Economics Answers

Two former Northwestern University students worked in an
investment bank at a salary of $60,000 each for 2 years after
they graduated. Together they saved $50,000. After 2 years,
they decided to quit their jobs and start a business designing
Web sites. They used the $50,000 to buy computer equipment,
desks, and chairs. For the next 2 years, they took in $40,000 in
revenue each year, paid themselves $10,000 annually each,
and rented an office for $18,000 per year. Prior to the investment,
their $50,000 was in bonds earning interest at a rate of
10 percent. Are they now earning economic profits? Explain
your answer.

X agrees to sell to Y 2000 kg of mangoes @ Rs 15. Per kilo if such quantity is produced in his farm in the next season

C=50+0.80 (Y-T)
I=200
G=100
Find out the equilibrium level of income
Suppose G increase to 125 what is the new equilibrium level of income?
What level of G is needed to achieve a target income of 200?

Explain money multiplier (M) and reserve ratio (R) will increase or decrease during the financial crisis.

Describe different categories of investments in financial assets and list the accounts used by giving examples

Question 5

Without using finance calculator,

Noel bought a house by making a down payment of RM 45,000. The balance was borrowed from a bank which charged interest of 7% compounded monthly for 25 years with monthly payments of RM 1413.56.

(a) Find the amount borrowed.

(b) What is the market price of the house?

(c) If he failed to make the first 5 payments, how much should he pay on the 6th payment to settle all the outstanding arrears?

Question 4

Without using finance calculator,

Refer to Johan's investment account, i.e. the monthly deposits made into his investment account:


Year Monthly deposits

2017 SR 500

2018 SR 400

2019 SR 700


Find the value of his investment at the end of 2019 if the investment rate was 12% compounded monthly. Find also the interest earned

Question 3

Without using finance calculator,

Tisha B plans to retire from nursing at age 65 and hopes to withdraw RM 25,000 per year from her retirement plan until she is 90.

(a) If money earns 8% per year compounded annually, how much will she need at age 65?

(b) If she deposits RM 2000 per year into her retirement plan beginning at age 32, and if the retirement plan earns 8% per year compounded annually, will her retirement account enough for her to meet her goals?

Question 2

Without using finance calculator,

(a) Haziq invests RM15,000 in a fund at 7% compounded quarterly. After t years, the value of the investment is RM300,000. Determine the value of t.

(b) Sarah invested RM5000 into an account that pays 5% compounded semiannually. She intended to keep the account untouched for 5 years. However, after 3 years, she had to withdraw RM3000. Find the amount left in the account after five years from the time she made her investment.

Question 1

Without using finance calculator,

(a) What sum of money will become RM 15,000 in three years at a simple interest rate of 8% per annum?

(b) A certain sum of money is invested now. This investment will be worth RM5500 after fifteen months and RM5800 after twenty-four months. Find the original principal and the simple interest rate that was offered.

(c) A finance company charges a simple interest of 18% per year for short-term loans. If a loan of RM 15,000 was charged RM 337.50, how long was the term of the loan?