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- 4. Eleanor makes year-end deposits of 500,000 the first year, 550,000 the second year, 605,000 thethird year, and so on increasing the next year’s deposit by 10% of the deposit in the preceding yearuntil the end of the 10th year. Ronald makes equal year-end deposits of 720,00,000 each year for 10years. A.) Is the gradient of Eleanor’s payments increasing or decreasing?B.) If interest on both funds is 12% compounded annually, who will be able to save more atthe end of 10 years.The permanent income hypothesis is consitent with cross-section and time-series data because a. higer-income households are savers, since their current income includes positive transistory conponents. O b. higer-income households are savers, since their current income includes negative transistory conponents. c. lower-income households are dissavers, since their current income includes positive transistory components. O d. lower-income households are savers, since their current income includes negative transistory conponents.. Assume you just deposited $1,000 into a bank account. The current real interest rate is 2%, and infla- tion is expected to be 6% over the next year. What nominal rate would you require from the bank over the next year? How much money will you have at the end of one year? If you are saving to buy a fancy bicycle that currently sells for $1,050, will you have enough to buy it?
- o Calculate the constant flows based on year zero of the following current data o What is the real rate of the flows if the market rate is 18% o In constant pesos, what is the value of the flows in 2015стор 0 The goverment report that (GDP) Increased by 1.6 6 1.6 percent in the last quater. This statement means that GOP Increased @by 6.4 percent for the year (6) rate of 6.4 percent 1 at an annual rate of 6.4 during last quater Ⓒ) at an annual rate of 1.6 during the las quater d at an annual rate of 4 4 percent during the last quater.From the diagram below we can see that: B 51.5 50 Julia's IC 0- 4950 Consumption now ($) Select one or more: O a. Julia would give up more than one unit of current consumption to get one additional unit of future consumption. O b. The marginal rate of transformation of future into current consumption is 1.5. c. Julia is indifferent between points A and B. O d. Julia values an additional unit of consumption now more highly than an additional unit of consumption later. Consumption later ($)
- Interest 6% lonable fund is 4trillion. Suppose there was a change in the tax laws to encourage savers to save more and as a result, assume the equilibrium interest rate falls by 2 % point. By how much the equilibrium loanable funds saved and invested would rise or fall?Which sequence of events describes what is happening here? Real interest (%) azes SN SN new A Quantity of Saving and Investment in real $ bns p.SN=0.1 T.SN=T. Firms receive an investment tax credit, which reduces r and promotes growth. O b. Government increases spending, which increases national saving, lowers real interest rates, promotes investment and growth. O c. Government reduces spending, which decreases national saving, raises real interest rates, reduces investment and growth. O d. None of the answers offered are accurate. Oe Government reduGes snending which increases national saving loweES real interest rates, promotes G Search or type URL %23 2 8. Y R. 1. A. C. B.Suppose a person's nominal income increases by 8% while the price level in the economy increases by 10%. In this case, the person's real income: O increased by 18% A) increased by 2% O decreased by 2% O decreased by 18%
- 3. An investor wants to be able to buy 4% more goods and services in the future in order to induce her to invest today. During the investment period prices are expected to rise by 2%. Which statement(s) below is/are true? 1. 4% is the desired real rate of interestII. 6% is the approximate nominal rate of interest requiredIII. 2% is the expected inflation rate over the periodA. I onlyB. II onlyC. III onlyD. I and II onlyE. I, II, and III are trueThis refers to an income instrument that represents a loan by an investor to a borrower. O A. Stock О В. Вond O C. Inflation O D. InterestQuèstion 2 Real Domestic Product, GDP ($B) Investment ($B) Refer to the diagrams. Other things equal, an interest rate decrease will O A. leave curve A in place but shift curve B upward. O B. leave curve A in place but shift curve B downward. Oc shift curve A to the right and shift curve B upward. O D. shift curve A to the left and shift curve B downward. hp Expected Rate of Return, r, and Real Interest Rate, I %) Investment ($B)