Answer:
a) The gross cost per household per year of this policy is $2 per household.
b) The policy's benefit per sugar producer per year is $2,500 per producer.
Explanation:
This tariff policy affects households, that loss consumer surplus, and sugar producers, which have a producer surplus gain.
The loss in consumer surplus due to the tariff will be $100,000 per year.
If there are 50,000 households in Sugarland, the cost per household is:
The gross cost per household per year of this policy is $2 per household.
The benefit per sugar produced can be calculated as the total benefit per year (producer surplus) divided by the total amount of sugar producers:
The policy's benefit per sugar producer per year is $2,500 per producer.
Answer:
$24,500
Explanation:
Given that,
Maturity value of bonds outstanding = $270,000
Unamortized discount = $11,000 they were called in at 105.
Net carrying amount of bonds redeemed:
= Maturity value - Unamortized discount
= $270,000 - $11,000
= $259,000
Re-acquisition price:
= Maturity value × Called at 105
= $270,000 × 1.05
= $283,500
Loss on redemption:
= Re-acquisition price - Net carrying amount of bonds redeemed
= $283,500 - $259,000
= $24,500
Given Information:
Real GDP growth = Y = 3%
Money growth = M= 7%
Real interest rate = r = 2%
Velocity = constant = 0%
Required Information:
Nominal interest rate = ?
Answer:
Nominal interest Rate = 6%
Explanation:
The quantity theory of money (QTM) equation is given by
ΔM + ΔV = ΔP + ΔY
ΔP = ΔM + ΔV – ΔY
Substituting the percentages given in the problem,
ΔP = ΔM + ΔV – ΔY
ΔP = 7% + 0% – 3%
ΔP = 4%
The fisher equation which relates real and nominal interest rate is given by
Real interest rate = Nominal interest rate - Inflation rate
Re-arranging the equation to find nominal interest
Nominal interest rate = Real interest rate + Inflation rate
Nominal interest rate = 2% + 4%
Nominal interest Rate = 6%
