Questions from Managerial Economics

Q: The following T-account (in billions of dollars) depicts

The following T-account (in billions of dollars) depicts an intervention by the Federal Reserve in the foreign exchange market: a) Did the Federal Reserve buy or sell U.S. dollars? b) What is the ef...

Q: Explain why a central bank might want to intervene in the foreign

Explain why a central bank might want to intervene in the foreign exchange market to prevent an excessive appreciation of its currency, even if it previously stated that it would allow its currency to...

Q: Suppose Prakash has an income today of $30,000,

Suppose Prakash has an income today of $30,000, an expected income in period 2 of $35,000, and initial wealth of $5,000. Prakash faces an interest rate of 5%. a) Graph Prakash’s intertemporal budget l...

Q: Go to the St. Louis Federal Reserve FRED database, and

Go to the St. Louis Federal Reserve FRED database, and find data on real GDP (GDPC1) and the GDP deflator price index (GDPDEF). Using the units setting, choose “Percent Change from Year Ago” to conver...

Q: Previous policies to increase saving in the United States have included fiscal

Previous policies to increase saving in the United States have included fiscal policy measures to exempt a part of individuals’ savings from income taxes (e.g., the creation of IRAs). According to the...

Q: Assume that Maria does not have a preference for smooth consumption.

Assume that Maria does not have a preference for smooth consumption. In particular, the average of two consumption points on the same indifference curve yields the same utility to Maria as either poin...

Q: The following figure represents the optimization problem for a homeowner whose home

The following figure represents the optimization problem for a homeowner whose home is currently valued at $250,000. a) Identify the optimum consumption point (i.e., what are the values of C1 and...

Q: Describe the effects of a decrease in the interest rate on present

Describe the effects of a decrease in the interest rate on present and next period’s consumption if the individual is a net lender (i.e., has savings) after period 1 and the substitution effect is lar...

Q: 6. Suppose Nicole’s yearly income is $5,000 when

6. Suppose Nicole’s yearly income is $5,000 when she is fifteen, $35,000 when she is twenty-five, and $70,000 when she is fifty (these are all present value measures of future income). Assume that Nic...

Q: What does the Keynesian consumption function imply about the average propensity to

What does the Keynesian consumption function imply about the average propensity to consume of a rich versus a poor country? Which country should have a higher average propensity to consume? How can yo...