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The central bank decided to implement an expansionary policy action. What would you expect to happen to the nominal interest rate, the real interest rate and the money supply? Under what economic circumstances would this type of policy action be most likely appropriate for the country?
ed's utility function is given by U = x1/2 y1/2
draw the marginal utility curve for x.
is the marginal utility of x diminishing or increasing?
You have the following data on three stocks:

Stock Standard Deviation Beta
A 20% 0.59
B 10% 0.61
C 12% 1.29


If you are a strict risk minimizer, you would choose Stock ____ if it is to be held in isolation and Stock ____ if it is to be held as part of a well-diversified portfolio.
Answer

A; A.

A; B.

B; A.

C; A.

C; B.
5 points
Question 2

Which is the best measure of risk for a single asset held in isolation, and which is the best measure for an asset held in a diversified portfolio?
Answer

Variance; correlation coefficient.

Standard deviation; correlation coefficient.

Beta; variance.

Coefficient of variation; beta.

Beta; beta.
5 points
Question 3

Inflation, recession, and high interest rates are economic events that are best characterized as being
Answer

systematic risk factors that can be diversified away.

company-specific risk factors that can be diversified away.

among the factors that are responsible fo
3. The study of economics has many facets and the field is unified by several central ideas regarding decision making of peoples, their interaction and the working of economy as a whole- Explain
The price of a laptop increases by 20% and there is a 40% drop in the quantity demanded.
The price of a pack of cigarettes increases by 10% and there is a 5% drop in the quantity demanded.
The price of water increases by 15% but there is no drop in the quantity demanded.
What does economists mean by the word inflation
Suppose real GDP is growing at 4 percentage , the money supply is growing at 11 percentage , the velocity of moey is costant and the real interest rate is 6 percentage.

What is the currect inflation rate and interest rate
It is assumed that the toothpaste market is perfectly competitive and the current price of a case of toothpaste is $42.00. CPI has estimated its marginal cost function to be as follows: MC=.006Q.

1.The Board would like to know how many cases of toothpaste should be produced in order to maximize profits.
2.What would happen if CPI decided to raise prices unilaterally in this toothpaste market?
3.What would happen to the profit maximizing level of output if the market price suddenly rose to $54 per case? Explain why the output level changes.
4.Could CPI benefit by advertising in this perfectly competitive market?
5.If CPI was somehow able to monopolize the market what would happen to the price of toothpaste, would it rise or fall? What would happen to the profits CPI makes via their toothpaste division?
suppose real GDP is growing at 4 percent, the money supply is growing at 11 percent, the velocity of money is constant and the real interest rate is 6 percent.
a. what is the current inflation rate and nominal interest rate?
b.if the money supply growth rate increases to 15 percent, how will your answers in part (a) change?
The government of a country experiencing a recession is considering an increase in the level of government spending (purchase) in order to raise the level of the country's output, financed by borrowing. Using the short-run aggregates supply (AS) - aggregate demand (AD) model, provide a short report for the Minister of Finance discussing whether such a policy would be effective (in the short run). your report must be divided into the subsections (a) to (e) indicated below. these must be labelled clearly.

a) the initial impact of an increase in government spending.
b) the multiplier effect (assuming no crowding out).
c) the crowding -out effect
d) the net export effect
the final effect on the price level and output
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