{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

ReviewProblems(Test1lastsemester)

# ReviewProblems(Test1lastsemester) - your work in the space...

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

SHORT ANSWER.   Calculate the Expected Dollar Depreciation Rate against the  euro and the expected dollar return on euro deposits  if the  expected exchange rate is \$1.10 per euro.   Your final answers should  be in the table below.  Show all work in  the space provided under  the table  ().

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

View Full Document
Suppose the money demand function is given by Md/ =  640  +  0.1 -  5000 ( +    e). π Suppose the central bank changes the nominal money supply depending on income and inflation: MS  =  1000  +  0.1Y  - 4000 . π (a) If expected inflation equals actual inflation  =  0.03, Y  =  1000, and r  =  0.02, calculate the price level. (b If expected inflation rises to 0.04 while the other variables remain as in part a, calculate the price level.   Please show all
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: your work in the space provided below (). Use Savings and Investment diagram along with the IS-LM model to determine the effect of higher user cost (uc) of capital on the long-run general equilibrium values of the real wage, employment, output, real interest rate, consumption, and price level . Explain your answers graphically. Use arrows in and under your graphs to show these changes. Hint: user cost of capital is the real cost of using capital. User cost is often associated with the depreciation of capital, due to the fact that capital wears out. ___________________________________________________________________________________________________________ _...
View Full Document

{[ snackBarMessage ]}

### Page1 / 3

ReviewProblems(Test1lastsemester) - your work in the space...

This preview shows document pages 1 - 3. Sign up to view the full document.

View Full Document
Ask a homework question - tutors are online