds. Suppose the demand for loans is given by i 100-30+, and the supply of loans is given by i= -20+Q+m, where represents inflation. In the case of m=5, what is the equilbrium quantity of loans and what is the corresponsing interest rate? O Q*=30,1"=5 ⒸQ=30,1" 15 O Q=35,1"=10 O Q*35, 1-2 An example of an adverse selection problem in the context of obtaining a loan would be Those individuals who are more likely to default turn out to be first in line for a loan, while the most trustworthy individuals select themselves out of the market for a loan. An untrustworthy person who decides to save money at a specific bank. O An untrustworthy individual who offers to lend money to a bank. A potential borrower not disclosing information conerning the risk or their project which would have otherwise lead the bank to not lend the money. Consider the market for loanable funds. Suppose the demand for loans is given by i= 100-30+, and the supply of loans is given by…What are the equilibrium effects of an increase in the depreciation rate? Explain using the two period model with consumption - saving as well as labor - leisure choice. Note:- Please avoid using ChatGPT and refrain from providing handwritten solutions; otherwise, I will definitely give a downvote. Also, be mindful of plagiarism. Answer completely and accurate answer. Rest assured, you will receive an upvote if the answer is accurate.133. Assume that the sum that individuals devour is equivalent to 80% of their extra cash of the former year, and au-tonomous utilization is $200 billion. Net venture approaches the expansion to the capital supply of the former enough said. The capital stock at whatever year is consistently equivalent to 2.5 times the level of that very year's utilization. What is the balance pay in the economy? How might the economy act in case it is faced by an abrupt drop in total pay of $50 billion?
- If the real discount rate is 7% and the inflation rate is 10%, Which of the follo ing interest rates ill be sed to find the present orth of a which of the following interest rates will be used to find the present worth of a series of cash flows that are in constant-worth dollars? a. 10.0% b. 17.7% c. 7.0% d. 10.7%.4. The Production function is given by Y= AK1/2L1/2 The economy initial level of capital stock is 60,000 billion dollars. The nominal interest rate is 4%, the inflation rate is 2% and the depreciation rate is 10% . The real price of capital is 3000. a) Calculate the value of the cost of capital. b) What is the current stock of capital and future stock of capital (next period) if the value of current production is equal to 20,000 and next year will be 22,000, assuming that interest rates, inflation and depreciation stay constant. c) Calculate net and gross investment in both periods (current and future).2 apter 16 Problems i 2 https://ezto.mheducation.com/ext/map/index.html?_con=con&external_browser=0&launchUrl=https... eBook Mc Graw Hill Type here to search % O Saved Ms. Spielvogel was paid $400 a week in 1987, the base year. By 1995 she was earning $900 a week. If the consumer price index was at 180 in 1995, how much were Ms. Spielvogel's real wages that year, and by what percentage had they changed? Real wages (1995) = $ Percentage change = ************ A Q C 91°F G A Help
- o Calculate the constant flows based on year zero of the following current data o What is the real rate of the flows if the market rate is 18% o In constant pesos, what is the value of the flows in 2015When we add depreciation to net investment, we arrive at............... what is the answer, we arrive at gross depreciation or gross investment? Step 1 Depreciation: The term depreciation refers to the fall in the monetary value of a commodity over the time period due to the use of the commodity. During the use of commodity, normal wear and tear, and obsolescence is the measure reason for the depreciation of the commodity. Step 2 Gross Investment Is the answer. The gross investment is the investment that encompasses the net investment and depreciation. If the depreciation is removed from the gross investment then the remaining investment will be the net investment. Similarly, if we add the depreciation with the net depreciation then the resulting investment amount will be the gross investment. Gross Investment = Net Investment + Depreciation Step 3 Answer. Gross depreciation.Let's assume that Enrique borrows $420,000 from the Bank of America and let's assume that the interest rate on this loan is fixed at 9%. If the current inflation is 6%, then the real interest rate in percentage is: