I need help understanding the following MBA macroeconomic problems: A)What are the tools used by the Federal Reserve to control the money supply? B)How do these tools influence the money supply, and in turn, affect macroeconomic factors? C)Explain how money is created. D)Which combinations of monetary policy help you to best
Do we use the price index system?
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. http://federalreserve.gov/boarddocs/hh/2007/february/testimony.htm a. Give a few reasons for the unexpected but significant positive impact of this testimony on the Wal
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? 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
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
Consider if true or false/explain. In the US the long run inflation rate can be expressed simply as the growth rate of money minus the long run growth rate of real GDP.
Congratulations, you just won the Irish Lottery! You bought a ticket while you were on vacation in Ireland, and you just won a 1 million Euro jackpot after all taxes were taken out. 1. If the current exchange rate is US$1 equals 1.25 Euros, how much did you win in US dollars? 2. Suppose that the interest rate in Irish
Okuns Law/Phillips Curve. See attached file for full problem description.
Apply Phillip's Curve. See attached file for full problem description.
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?
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
Read the 2 articles Fed Official Expects Growth and are Inflation Expectations Rising from the Ashes? The cites are: http://pittsburghlive.com/xtribunereview/business/s 385893.html http://research.stlouisfed.org/publications/mt/20051101/cover.pdf Questions: 1) What exactly is the Federal Reserve?
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
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
Year 2 is the base year. Calculate the price index, inflation rate in the table attached to the excel spread sheet.
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
Look at the concepts of real and nominal interest rates. How does inflation impact the interest you pay for loans such as a mortgage, car loan, or credit card loan? How do the concepts of real and nominal affect you when you get a raise?
Go to http://stats.bls.gov/ and look up the inflation data and report the most recent annual inflation rate. Then, within the consumer price index data are the recent inflation rates for various types of purchases (ex: food, fuel, housing, etc.). Pick 3 separate types of purchases and record the unadjusted one year rate for ea
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
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,
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.
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
How do high inflation rates affect the exchange rate of a country in the short and the long run?
Suppose the CPI is 100 in 1992, its base year. In 1993 and 1994 it is equal to 112 and 120,respectively. During 1995 the economy experienced an inflation of 10 percent. a) What rate of inflation characterized this economy during 1994? b) If consumption in 1994 was $300 billion in 1994 dollars, what is this consumption express
Suppose that in 1992 the price and quantity of energy were 1.00 and 50, respectively, and that in 1993 they were 1.04 and 60, respectively. In 1992 the price and quantity of all other consumer goods and services were 1.10 and 40, respectively, and in 1993 they were 1.20 and 30 respectively. a. Using 1992 as a base year and the
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?
1. How does inflation affect an organization's decision-making process? 2. If dollar bills (Federal Reserve notes) are backed by nothing but promises and are in real terms worthless, why do people accept them?