JefferyWalburgerMod4

JefferyWalburgerMod4 - 1. Explain how each of the following...

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1. Explain how each of the following will affect the consumption and saving schedules and/ or the investment schedule: a. A large increase in the value of real estate, including private houses. b. A decline in the real interest rate. c. A sharp, sustained decline in stock prices. d. The development of a cheaper method of manufacturing computer chips. e. A sizable increase in the retirement age for collecting Social Security benefits. f. An increase in the Federal personal income tax a. (C) Shift up (S) Shift Down (I) Shift Right b. (C) Shift up (S) Shift Down (I) c. (C) Shift Down (S) Shift up (I) d. (C) (S) (I) Shift Right e. (C) f. (C) Shift Down (S) Shift up (I) 2. a) Expected Rate of return $550 contribute -500 new = $50/500 = expected rate of return = 10% B) The company should undertake this investment because if you multiply the interest rate (8%) by the new machine cost (500) this will add $40 dollars of interest, therefore, the new machine will be profitable ($10) and a company will invest, or should invest, up
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This note was uploaded on 05/03/2008 for the course ECO 111 taught by Professor Kuryla during the Spring '08 term at Broome Community College.

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JefferyWalburgerMod4 - 1. Explain how each of the following...

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