Answer: Worsen; benefits
Explanation:
Specific Automakers is signing a long term contract with the union who are the representative of workers.
Real wages should increase by = 2%
Expected inflation = 5%
Nominal wage increase = 7%
Actual inflation = 6%
Actual inflation is greater than expected inflation, so this would worsen the union and it is beneficial for the automakers because now real wage increase is only:
= Nominal wage - Actual inflation rate
= 7% - 6%
= 1%
This is an example of re-distributive cost of inflation.
Answer:
c.$16,112
Explanation:
Since the payment of $3,500 per year is to be paid for 4 years, starting immediately, therefore the future value of annuity will be determined to calculate the amount that you will have after 4 years.
Future value of annuity=(1+i)*R[((1+i)^n-1)/i]
R=Payment to made per year=$3,500
i=interest rate=5.7%
n=number of payments to be made in future=4
Future value of annuity=(1+5.7%)*3,500[((1+5.7%)^4-1)/5.7%]
=$16,112
So the answer is c.$16,112
As a member of the Federal Reserve Board, in an inflationary situation I would suggest a change in the federal funds rate that would be accomplished by raising the base interest rate of the US economy. This would make bonds more attractive and people would stop consuming to invest in public debt securities. In addition, raising interest rates would discourage credit, causing banks to lend less. Since inflation is a monetary phenomenon caused by the excess of currency in circulation, these measures would have a downward effect on inflation, as they reduce the amount of money in circulation in the economy.
Answer:
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Explanation:
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Answer:
$12,884.78
Explanation:
The amount in Future for the dollar invested today is referred as the Future Value. We determine the Future Value by compounding the Principle amount using the effective interest rate.
We can simply calculate the Future Value using a Financial calculator as follows :
PV = $0
PMT = - $5,700
I = 10 %
P/YR = 12
N = 30 x 12 = 360
FV = ??
Therefore,
The Future Value (FV) will be $12,884.78
The Account balance will be $12,884.78 in 30 years.