(i) What is the relationship between the two variables as shown in table 1 and why does this relationship exist? (ii) Assume the quantity of real money supplied (money supply) is $3M when interest rates are at 5%. Describe what is occurring when interest rates are at 7%? (iii) Assume the Reserve Bank of Economy X wants to achieve a new equilibrium interest rate of 3%. What would be the likely problem facing economy X for the Reserve Bank to take this action? Describe the process on how (transmission mechanism) the Reserve Bank can solve the problem of economy X.
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- TUNIS geoiduzil.AT/-3.02 Note: Please make sure to properly format your answers. All dollar figures in the answers need to include the dollar sign and any amount over 1,000 should include the comma ($2,354.67). All percentage values in the answers need to include a percentage sign (%). For all items without specific rounding instructions, round your answers to two decimal places, show both decimal places (5.06). If you borrow $220,000 at an APR of 3.5% for 25 years, you will pay $1,101.37 per month. If you borrow the same amount at the same APR for 30 years, you will pay $987.90 per month. a. What is the total interest paid on the 25-year mortgage? $110,411.00 b. What is the total interest paid on the 30-year mortgage? $135,644.00 X c. How much more interest is paid on the 30-year mortgage? Round to the nearest dollar. d. If you can afford the difference in monthly payments, you can take out the 25-year mortgage and save all the interest from part c. What is the difference between the…5. Josh wants to save for his college education. He plans to make equal monthly deposits for four years. The savings account he has chosen will pay annual interest of 2% cornpounded monthly. (1 r): - 1 a. Use the future value formula F = I(1 + r)' + A ' + A ( ¹² + 1)² - ¹) t to write an algebraic rule that expresses ? the balance at the end of four years as a function of the amount Josh deposits each month. (initial deposit is $0.00) 48 F(48 months) = 0(1+.02) " + A((1+.02) .02 - 1) 48 Unit 4.1.1 → 4.1.4 (2 b. To which function family does this function belong? Explain your choice. c. Josh wants to have $5,000 at the end of the four years. Write an equation that could be used to determine how much Josh needs to save each month, solve the equation. then (find the monthly deposit needed if you start with =0)4) Mitsven Surfboard Inc. is a company in San Diego that shapes and sells surfboards. In 2018 their accounts were as follows: total revenues $150,000; cost of inputs $75,000; wages paid to employees $35,000; profits to owner $25,000, taxes paid by company $5,000. The building and the equipment used for production are property of the company, and no new building or new equipment was purchased in 2018. The value added produced by Mitsven Surfboard Inc. in 2018 was A. $150,000 B. $75,000 C. $65,000 D. $10,000 Answer: 5) Consider the accounts of Mitsven Surfboard Inc. described in question 4). Applying the income approach to GDP that we have studied in class, the depreciation (or consumption) of fixed capital for the company in 2018 was A. Zero. B. $10,000 C. $65,000. D. $75,000 Answer:
- T chart of Canny bank Assets Liabilities Reserve: $10,000 Demand Deposit: $200,000 Government bonds: $300,000 Owners equity: $110,000 Laceland buys $50,000 of government from canny bank. (Money multiplier = 20) Maximum change caused by this is $1,000,000 change. (a)Based on this change above, Try to calculate the change in nominal gross domestic product based on the change above. (Use mv=py) (b) Assume the economy os Econland is initially at full employment, Does change ($1,000,000) increase, decrease, stay the same the real output in the long run? Explain.2) Which of the following statements regarding net income transferred to retained earnings is correct? A) Net income net income transferred to retained earnings - dividends B) Net income transferred to retain earnings = net income + dividends C) Net income = net income transferred to retain earnings + dividendsThe Reliable Aircraft Company manufactures small, pleasure-use aircraft. Based on past experience, sales volume appears to be affected by changes in the price of the planes and by the state of the economy as measured by consumers' disposable personal income. The following data pertaining to Reliable's aircraft sales, selling prices, and consumers' personal income were collected: Year AIRCRAFT SALES AVERAGE PRICE DISPOSABLE PERSONAL INCOME 2006 525 $17,200 $610 2007 450 8,000 610 2008 400 8,000 590 Present your results in the form of a short report (maximum 1500 words) with the following elements: 1- A brief introduction to report. This should include an indication of the form of the model used, including the expected signs of the coefficients for each variable (use quality academic resources in this area, why do you think these factors affect the den 2- An analysis of each variable in the model. This should include: function). An interpretation of each estimated coefficient A…
- If one's salary is $100k per year, the interest rate is 0.5 % (bank's rate), and the withdrawal cost is $300: money demand and withdrawal amount? If an individual can also buy perpetual bonds (either bond or having bank deposit, no other investment), what percentage should she keep in the bank (and buy bonds with the rest)? Explain (current year)The table below shows the amount of savings and borrowing in a market for loans to purchase homes, measured in millions of dollars, at various interest rates. InterestRate QuantitySupplied QuantityDemanded5% 98 2216% 129 1917% 160 1608% 178 1429% 196 12410% 214 106 What is the equilibrium interest rate and quantity of loaned funds? r = % Q = Suppose there is a decrease in demand of money, what will happen to interest rates and quantity? Increase in Interest Rates, Increase in Quantity?Increase in Interest Rates, Decrease in Quantity?Decrease in Interest Rates, Increase in Quantity?Decrease in Interest Rates, Decrease in Quantity?Chapter 2 Assignment Long-Term Interest Rate 10 9 8 7 3 2 1 0 D Amount of Funds Ⓒ Without influence from foreign sources of funds, the long-term equilibrium interest rate is term equilibrium interest rate is %. %. With influence from foreign funds, the long- The following graph depicts the market for business investments in the United States. The green line represents the relationship between the long-
- d. Does the total flow of money out of households- the sum of taxes paid, consumer spending, and private savings-equal the total flow of money into households? e. How does the government finance its spending?(M/P)d = 1,000 − 100r,M = 1000P = 2.a) Graph the supply and demand for real money balances.b) What is the equilibrium interest rate?c) Assume that the price level is fixed. What happens to the equilibrium interest rate if the supply ofmoney is raised from 1,000 to 1,200?d) If the Central Bank wishes to raise the interest rate to 7 percent, what money supply should it set?1. What is the relationship between the time value of money and inflation? 2. Compare simple interest to compound interest. 3. What are the advantages and disadvantages of a fixed principal, fixed interest loan? 4. What is the purpose of a bridge loan? 5. Distinguish between bank discount and simple interest.6. Differentiate between a stated rate of interest and an effective rate of interest. 7. What is the significance of finding the internal rate of return (IRR)? 8. Jill Kramer borrowed $25,000 to pay for a startup business. Jill must repay the loan at the end of five months in one payment with a 6 percent simple interest rate.What is the total amount that Jill must repay in five months?How much interest does Jill repay?9. Joe Jones went to his bank to find out how long it will take for $1,000 to amount to $1,350 at 9 percent simple interest. Solve Joe's problem.