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- 3.Consider an independently run hotel in Krems and briefly discuss how it might be affected by the following scenarios: a) A rise in interest rates b) A fall in unemployment c) A fall in the exchange rate (i.e., the value of the euro decreases) d) A rise in inflationYou are the bank's liquidity manager. If the liquidation cost of highly non-liquid assets decreases, the risk of illiquidity [A] and the cost of illiquidity [B]. Therefore, it you can [C] the ESF buffer. As a result, your bank will provide [D] liquidity transformation for society. C and D are increase, the same decrease, the same increase, less decrease, more28)By using aggregate demand (AD) and aggregate supply (AS) curves, show and explain the effects of an anticipated increase in money supply on macroeconomic equilibrium according to Rational Expectations Hypothesis
- Illustrate graphically the effect the credit market crisis in the United States in 2008 had in the market for existing single-family homes. Assuming the demand for existing single-family homes is relatively inelastic, what is likely to happen to the total revenues of home sellers as a result of the credit market crisis?2.2(a)How Permanent income hypothesis and life cycle hypothesis explain the differences between the long-run APC and the short-run APC?(b)Use an appropriate diagram based explain why the MEC-curve might overstate the additional investment that could be generated in an economy with a one-percent reduction in the rate of interest.3. For aggregate planning, groups of similar products are lumped together and treated as equivalent products for planning purposes. True False
- Briefly explain whether each of the following statements is true or false 4. The Tobin speculative demand model predicts that cash holdings decline when there is an increase in uncertainty about returns on other assets.urgentIs this statement true or false? Please explain in detail why. Investing in development of people is more important than liquidity.
- 4. What is meant by Liquidity and its discuss its significance? *Given that banks are operating within a highly disruptive economy it is imperative that a robust Technology Risk Management Framework (TRMF) is in place.i. Name two risk factors that need to be taken into account in the TRMF? ii. Describe two scenarios that could constitute a risk to the bank if the factors mentioned in Question i. were not taken into consideration. iii. What is the possibility of these risks occurring and what would the impact to the bank be? iv. Describe how you would prioritise the risks to ensure the least impact?B1(b) Show consumption c1 and c2 (you can use algebraic or graphical methods). In the answer, you should discuss whether a1 ≥ 0 or a1 < 0 and provide an economic interpretation. What determine(s) the sign of a1 and why? Explain how a credit constraint can be modeled by a1 ≥ 0 and under this constraint how does your answer to B1(b) change? How does it change if there is a banking markup such that the borrowing interest rate is above the interest rate of r = 0 assumed earlier? Hint: try to relate your reasoning to the permanent income hypothesis. Suppose a0 = A0/P1 where A0 ≥ 0 denotes the savings in nominal terms. Consider a supply-side shock that leads to a surprise significant increase of the price level only in period 1. Should the government change its tax plan if a1 ≥ 0 is imposed?