1. Read the quote below. Then answer the following questions [Beginning of Quote] Europeans Are Paid to Borrow but Get a Bill for Trying to Save. By DANNY HAKIM and PETER EAVIS. NYT, link. HVIDOVRE, Denmark-At first, Eva Christiansen barely noticed the num- ber. Her bank called to say that Ms. Christiansen, a 36-year-old entrepreneur here, had been approved for a small-business loan. She whooped. She danced. A friend took pictures. "I think I was so happy I got the loan, I didn't hear everything he said," she recalled. And then she was told again about her interest rate. It was -0.0172 percent per year-less than zero. While there would be fees to pay, the bank would also pay interest to her. It was just a little over $1 a month, but still. [End of Quote] (a) How large was the loan that was approved? (b) Given the information provided, can you conclude that overall the in- terest rate at which Ms. Christiansen is borrowing is negative? Is there a pure arbitrage opportunity one could exploit to make unbounded prof its? 2. What does "Lean against the Wind Monetary Policy" mean? 3. List unconventional monetary policies implemented during the Great Reces- sion and explain how these work

1. Read the quote below. Then answer the following questions [Beginning of Quote] Europeans Are Paid to Borrow but Get a Bill for Trying to Save. By DANNY HAKIM and PETER EAVIS. NYT, link. HVIDOVRE, Denmark-At first, Eva Christiansen barely noticed the num- ber. Her bank called to say that Ms. Christiansen, a 36-year-old entrepreneur here, had been approved for a small-business loan. She whooped. She danced. A friend took pictures. "I think I was so happy I got the loan, I didn't hear everything he said," she recalled. And then she was told again about her interest rate. It was -0.0172 percent per year-less than zero. While there would be fees to pay, the bank would also pay interest to her. It was just a little over $1 a month, but still. [End of Quote] (a) How large was the loan that was approved? (b) Given the information provided, can you conclude that overall the in- terest rate at which Ms. Christiansen is borrowing is negative? Is there a pure arbitrage opportunity one could exploit to make unbounded prof its? 2. What does "Lean against the Wind Monetary Policy" mean? 3. List unconventional monetary policies implemented during the Great Reces- sion and explain how these work

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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