Answer:
Residual supply = Quantity supplied - Quantity demanded = (p - 20)/0.02 - (80 - p)/0.02
= (p - 20 - 80 + p)/0.02 = (2p - 100)/0.02 = 100p - 5000
So, Excess or residual supply function is: A) Sr(p) = - 5000 + 100p
At price of $ 60, Excess supply = - 5000 + 100(60) = - 5000 + 6000 = 1000
Explanation:
Answer:
Target funds rate = 7.5%
Explanation:
The target Federal funds rate is calculated as:
Target funds rate = Real equilibrium Federal funds rate + current inflation + 0.5(inflation gap) + 0.5(output gap).
(Inflation gap = Current inflation rate - Target inflation rate)
So, Target funds rate = 2 + 1 + 0.5(1 - 2) +0.5(10)
= 3 + 0.5(-1) + 5
= 3 - 0.5 + 5
= 7.5
Therefore, Target funds rate = 7.5%
The strategy for these questions is to scan through them and choose the easiest to complete first, so that we avoid errors. The easies among the pairs seems to be cultural imperialism because it is somewhat unrelated to the rest. If a foreign culture is imposed upon someone, it is probable that he will wear foreign clothes.
Next, we have that if there are more foreign investments in a country, this affects the value of money in this country. The interest rates will be going higher since there is a motive now for people to take their money out of the bank and invest; hence, the banks need to readjust upwards the rates.
Finally, if the exports are increased, it means that there is more need for your currency (you are taking your good outside your country and they need to be bought with your currency), so the rise in exports yields also a rise in currency value, just because there is more demand for your currency.
Finally, the last slot left is decrease in exports, which goes hand to hand with a lower currency value.