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Answer: The correct answer is 0.80. When you allocate consumption optimally between the two periods, the marginal rate of time preference between the two periods is 0.80. This is because the marginal rate of time preference is the interest rate

Answer: Integration of (2x^3 + x^2) dx is the process of finding the anti-derivative of the expression. The anti-derivative of 2x^3 + x^2 is 2x^4/4 + x^3/3 + C, where C is an arbitrary constant. We can use the power

Answer The statement that the price elasticity of demand coefficient is, technically, always negative, but for convenience economists ignore the minus sign is true. The price elasticity of demand is a measure of the responsiveness of the quantity demanded of

Canadian Net Capital Outflow from Foreign Transaction The net capital outflow from a foreign transaction in Canada is determined by the amount of foreign assets acquired by the country versus the amount of capital goods sold to a foreign company.

Analysis of “A Very Old Man with Enormous Wings” The short story “A Very Old Man with Enormous Wings” by Gabriel Garcia Marquez is an exploration of humanity’s relationship to faith and the ways in which faith can both shape

Answer The local bus company can use the elasticity of demand to determine the best fare option to maximize their profits. The elasticity of demand measures the responsiveness of the quantity demanded to a change in price. The company surveyed

Answer The price elasticity of demand between $0.40 per kilometer and $0.50 per kilometer is calculated by dividing the percentage change in quantity demand (2 / 4 x 100 = 50%) by the percentage change in price (10 / 50

Answer The recommended plan for the conversion of an existing two-lane roadway to a four-lane freeway is Plan B, as it would upgrade the existing 2 lanes and add 2 new adjacent lanes. This is determined by the Cost Benefit

Answer Based on the provided information, Plan C is the best option for the conversion of the existing two-lane roadway to a four-lane freeway. Plan C has the lowest maintenance cost, the lowest accident rate, and the highest reduction in

Answer: Finding the Golden Rule Level of Capital per Effective Worker The golden rule level of capital per effective worker, k*_gold, can be found using the Cobb-Douglas production function: Y = K^(a)*(AL)^(1-a). With a = 0.3, delta (the depreciation rate)

Answer: Water Supply Project Operating Six Months Per Year The outline of a proposed water supply project operating six months per year is given as follows. Water is to be delivered at a water surface elevation of 110 m, either

Answer Devaluation, or the decrease of a currency’s exchange rate relative to other currencies, is a popular policy tool used by governments to address balance of payment (BOP) problems in an economy. In theory, devaluation should help to increase the

Answer: The exchange rate of 10$ = 850 Rwandan Francs (RWF) means that 1$ is equivalent to 85 RWF. If the Rwandan Franc devalues by 20%, the new exchange rate would be 10$ = 680 RWF, which means that 1$

Answer When an increase in exports takes place, it can have a positive effect on the exchange rate of the country’s currency. This is because the higher demand for the currency will push the value up. This is true even

Answer: A. Explaining the Equations The first equation, Y = C + I + G, is the equation for Gross Domestic Product (GDP), which is the total value of all goods and services produced within a given period. C stands

Overview of the Marshall-Lerner Condition The Marshall-Lerner Condition, named after two economists, Alfred Marshall and Abba Lerner, is an economic concept used to determine the success of a currency devaluation. This condition states that the sum of the elasticities of

Answer: What is a Recessionary Gap? A recessionary gap is a situation where the actual output of a country’s economy is below its potential output. This gap is caused by insufficient aggregate demand, which can be addressed by implementing appropriate

Answer Fiscal policy is the government’s use of taxation and spending to influence economic activity and to achieve specific economic and social objectives. To eliminate the gap, a government must use a combination of taxation, government spending and transfer payments

Answer Fluctuations in exchange rates can have a significant effect on an economy. Exchange rates are the value of a currency relative to the currency of another country. When the value of a currency strengthens or weakens compared to another

The Four Factors that Determine the Demand for Fijian Dollars in the Foreign Exchange Market The demand for Fijian dollars in the foreign exchange market is determined by four main factors: the level of Fijian imports, Fijian export earnings, international

Answer Aloha Bank starts with $200 in Bank Capital and accepts $800 in deposits. 12.5% of deposits is kept as Reserves and the rest is used to make bank loans. This question consists of four parts: A) Show the Balance

Answer: Aloha Bank Balance Sheet The balance sheet of Aloha Bank starts with $200 in Bank Capital and after accepting $800 in deposits, the balance sheet would look like this: Assets: $800 Liabilities: $800 Bank Capital: $200 Aloha Bank’s Leverage

Answer: This question is asking about the stability of a market model. A market model is a theoretical model of how a market might react and behave in different situations. It is important to analyze and understand the stability of

Answer The profit maximizing or loss minimizing equilibrium level of output (Q*) for a firm operating in a perfect competition market is determined by the intersection of its total revenue (TR) and total cost (TC) functions. In this instance, the

What is the Supply Curve for Australian Dollars? The Supply Curve for Australian Dollars is a graphical representation of the relationship between the quantity of Australian dollars being supplied and the exchange rate. The supply curve shows the amount of

What is the Cash Rate? The cash rate is the rate of interest charged on overnight loans between financial intermediaries. It is the rate the Reserve Bank of Australia (RBA) charges on overnight loans which are made by the RBA

Answer: Starting a Business Starting a business is a great way to be your own boss, create an opportunity for yourself, and even make a difference in the world. There are many steps to consider when starting a business, from

What is Business? Business is an activity of exchanging goods and services with others for money. It involves the production, distribution, sale, and management of goods and services. Businesses can be categorized as private, public, or governmental. Businesses are also

What is Business? Business is the activity of making one’s living or making money by producing or buying and selling goods or services. It is an economic system where goods and services are exchanged for one another or for money.

Answer: The Profit Maximizing or Loss Minimizing Equilibrium Level of Output The profit maximizing or loss minimizing equilibrium level of output can be determined by examining the Total Revenue (TR) and Total Cost (TC) functions for a firm operating in

Factors That Cause Economies and Diseconomies of Scale Economies and diseconomies of scale refer to the relationship between the size of a business and the cost of producing its products and services. Economies of scale occur when a company produces

Summary The long run average cost curve (LRAC) is U-shaped due to economies of scale, the law of diminishing returns, and varying input costs. Economies of scale are when firms experience lower costs from increased production output due to specialization

Deriving the Long Run Total Cost Curve The long run total cost curve (LRTC) shows the relationship between total cost (TC) and output (Q). It is derived from the long run average cost (LRAC) curve, which is derived from the

National Bank of Ethiopia Interest Rates The National Bank of Ethiopia (NBE) is the country’s central bank and is responsible for maintaining economic stability and setting monetary policy. Recently, the NBE has taken a number of actions that have resulted

Eating Using Fancy Biological Words Eating is a process of ingestion and digestion of nutrients to provide energy to the body. Ingestion is the act of taking food into the body via the mouth, where mastication or chewing breaks down

5 marks) Answer A. Explain the meaning of each of these equations. The equation Y=C+I+G represents the equation for Gross Domestic Product (GDP). GDP is the total value of goods and services produced in a country in a given year.

What is a Cash Flow Hedge A cash flow hedge is a financial instrument that helps companies manage their exposure to foreign exchange rate movements by fixing the exchange rate of a future cash flow. This type of hedge is

Answer: Monthly Financial Statement Procedure: Review of Recoverability of Cash Flow Hedge Losses The monthly financial statement procedure should include a review of the recoverability of cash flow hedge losses. This review should assess the extent to which the losses

What is Hedging? Hedging is an investment strategy that involves taking strategic positions in a variety of markets, assets, or securities to minimize the risk of loss. Hedging activities can range from complex derivatives and options strategies to simple stock

Commercial Mortgage-Backed Security (CMBS) A Commercial Mortgage-Backed Security (CMBS) is a type of mortgage-backed bond that is secured by a mortgage on commercial property. CMBS are typically issued by large investment banks and are structured to pay investors a fixed