{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

Econ102 Quiz 3 -Spring 08SolutionsUpdated

Econ102 Quiz 3 -Spring 08SolutionsUpdated - EC102 Quiz 3...

Info icon This preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
EC102 Quiz 3 Elena Quercioli March 12th, 2008 On this day in 1876 , Alexander Graham Bell successfully speaks the first words on a telephone by calling for his assistant: “Mr. Watson, come here!” (His second words were: “My bill is THAT much? No way!”) Clearly indicate a first choice and a second choice. If your first choice is right, you get 7 points. If your second choice is right, you get 2 points. If both are wrong, you get 0. If you are unsure, guessing is your best option. 1) Suppose that the real return on assets is 4% forever. Approximately what is it worth to have a gift from your grandparents when you are young that pays $2000 a year until you die: a. About $2,000 b. About $5,000; c. About $120,000 if you expect to live for another 60 years; d. About $20,000 e. About $8,000 f. About $50,000 Solution: The present value of the sum of all money to be received in the future on this “perpetuity” is given by $2,000 / 0.04 = $50,000 2) According to the Beveridge curve, what are possible values for x,y below? Vacancy rate 5% 7% 9% 11% Unemployment rate x% 11% 8% Y%
Image of page 1

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon