ps2 - METU, FEAS ECON 311 SA : Hatice pek TA: Nutiye Sekin...

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METU, FEAS ECON 311 SA : Hatice İ pek Fall 2009 TA: Nutiye Seçkin Inst: Elif Akbostanc ı PROBLEM SET II 1. Explain why you would be more or less willing to buy a real estate under the following cases: a) You expect Galatasaray stock to double in value next year. b) You expect real estate housing prices to fall. c) Prices in the stock market become more volatile. d) You expect interest rates to rise e) You expect inflation to rise, and real estate prices tend to move with the aggregate price level. f) Your wealth falls g) The bond and stock market becomes more liquid relative to the real estate market h) You expect gold to appreciate in value. i) Real estate commissions fall 2. What happens to bond prices if income taxes increase? Why? 3. In the liquidity preference framework for interest rate determination, what assets can wealth holders choose from? What is the "price" of money? Why? 4. Using the liquidity preference framework, what will happen to interest rates if the CB increases the money supply? 5.
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ps2 - METU, FEAS ECON 311 SA : Hatice pek TA: Nutiye Sekin...

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