Price LiB8%102100$1.4BAD2AD11.51.6Real GDP (trillions of 2007 dollars)Refer to Figure 11.13. In the dynamic model of AD-AS in the figure above, if theeconomy is at point A in year 1 and is expected to go to point B in year 2, and theBank of Canada pursues no policy, then at point Bincomes and profits are rising.the unemployment rate is very, very low.firms are operating above their normal capacity.the economy is below full employment.there is pressure on wages and prices to rise.

Based on the provided information and the AD-AS model in the figure:Point A represents the initial…

Answered: Price Li B8% 102 100 $1.4 B AD2 AD1 1.5…

International Financial Management

14th Edition

ISBN:9780357130698

Author:Madura

Publisher:Madura

ChapterP3: Part 3: Exchange Rate Risk Management

Section: Chapter Questions

Problem 4Q

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Suppose Canada in 2018 has GDP per capita that is 80% of that in the U.S. Assume that GDP per capita in the U.S. grows at 2% per year forever, and in Canada it grows at 3% per year forever. In what year will Canada have the same GDP per capita as the U.S.? (Hint: ln(1.25) ≈ 0.22, ln(1.03) ≈ 0.03, and ln(1.02) ≈ 0.02)
E4
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Table 2 shows the elements of national income accounts of a country. The economy is in equilibrium. Accounts Consumption (total) Investment Government Expenditures Imports Exports £bn 80 12 8 10 16 A) What is the current equilibrium value of national income? B) What are the levels of injections and withdrawls? C) Assume that the national income rises to £108 bn and the consumption of the domestically produced goods rises to £72 bn. What is the marginal propensity to consume (use 2 decimal places)? D) What is the multiplier for this economy? E) Comment on the results in part c) ad d).
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Explain what type of Economic Growth is this country experiencing?Complete the table and show your calculations.
The Table below summarizes the nominal and real GDP information for an economy for 2013 and 2014: 2013 2014 Nominal GDP $43,000 $51,000 Real GDP $38,700 $44,300 Between 2013 and 2014, what has happened to price levels in this economy? Select one: O a. The price level has risen. O b. The price level has remained constant. O . The price level has fallen. O d. Not enough information is available to determine what has happened to prices.
21. Gross domestic product. The U.S. gross domestic prod- Luct, in billions of current dollars, may be modeled by the function P(x) = 367 + x(36x0.6 – 104), where x is the number of years since 1960. (Source: U.S. Bureau for Economic Analysis.) Use P'(x) to estimate how much the gross domestic product increased from 2014 to 2015.
need answers for number 3
The Scenarios: You work in the macroeconomic research department of an investment bank. Based on your modelling of the economy, you think that in the next few months US GDP will evolve according to three basic scenarios: Scenario A: GDP will rise 3%. This will send the S&P ETF to 414. Scenario B: GDP will stagnate. S&P ETF will stay at 407. Scenario C: GDP will fall 2%. This will send the S&P ETF to 400. Question Compute the payoff and net payoff in the three scenarios above of a strategy made of two legs: Leg 1: a long straddle with maturity in February and strike 407. Leg 2: a short straddle with maturity in March and strike 407. Use the data in Table 2. Discuss why an investor might be interested in trading this strategy. What is the investor betting on?
Scenarios: You work in the macroeconomic research department of an investment bank. Based on your modelling of the economy, you think that in the next few months US GDP will evolve according to three basic scenarios: Scenario A: GDP will rise 3%. This will send the S&P ETF to 414. Scenario B: GDP will stagnate. S&P ETF will stay at 407. Scenario C: GDP will fall 2%. This will send the S&P ETF to 400. Compute the payoff and net payoff of a bear spread strategy built with put options in the three scenarios above. The put options should have strikes 405 and 409 and mature in February. Draw the profile of the bear spread strategy. Use the data in Table 2. Please show your calculations. Discuss your result. You also observe the following market for European Call and Put options on the S&P 500 ETF: Today: 10th January 2023 Spot index level: 407 LOOK AT ATTACHED IMAGE
Scenarios: You work in the macroeconomic research department of an investment bank. Based on your modelling of the economy, you think that in the next few months US GDP will evolve according to three basic scenarios: Scenario A: GDP will rise 3%. This will send the S&P ETF to 414. Scenario B: GDP will stagnate. S&P ETF will stay at 407. Scenario C: GDP will fall 2%. This will send the S&P ETF to 400. Question 1: Compute the payoff and net payoff of a bear spread strategy built with put options in the three scenarios above. The put options should have strikes 405 and 409 and mature in February. Draw the profile of the bear spread strategy. Use the data in Table 2. Please show your calculations. Discuss your result.

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