4. In an infinite period model, let y denote output and let ß = (1+r)¹. Let LATRI denote lifetime after-tax real income, where LATRI is defined as (for simplicity, all current and future taxes are 0): LATRI =y++By++1 + B²y++2 + Solve the right-hand side of LATRI by eliminating the future output variables in the following way: use the following equations for future output, where it is assumed that output grows by g percent each period (year); for example, g = 0.03, so that output grows by 3% per year: Y+1 (1g) y₁, Yt+2 = (1 + g) Yt+1, and so on. Use these equations, along with the rule for an infinite-period sum, to show that the equation for LATRI can be solved such that LATRI depends on current-period output y₁, as well as on r and g. Show your work. After deriving the equation for LATRI, do the following calculation. Assume that r equals 0.04, g equals 0.03, and y, is $40,000, and use the equation to calculate the dollar amount for LATRI (note that $40,000 x 1.04 equals $41,600). How many million dollars is LATRI equal to?

4. In an infinite period model, let y denote output and let ß = (1+r)¹. Let LATRI denote lifetime after-tax real income, where LATRI is defined as (for simplicity, all current and future taxes are 0): LATRI =y++By++1 + B²y++2 + Solve the right-hand side of LATRI by eliminating the future output variables in the following way: use the following equations for future output, where it is assumed that output grows by g percent each period (year); for example, g = 0.03, so that output grows by 3% per year: Y+1 (1g) y₁, Yt+2 = (1 + g) Yt+1, and so on. Use these equations, along with the rule for an infinite-period sum, to show that the equation for LATRI can be solved such that LATRI depends on current-period output y₁, as well as on r and g. Show your work. After deriving the equation for LATRI, do the following calculation. Assume that r equals 0.04, g equals 0.03, and y, is $40,000, and use the equation to calculate the dollar amount for LATRI (note that $40,000 x 1.04 equals $41,600). How many million dollars is LATRI equal to?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Please help me with this question wih explanantion.
COURSE: MACROECONOMICS - IS-LM and/or MUNDELL FLEMING MODELS Refer to 2 different models (and/or conditions) under which an increase in the amount of money circulating in the economy has a NULL impact on GDP. Then, refer to 2 different models (and/or conditions) under which an increase in the amount of money circulating in the economy has a MAXIMUM impact on GDP. EXPLAIN very briefly the mechanism by which each model generates that NULL or MAXIMUM impact on GDP. Hint: 2 conditions under increase of M (money) and how impact null (zero) and maximum on GDP. Example, considering both fiscal or monetary policies or liquidity trap model. Please graph and explain on detail both cases.
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Q2 Solve 2 parts
Last year, Jarod left a job that pays $50,000 to run his own bike-repair shop. Jarod's shop charges $65 for a repair, and last year the shop performed 3,000 repairs. Jarod's production costs for the year included rent, wages, and equipment. Jarod spent $40,000 on rent and $100,000 on wages for his employees. Jarod keeps whatever profit the shop earns, but does not pay himself an official wage. Jarod borrowed $20,000 for the shop's equipment at an annual interest rate of 5 percent. Instructions: Round your answers to the nearest dollar and include a negative sign if appropriate. a. What is Jarod's accounting profit? $ b. What is Jarod's economic profit?
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