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Natasha_Volkova [10]
3 years ago
7

Between 2015 and 2016 the country of experienced a growth rate of 0.3 If nominal GDP had increased by 2.0 and the population gro

wth was recorded as 0.4 then calculate the annual inflation rate in West Fredonia Give your answer to one decimal
Business
1 answer:
Novosadov [1.4K]3 years ago
5 0

Answer: 1.3%

Explanation:

Inflation refers to general increase in prices in a given economy in a given period. Given the variables available, the best formula to use would be the Economic growth formula;

Economic Growth = %Δ Nominal GDP – %ΔPrices – %ΔPopulation

0.3 = 2.0 - %ΔPrices - 0.4

%ΔPrices = 2.0 - 0.4 - 0.3

%ΔPrices = 1.3

<em>Inflation rose by 1.3%</em>

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a) A = 4.50% and B = 2.00%

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Explanation:

a) Expected Returns for Both A and B respectively:

In order to calculate the expected returns, let's categorize the given data first.

Economy        Probability      Stock A       Stock B

Booming            0.30               10%               20%

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c) Portfolio Return Given that:

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Stock A                          4000              0.4               4.50%

Stock B                          6000             0.6                 2.0%

                                      10000

Portfolio Return =  Sum of ( Weight x Return)

                          = (0.4 x 0.045) + (0.6 x 0.02)

                          = 0.03

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