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Two students go out to lunch and decide to split the bill evenly between them. Each student has a quasi-linear utility function given by ui(fi , xi) = φi(fi) + xi , where φi(·) is strictly concave, fi is the amount of food consumed by student i, and xi is a composite numeraire good. Each student has a fixed budget of mi . EVALUATE THIS CLAIM: Both students eat too much!
When deciding how much of their income to save vor retirement
Who has a greater opportunity cost of enjoying leisure, a janitor or a brain surgeon?
Why aggregate demand is determined by money supply in classical model????
South Africa has an unemployment rate of around 32.6% (using the narrow definition) and 43.2% (using the broad definition). Using market supply and market demand curves describe how the market will react to the introduction of statutory minimum wage. Indicate what the likely effect would be on the unemployment situation in South Africa.
Money demand in an economy in which no interest is
paid on money is
Md
p == 500 + 0.2Y - 1000i.
a. Suppose that P = 100, Y = 1000, and i = 0.10. Find
real money demand, nominal money demand, and
velocity.
b. The price level doubles from P = 100 to P = 200.
Find real money demand, nominal money
demand, and velocity.
Suppose the interest rate on a one-year bond today is
6°/o per year, the interest rate on a one-year bond one
year from now is expected to be 4°/o per year, and the
interest rate on a one-year bond two years from now is
expected to be 3°/o per year. The term premium on a
two-year bond is 0.5°/o per year and the term premium
on a three-year bond is 1.0°/o per year. In equilibrium,
what is the interest rate today on a two-year bond? On
a three-year bond? What is the shape of the yield
curve?
Consider the economy with the following data
𝐶 = 200 + 0.25(𝑌 − 𝑇)
𝐼 = 150 + 0.25𝑌 − 1000𝑟
𝐺 = 250
𝑇 = 200
(𝑀⁄𝑃)
= 2𝑌 − 100𝑟
𝑀 = 3200,
𝑃 = 2
a. Mathematically derive the IS-curve
b. Mathematically derive the LM-curve
c. Solve for the equilibrium income (Y) and interest rate (r)
d. Calculate the value of consumption (C) at the equilibrium level
e. Analyze effect that a monetary expansion will have on the equilibrium values for Output, Interest Rate, Consumption and Investment in the model.
Explain how the inadequate aggregate demand has affected the output of pakistan during lockdown period?
How will each of the following changes in demand and/or supply affect equilibrium price and
equilibrium quantity in a competitive market; that is do price and quantity rise, fall,
remain unchanged, or are the answers indeterminate because they depend on the
magnitudes of the shifts? Use supply and demand diagrams to verify your answers.
