4. Madeleine is a high school graduate deciding whether to go to university. She (like everyoneelse) lives for two periods after high school. In the first period, she can work (withoutuniversity) for a salary of YH, or she can attend university. If she attends university, she mustpay $5,000 in fees (tuition, books), but she will also earn $5,000 from a summer job. In thesecond period, she will continue to earn Y, if she did not attend university, or she will earn Yuif she went to university. The interest rate at which money can be borrowed or invested is r.Show that she will attend university if:Yu > (2+r)YHExplain how an increase in the interest rate will affect her decision to attend university.

Step 1: Step 2:Explanation An increase in interest rate will amke it moe likely that she will…

Answered: 4. Madeleine is a high school graduate…

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter20: Economic Growth

Section: Chapter Questions

Problem 4SCQ: Assume there are two countries: South Korea and the United States. South Korea grows at 4 and the...

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1. Shelley is deciding whether to start a winery. To do this, she must leave her job as a consultant from which she could earn $120,000 as a full-time employee, and instead take a part-time job as a gardener that pays $30,000. It costs her $110,000 to install watering equipment and vines. She pays for one-half of this amount from her savings, and borrows one-half. There is a 10% rate of interest. If she was to cease her business, then the watering equipment and vines would have no resale value. As well, she must pay $25,000 per year for water. At the time Shelley is deciding whether to start the business she plans to operate it for one year and then cease the business. Her opportunity cost of operating the business for that year is: a) $236,000 b) $225,000 c) $245,000 d) $278,000 e) Zero
After grauating with a BBA in Economics, Dwight is considering going to college to get a Ph. D. in Economics. If he does not go to graduate school to get a Ph. D. in Economics, he will be earning $112483 working at Bank of America, and spend $44134 on room and board. If he goes to college to get a Ph. D. in Economics, he will spend $43012 on tuition, $20376 on room and board, and $7550 on books. What are Dwight's full cost of getting a Ph. D. in Economics? Only typing answer Please explain step by step
Suppose the government runs fewer budget deficit and there is a decrease in the average household income. Then, O The new EQ quantity of loanable funds would be indeterminate, , but the new EQ interest rate would increase. O The new EQ quantity of loanable funds would decrease, but the new EQ interest rate would be indeterminate. O The new EQ quantity of loanable funds would be indeterminate, , but the new EQ interest rate would decrease. The new EQ quantity of loanable funds would be indeterminate, but the new EQ interest rate would increase. The new EQ quantity of loanable funds would increase, but the new EQ interest rate would be indeterminate.
1. Kelly spends most of her time taking care of her home and children, but she helps in her husband's computer software store 4 hours a day from Monday to Friday. Which category of employment status fits Kelly’s situation? 2. Ashton is 15 years old and helps out in his father’s grocery store 4 hours a day from Monday to Friday. Which category of employment status fits Ashton’s situation? 3. Justin is a full-time college student looking for a job. Which category of employment status fits Justin’s situation?
Go to this website (http://www.measuringworth.com/ppowerus/) for the Purchasing Power Calculator at measuringWorth.com. How much money would it take today to purchase what one dollar would have bought in the year of your birth?
3. In the upcoming year, the income from your current job will be $50,000. There is a 0.5 chance that you will keep your job and eam this income, and 0.2 chance that you will get a rise and earn 75,000. However, there is 0.3 chance that you will be laid off, putting you out of work for a time and forcing you to accept a lower paying job. In this case, your income is $25.000. The expected value of your income is thus $47,500. a) If your utility function has the formula 5001 - 0.0002/, determine the risk premium associated with this lottery. b) Provide an interpretation of the risk premium in this particular example.
2. Peter has just graduated from high school. He will live for three more periods and is considering three alternative education-work options. He can start working right away, earning $100,000 in period 1, $110,000 in period 2, and $90,000 in period 3. He can also go to college in period 1, spending $10,000 in tuition and books in that period, and then earn $150,000 in periods 2 and 3. Finally, he can get a doctorate degree in period 2 after completing his college education. If he gets a doctorate degree he will not need to pay for tuition or books in period 2 (he will receive a fellowship) and he will earn $300,000 in period 3. The rate of discount is 20 percent. What should Peter do? (Hint: Assume period one is the current period.)
8. Interest, inflation, and purchasing power Suppose Devon is an avid reader and buys only reusable tote bagses. Devon deposits $3,000 into a savings account that pays an annual nominal interest rate of 15%. Assume this interest rate is fixed, and so it will not change over time. On the day she makes her deposit, suppose that a reusable tote bags has a price of $15.00. Initially, Devon's $3,000 deposit has a purchasing power of 9 reusable tote bagses. For each of the annual inflation rates given in the following table, first determine the new price of a reusable tote bags, assuming it rises at the rate of inflation. Then enter the corresponding purchasing power of Devon's deposit after one year in the first row of the table for each inflation rate. Finally, enter the value for the real interest rate at each of the given inflation rates. Hint: Round your answers in the first row down to the nearest reusable tote bags. For example, if you find that the deposit will cover 20.7 reusable…
D. The table below contains data for the country of Batterland, which produces only waffles and pancakes. The base year is 2009. Year Price Quantity Price of Quanti of of Pancakes of Waffles Waffles Pancak 2008 $2.00 100 $1.00 100 2009 $2.00 120 $2.00 150 2010 $2.0O 150 $3.00 200 2011 $4.00 180 $3.00 220 1. In 2009, this country's nominal GDP was 2. In 2009, this country's real GDP was 3. In 2011, this country's GDP deflator was 4. In 2011, this country's real GDP growth rate was 5. This country's inflation rate in 2011 was
QUESTION 27 Mazen is refinishing an antique china cabinet and has already spent AED 180 on the restoration. He expects to be able to sell the cabinet for AED 360. Mazen discovers that he needs to do an additional AED 200 of work to make the cabinet worth AED 360 to potential buyers. He could also sell the cabinet now, without completing the additional work, for AED 100. What should he do? A. It does not matter which action he takes since the outcome will be the same either way. OB. He should keep the cabinet since it wouldn't be rational to spend AED 380 restoring a cabinet and then sell it only for AED 360. OC. He should complete the additional work and sell the cabinet for AED 360. D. He should sell the cabinet now for AED 100.
3.Suppose that you observed the following set of data: Average Business School tuition: $30,000 Average Salary for non-MBA’s: $50,000 per year Average MBA salary: $90,000 per year. The length of an MBA program is 2 years and is assumed that and MBA will have a working career of 20 years after graduation. Further, suppose that, instead of going to get an MBA,2you could keep your current non-MBA job and invest what you could have used to pay for tuition, risk free, at 4% per year.SHOW ALL YOUR WORKING.a) Is this set of data consistent with market equilibrium? Explain.b) If your answer to (a) is no, how will markets adjust?
5. Interest, inflation, and purchasing power Suppose Dalton is an avid reader and buys only reusable tote bagses. Dalton deposits $4,000 into a savings account that pays an annual nominal interest rate of 5%. Assume this interest rate is fixed, and so it will not change over time. On the day she makes her deposit, suppose that a reusable tote bags has a price of $10.00. Initially, Dalton's $4,000 deposit has a purchasing power of reusable tote bagses. For each of the annual inflation rates given in the following table, first determine the new price of a reusable tote bags, assuming rises at the rate of inflation. Then enter the corresponding purchasing power of Dalton's deposit after one year in the first row of the table for each inflation rate. Finally, enter the value for the real interest rate at each of the given inflation rates. Hint: Round your answers in the first row down to the nearest reusable tote bags. For example, if you find that the deposit will cover 20.7 reusable tote…

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