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- Typed plzz and asap thanksCourse: Microeconomics - Intertemporal ConsumptionGiven the following data: ; where p1 = 10; m1 (income 1st period) = 100; m2 (income 2nd period) = 120; r (interest rate) = 0.2; and (inflation rate) = 0.2. So the quantities demanded of both goods are: a) C1 = 10 ; C2 = 10b) C1 = 15 ; C2 = 8c) C1 = 12.3 ; C2 = 7.4d) C1 = 8.7 ; C2 = 11.3 THANKS :D9
- The table below shows the amount of savings and borrowing in a market for loans to purchase homes, measured in millions of dollars, at various interest rates. InterestRate QuantitySupplied QuantityDemanded5% 98 2216% 129 1917% 160 1608% 178 1429% 196 12410% 214 106 What is the equilibrium interest rate and quantity of loaned funds? r = % Q = Suppose there is a decrease in demand of money, what will happen to interest rates and quantity? Increase in Interest Rates, Increase in Quantity?Increase in Interest Rates, Decrease in Quantity?Decrease in Interest Rates, Increase in Quantity?Decrease in Interest Rates, Decrease in Quantity?4. Inflation can redistribute wealth between borrowers and savers. Consider the following four cases. In each case, assume that when the loan was negotiated the nominal interest rate was set such that the lender would earn a 3% real return based on inflation expectations. Apply the Fisher effect to calculate the agreed upon nominal interest rate. Given that the actual inflation differs from the expected inflation rate, what was the actual real interest rate over the course of the loan? Who was harmed from the unexpected change? The borrower or the lender? Explain. Nominal Actual (Actual) real Who gets Expected inflation Expected real return interest rate inflation rate interest rate hurt? (Επ) (1) Borrower or lender 4% 3% 5% 6% 3% 4% -1% 3% 1% 3% 3% 3%Consider an economy with the following measures: (a) The nominal interest rate is 2%. The rate of growth of money supply is 5%. The velocity growth is constant. What is the growth in nominal GDP? ) In the context of introduction of robots into manufacturing, what is the difference be- (b) tween the productivity effect and the reinstatement effect? (c) thinking about the effect of higher capital income taxes. 3) Briefly describe any two of the three elasticities that Diamond and Saez mention in
- 2. Suppose the Federal Reserve (the USA central bank) increases the money supply in the USA. What would be the effect of this monetary expansion in the USA on the Canadian GDP? Specifically, explain what happens to the Canadian net exports (hint: there is more than one way that the US monetary expansion influences the Canadian net exports and vou should try to describe & explain each of those influences and the overall impact).Question 16 The economy is said to face a problem of "Infiation" when: O There is an increase in the prices of some goods and services. There is an increase in the consumer price index (CPI) in a particular year. O There is an increase in the consumer price index (CPI) in a successive number of years. There is an inorease in exchange rate of national currency against foreign currencies.1. Key facts about economic fluctuations The following graph approximates business cycles in the United States from the first quarter of 1953 to the third quarter of 1957. The vertical blue bar coincides with periods of 6 or more months of declining real gross domestic product (real GDPP). 2700 200 2000 W 2400 2300 1950 1954 1965 1956 1957 YEAR Source: "Current dollar and Real GDP" Bureau of Economics Analysis, last modihed May 1, 13, accessed May 15, 13, http://www.bea.gov/national/xds/gdplev.ds. Notice that real GDP trends upward over time but experiences ups and downs in the short run. A period of declining real GDP, such as the blue-shaded period in 1953, is known as True or False: Small ups and downs in real GDP follow a consistent, predictable pattern. O frue O False Which of the following probably occurred as the U.S. economy experienced declining real GDP in 19537 Check all that apply ORetail sales declined. O Home sales increased. O Industrial production increased. O Consumer…
- 5. How might a rapid rise in inflation harm you? How might a rapid rise in inflation help you? In answering this question consider your role as both a consumer, worker, and borrower. Consider the likely effect on your real wages, and any interest you recelve as a saver. Would it be advantageous to borrow money if you expected inflation to rise? Would you want a fuxed rate loan or one with an adjustable interest rate?13. How does inflation affect people's standards of living and savings? Inflation is an (increase, decrease ) in the overall level of prices and has a ( positive , negative ) effect on people's standards of living and savings. People are forced to reduce their expenditures when the price of goods and services increases while nominal wages (also known as salaries) do not change. Savings are also affected by inflation because the (2 saved dollars is reduced. For example, a family with saving of $60,000 will be able to purchase (. more, fewer) goods and services with those dollars if the economy is experiencing inflation. ) of1. The level of prices and the value of money Suppose the price level reflects the number of dollars needed to buy a basket of goods containing one can of seltzer, one bag of pretzels, and one shuttle ride. In year one, the basket costs $11.00. In year two, the price of the same basket is $10.00. From year one to year two, there is deflation at an annual rate of 1.00% In year one, $55.00 will buy baskets, and in year two, $55.00 will buy This example illustrates that, as the price level falls, the value of money baskets.