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Unformatted text preview: ion. e) Assuming that the velocity of money was constant what was the growth rate of money supply between 2013 and 2014? (show the formula you are using) Problem 2: Consider a person comparing the following two opportunities after graduating from college, over a three years horizon: choice 2013 2014 2015 Work with no Wage: 70,000 Wage: 75,000 Wage: 80,000 Master: Wage with Master: Wage with Master: Wage if working: Obtain a master 125,000 140,000 70,000 degree and then Cost of master: work: 20,000 The person could either : work each year without a Master or not work for one year, study in a full time master and then work with a master. Assume that people only consider these three years only when making a choice. a) Calculate the present discounted value in 2013 of each choice if the interest rate is 0. 4 b) Calculate the PDV value of each choice if the interest rate is 10%. Say which choice is preferred. c) Calculate the PDV value of each choice if the interest rate is 20%. Say which choice is preferred. d) At an interest rate of 5% what is the cost of the Master...
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This note was uploaded on 01/30/2014 for the course ECON 101 taught by Professor Miyanishi during the Fall '08 term at UC Davis.
 Fall '08
 Miyanishi
 Economics

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