Economics Answers

Suppose the economy is currently having an inflation expectation which equals to actual inflation.
Explain how the output level will be affected in the short-run and long-run if there is a demand shock that
drives the actual inflation to fall below expectation.

Explain the concept of “The Impossible Trinity”. Use the case of expansionary monetary policy to
illustrate your answer.

Assuming that central government decides to cut taxes by 100 billion to stimulate he economy. The relevant marginal propensity to consume is 0.6. What will be the impact of such fiscal policy on equilibrium GDP?

e) Assume that, due to the economic downturn, the president predicts that the corporation will earn only 4.5% per year on its money, not the previously anticipated 10% per year. What is the required amount of the annual revenue series over the 5-year period to be economically equivalent to the amount calculated in (d)?

The plant investment, expected to amount to $200 million, has been planned for 2017; however, it is delayed due to the economic downturn in construction. When the plant is completed and operating at full capacity, based upon the projected needs and cost per metric ton, it is possible that the plant could generate as much as $50,000,000 annually in revenue.
All analysis will use a planning horizon of 5 years commencing when the plant begins operation.
Delays beyond the anticipated implementation year of 2017 will require additional money to construct the factory. Assuming that the cost of money is 10% per year, compound interest, draw the cash flow diagram and determine the following:

d) What is the equivalent future worth of the estimated revenues after 5 years at 10% per year?

The plant investment, expected to amount to $200 million, has been planned for 2017; however, it is delayed due to the economic downturn in construction. When the plant is completed and operating at full capacity, based upon the projected needs and cost per metric ton, it is possible that the plant could generate as much as $50,000,000 annually in revenue.
All analysis will use a planning horizon of 5 years commencing when the plant begins operation.
Delays beyond the anticipated implementation year of 2017 will require additional money to construct the factory. Assuming that the cost of money is 10% per year, compound interest, draw the cash flow diagram and determine the following:
a) The equivalent investment needed if the plant is built in 2020.
b) The equivalent investment needed had the plant been constructed in the year 2013.
c) Will the initial investment be recovered over the 5-year horizon with the time value of money considered?

An irrigation canal contractor wants to determine whether he should purchase a new Caterpillar mini excavator or a used one. The initial cost of the new excavator is $26,500 and has a lifetime of 10 years. Fixed costs for insurance are expected to be $8,000 per year. The excavator will require one operator at $15 per hour and maintenance at $1 per hour. In 1 hour, 0.16 mile of ditch can be prepared.

Alternatively, the contractor can purchase the used one and hire 2 workers at $11 per hour each. The used excavator costs $1000 and has a useful life of 5 years with no salvage value. Its operating cost is expected to be $1.20 per hour, and with the tiller, the two workers can prepare 0.04 mile of ditch in 1 hour.

Determine the number of miles of ditch per year the contractor would have to service for the two options to break even.

Alyssa Clark is evaluating her debt safety ratio. Her monthly take- home pay is $3,320. Each month, she pays $380 for an auto loan, $120 on a personal line of credit, $60 on a department store charge card, and $85 on her bank credit card. Complete Worksheet 6.1 by listing Alyssa’s outstanding debts, and then calculate her debt safety ratio. Given her current take-home pay, what is the maximum amount of monthly debt payments that Alyssa can have if she wants her debt safety ratio to be 12.5 percent? Given her current monthly debt payment load, what would Alyssa’s take-home pay have to be if she wanted a 12.5 percent debt safety ratio?

what are financial risks faced by Brazil ?
Note financial risks are : Interest rate risk, market risk, credit risk, off-balance-sheet risk, foreign exchange risk, country or sovereign risk, technology risk, operational risk, liquidity risk, insolvency risk