An increase in money supply causes the real interest rate to remain unchanged and the price level to rise in long-run general equilibrium.
Unlike partial equilibrium analysis, which only examines individual markets, general equilibrium analysis examines the entire economy. In an economy with several markets operating concurrently, general equilibrium illustrates how supply and demand interact and tend toward balance.
By attempting to demonstrate that the interaction of supply and demand will lead to an overall general equilibrium, general equilibrium theory seeks to explain the behavior of supply, demand, and prices in a large economy with several or many interacting markets.
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What the other person said is right
Answer:
CAPM = 12.30%
Dividend Growth Model= 10.32%
Explanation:
According to the capital asset price model: Expected rate of return = risk free + beta x (market premium)
5% + (0.73 x 10%) = 12.30%
according to the constant dividend growth model
price = d1 / (r - g)
d1 = next dividend to be paid
r = cost of equity
g = growth rate
$35 = $1.6 x (1.055) / (r - 0.055)
r = 1.688 / 35 + 0.055 = 0.1032 = 10.32%
Question Options:
A. The local government decides that the average commute time is 30 minutes.
B. The local government decides that the data provide convincing evidence of an average commute time higher than 30 minutes, when the true average commute time is in fact 30 minutes.
C. The local government decides that the data do not provide convincing evidence of an average commute time higher than 30 minutes, when the true average commute time is in fact higher than 30 minutes.
D. The local government decides that the data do not provide convincing evidence of an average commute time different than 30 minutes, when the true average commute time is in fact 30 minutes.
Answer: A type 2 error in this context will mean that The local government decides that the data do not provide convincing evidence of an average commute time higher than 30 minutes, when the true average commute time is in fact higher than 30 minutes.
A type 2 error in statistics is defined as a situation where a false null hypothesis is not rejected.
In this question, a false null hypothesis would that the average commute time for the elementary school in the district is higher than the average 30 minutes.
Answer:
7.44 %
Explanation:
The Yield to Maturity (YTM) is the Interest rate that makes the Present Value of Coupons and Principle equal the Market Price or Current Price of the Bond.
The Yield to Maturity can be calculated using a financial calculator as follows :
PV = - $100
N = (15 -2) × 2 = 26
PMT = ($100 × 7.30%) ÷ 2 = $3.65
FV = $103
P/YR = 2
YTM = ?
Therefore, Inputting the values in the calculator as shown gives the Yield to Maturity is 7.44 %.