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1) The table below provides economic information of Republic of Eastein for 2014
Items Amount ($)
Transfer Payments $1,440
Interest Income $2,900
Capital Consumption Allowance $1,000
Wages $3,200
Gross Investment $3,470
Business Profits $3,900
Indirect Business Taxes $2,900
Rental Income $2,400
Net Exports (Export - Import) $1,120
Government Purchases $4,410
Canadians and firms abroad $1,400
Non Canadians and foreign firms in Canada $700
Household Consumption $7,300
a) Calculate Republic of Eastein’s GDP for 2014 using the expenditure approach.
b) Calculate Republic of Eastein’s GDP for 2014 using the income approach.
c) Calculate Gross National Product for 2014.
d) Determine the Net Domestic Product.
e) Determine the Net Investment.
f) Use the circular flow of money model to explain income approach and
expenditure approach, and relate this to your answers in A and B above.
Items Amount ($)
Transfer Payments $1,440
Interest Income $2,900
Capital Consumption Allowance $1,000
Wages $3,200
Gross Investment $3,470
Business Profits $3,900
Indirect Business Taxes $2,900
Rental Income $2,400
Net Exports (Export - Import) $1,120
Government Purchases $4,410
Canadians and firms abroad $1,400
Non Canadians and foreign firms in Canada $700
Household Consumption $7,300
a) Calculate Republic of Eastein’s GDP for 2014 using the expenditure approach.
b) Calculate Republic of Eastein’s GDP for 2014 using the income approach.
c) Calculate Gross National Product for 2014.
d) Determine the Net Domestic Product.
e) Determine the Net Investment.
f) Use the circular flow of money model to explain income approach and
expenditure approach, and relate this to your answers in A and B above.
. If the demand for biscuits rises by 10% in the 6th year, how many oven will be replaced in that year? Please show working.... how is the answer 100*1.1/5 = 22
The market demand for woozles is given by:
Qd = 2,400 – 20p
There is only one available technology, and it is employed by all producers—
actual and potential. It implies the following average cost function:
AC = 625q–1 + 0.25q
Currently, 20 firms serve the market.
The individual supply curve is the part of marginal cost (MC) curve after the intercection with average variable cost (AVC) curve. MC is the derivative of TC curve. MC = TC = (AC*q)= (625 + 0.25q^2)= 0.5q, so Ps = 0.5q or qs = 2p.
The industry supply curve is the sum of 20 individual firm's supply curves, so Qs = 20*2p= 40q
The short‐run competitive equilibrium price and output is in the point, where Qs = Qd, so:
40p = 2,400 - 20p,
60p=2400 > pe=$40
Qe=40*40=1600 units
Individual competitive output is q = 1,600/20 = 80 units.
TP=(P – AC)*q = (40 - (625/80 + 0.25*80))*80 = (40 - 27.8125)*80 = $975
E- Determine the long‐run competitive market price and quantity and how
many firms will operate.
Qd = 2,400 – 20p
There is only one available technology, and it is employed by all producers—
actual and potential. It implies the following average cost function:
AC = 625q–1 + 0.25q
Currently, 20 firms serve the market.
The individual supply curve is the part of marginal cost (MC) curve after the intercection with average variable cost (AVC) curve. MC is the derivative of TC curve. MC = TC = (AC*q)= (625 + 0.25q^2)= 0.5q, so Ps = 0.5q or qs = 2p.
The industry supply curve is the sum of 20 individual firm's supply curves, so Qs = 20*2p= 40q
The short‐run competitive equilibrium price and output is in the point, where Qs = Qd, so:
40p = 2,400 - 20p,
60p=2400 > pe=$40
Qe=40*40=1600 units
Individual competitive output is q = 1,600/20 = 80 units.
TP=(P – AC)*q = (40 - (625/80 + 0.25*80))*80 = (40 - 27.8125)*80 = $975
E- Determine the long‐run competitive market price and quantity and how
many firms will operate.
Hi,
Below are my two questions.
a) Suppose the monthly income of an individual increases from Rs 20,000 to Rs 25,000 which increases his demand for clothes from 40 units to 60 units. Calculate the income elasticity of demand.
b) Quantity demanded for tea has increased from 300 to 400 units with an increase in the price of the coffee powder from Rs 25 to Rs 35. Calculate the cross elasticity of demand between tea and coffee.
Below are my two questions.
a) Suppose the monthly income of an individual increases from Rs 20,000 to Rs 25,000 which increases his demand for clothes from 40 units to 60 units. Calculate the income elasticity of demand.
b) Quantity demanded for tea has increased from 300 to 400 units with an increase in the price of the coffee powder from Rs 25 to Rs 35. Calculate the cross elasticity of demand between tea and coffee.
put your self in the shoes of an economic policymaker. the economy in the equilibrium with price = 100 and Q = 3000 = potential GDP . you refuse to accommodate inflation ; thats is , you want to keep prices absolutely stable at p = 100 , no matter what happens to output . you can use monetary and fiscal policies to affect aggregate demand , but yo cannot affect aggregate supply in the short run how would you respond to :
a) a surprise increase in the investment spending.
b) a sharp food-price increase following catastrophic flooding of the mississippi river .
c) a productivity decline that reduce potential output .
d) a sharp decrease in net exports that followed a deep depression in the east asia
a) a surprise increase in the investment spending.
b) a sharp food-price increase following catastrophic flooding of the mississippi river .
c) a productivity decline that reduce potential output .
d) a sharp decrease in net exports that followed a deep depression in the east asia
Q2:
a- i) what would be the market price of six month call option on Ajax's stock , given that the stock currently trade at 70$ and is expected to be either 45$ or 100$ at the end of six months, if the strike price is 80 $. The annual risk free rate of interest is 10%.
ii) what is the value of the six month put option on the stock given the same underlying information for the call option .
b- verify that put/call parity holds for properly priced call and out options
a- i) what would be the market price of six month call option on Ajax's stock , given that the stock currently trade at 70$ and is expected to be either 45$ or 100$ at the end of six months, if the strike price is 80 $. The annual risk free rate of interest is 10%.
ii) what is the value of the six month put option on the stock given the same underlying information for the call option .
b- verify that put/call parity holds for properly priced call and out options
Q1-You decide to hedge your position in the stock and buy options at the fair market value , when strike prices of 60$ .
a) what is the value of the option premium to hedge your position
b) what is the value of your position at the end of the year of the stock trades at 75$ per share , taking into consideration all costs associated with buying the options
a) what is the value of the option premium to hedge your position
b) what is the value of your position at the end of the year of the stock trades at 75$ per share , taking into consideration all costs associated with buying the options
A trader creates a long butterfly spread from options with strike prices $60, $65, and $70 by trading a total of 400 options. The options are worth $11, $14, and $18. What is the maximum net gain (after the cost of the options is taken into account)? Show all working in detail including the strategy, cost and payoff of the options and total payoff.
If the banks decide to hold a lower liquidity ratio, what effect will this have on the banks multiplier?
Peter and Jane receive the same annual income, but Peter , who gets paid monthly, will have a much higher demand for active balances than Jane, who gets paid weekly.
a. Is this statement true ?
b. Justify your answer.
a. Is this statement true ?
b. Justify your answer.
