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Calculating the Present Value of an Annuity

In a widely publicized case in California, the ex-wife of a doctor sued to obtain half the value of his medical degree, on the grounds that she had helped put him through medical school and was entitled to half of everything they owned under California's community property law. The wife's attorney asked for $250,000 as her sh

Money and banking

One of the largest single influences on the level of interest rates is inflation. There are a number of sites that report inflation over time. Go to and review the data available. Note that the last columns report various averages. Move these data into an Excel spreadshee

Testimony of the Fed Chairman Bernanke

Read the following url link to the Federal Reserve on the testimony of the Fed Chairman Bernanke given on Feb 15, 2007 and answer the questions followed. a. Give a few reasons for the unexpected but significant positive impact of this testimony on the Wal

Intermediate Macroeconomics

QUESTION 1: Consider a country that is characterized by the following production function: Y= 5K.5 L.5. Assume that the rate of depreciation as well as the rate of saving are each .10. Also assume that there is no technological progress nor population growth. a. What is the steady state level of capital per worker? b. W

1) Stock a has a beta of 1.5 and Stock b has a beta of 0.5. The market is in equilibrium, with required returns equaling expected returns. Which of the following statements is CORRECT? 2) The risk-free rate is 5%. Stock A has a beta = 1.0 and Stock B has a beta = 1.4. Stock A has a required return of 11%. What is Stock B's required return?

1) Stock a has a beta of 1.5 and Stock b has a beta of 0.5. The market is in equilibrium, with required returns equaling expected returns. Which of the following statements is CORRECT? a. Since the market is in equilibrium, the required returns of the two stocks should be the same. b. If expected inflation remains con


See attached file for full problem description. Directions: Type your answer to each question where indicated. Use more space if needed. 1. Two countries, the United States and England, produce only one good, wheat. Suppose the price of wheat is $3.25 in the United States and is 1.35 pounds in England. a. According to the


1. If the price level for the last three months has been 112, 125, and 126, we would say: a. inflation has been constant over the three months. b. inflation was more rapid between the first and second month than between the second and third month. c. inflation was less rapid between the second month than between the s

Intermediate Economics

1. Consider an economy in long-run equilibrium with an inflation rate, π, of 12% (0.12) per year and a natural unemployment rate, ū, of 6% (0.06). The expectations-augmented Phillips curve is π = π^e - 2(u - ū). Assume that Okun's law holds so that a 1 percentage point increase in the unemployme

Macroeconomic Questions

A) How can output and unemployment rise at the same time? b) What are the major macroeconomic goals of all societies? c) Why are imports subtracted in calculating GDP? d) How would you differentiate between economic growth and development? e) Is zero inflation attainable and/or undesirable? Why?

NPV and IRR analysis

If I was considering the following projects which project should be accepted if the required rate of return for the projects is 10 percent? Compute NPVs and IRRs for both projects. Year Project A Project B 0 (25000) (25000) 1

Important information about Federal Reserve and Inflation

Read the 2 articles Fed Official Expects Growth and are Inflation Expectations Rising from the Ashes? The cites are: 385893.html Questions: 1) What exactly is the Federal Reserve?

Optimal Date of Development

4.Consider the market for oil. Assume that owners of oil reserves have the choice of when and how rapidly to extract their oil reserves. In particular, owners must make an investment in order to begin extracting their oil. Assume that it requires an initial capital investment of $100,000,000 (made at the time at which extracti

trends/forces exhibited in the graphs below

Comment on the trends/forces exhibited in the graphs below, including your observations on the law of supply/demand, the impacts of inflation, and the boundary conditions for cyclical change in rents. List four variables influencing the location of major sports franchises in 2005, compared with 1950. Briefly indicate how thes

Supply Side Macroeconomics

1. Supply side economists argue: A) Tax rates can be brought down and tax revenues will increase, and lower taxes will lead to more supply, lower inflation, and more GDP B) Tax rates can be brought down but the Laffer curve shows revenues will always fall C) Higher taxes will lead to more su

Rise and fall of mpe

Congratulations. You've been appointed economic adviser to Happyland. Your research assistant says the country's mpe is .8 and autonomous expenditures (probably federal government spending) have just risen by $20. 1. What will be the actual dollar change in income and does it rise or fall? 2. Your research assistant comes

Why is value of capital good increasing at rate of inflation?

Question a The opportunity cost of an investment is the real interest rate, and that's why investment demand depends on the the real interest rate. The effect of inflation "cancels out" because, although it increases the cost of borrowing funds, it also increases the value of the capital goods in which the funds were invested,

Inflation measurements and military goods

The price on military goods becomes cheaper due to a change in technology. Depending on how inflation is measured, explain why and why not the change in the price of military goods will be reflected in how the United States measures inflation.

Multiple Choice Problems

1. In 2004 the consumer price Index was equal to 163.8 and in 2003 it was equal to 157.5. What is the inflation rate over of this time period.(6.3%, 4.0% 3.85% or 10.1%). 2. What is National saving equal to ? A) household saving + business saving. B) household saving + business saving+ government saving. C) household saving

CPI, Inflation

Suppose the price index is 130 and a typical basket of goods and services cost 520.What would this typical basket have cost in the base year?If the CPI changes from 110 in 1993 to 120 in 1994, what is the rate of inflation?


Define inflation and distinguish a real concept from a nominal concept. State two important costs of inflation.