Options:
(a) $162,032.
(b) $406,067.
(c) $417,246.
(d) $674,023.
Answer:
Correct Option is B.
<u>$406,067</u>
Explanation:
At an expected earnings rate of 6%, and an inflation rate of 3% during the period, he need to have $406,067 at the beginning of his retirement.
Answer:
The correct answer is letter "A": It may not lead to a sizable increase in physical capital in poorer countries.
Explanation:
Most underdeveloped countries rely on foreign aid to reduce the poverty rate. While this is could be the fastest method to relieve social problems it curses the underdeveloped country's economy to remain stagnant. <em>Countries providing aid mostly do it by providing goods of immediate use such as food or clothing but poor countries need investment to improve their industries, generate employment and in such a way increase individuals' income.
</em>
Therefore, <em>physical capital is unlikely to grow in poorer countries depending on foreign nations' aid.</em>
Answer:
The wage per hour must be paid in the second year is $11.021 per hour.
Explanation:
Please find the below for detailed explanations and calculations:
We have the real wage stipulated in the contract must be grown at 3% in second year in comparison to first year.
Thus, the nominal pay rise must grow at the higher rate than 3%, in the way that it may cover the effect from inflation to ensure real rise is 3% as agreed in the labor contract.
As a result: Nominal increase (%) = (1+ real increase rate) x CPI of second year in comparison to first year - 1 = (1+3%) x 1.07 -1 = 10.21%.
=> Wage per hour must be paid in the second year = Wage per hour in first year x ( 1 + Nominal increase) = 10 x (1 + 0.1021) = $11.021.