Answer:
False
Explanation:
In a competitive market, if production (and consumption) continues until the marginal benefit of one more unit equals marginal cost, then total surplus is maximized.
As for any extra unit produced
Marginal Benefit > Marginal cost = Surplus
Marginal Benefit = Marginal cost = No Surplus / No loss
Marginal Benefit > Marginal cost = loss
When your Marginal benefit is maximum and Marginal cost is minimum then the surplus will be maximized.
Most efficient situation in which benefit is maximum and the cost is minimum results in maximized surplus.
The process being employed in the scenario above is called
quality control. This is a system being used in means of maintaining standards
with the use of testing out samples or products in order to check and maintain
the standards that has been implemented.
Answer:
The interest rate is higher in the US.
Explanation:
The forward price is calculated using the following formula,
F= S ( 1+Rd / 1+Rf)^t
where,
- F = Forward rate
- S = Spot rate
- Rd = Nominal interest rate in domestic market
- Rf = Nominal interest rate in foreign market
- t = time in years
We consider that the domestic market is the US and the domestic currency is the USD. Thus, it is a direct quote where 1 EUR = 1.3 USD
The forward price ER is more than the Sport ER only when the interest rate in domestic market is more than the interest rate in foreign market and as a result, the value of domestic currency against a foreign currency in the forward market depreciates.
We can see this by the following example,
Say Spot rate is $1.3 per 1 EUR and the interest rate in US is 10% while that in Euro zone is 5%. When we calculate the forward ER we will see that 1 EUR will buy us more USD in forward (more than 1.3 USD)
F= 1.3 * (1.1 / 1.05)^1 => $1.362 PER 1EUR
Amount invested in stocks 5,000 X 0.60 = 3,000
After one year gains 9%
3,000 X ( 1 + 0.09) = 3,270
After second year loses 4%
3,270 X ( 1 - 0.04) = 3,139.2 amount after second year
So Stocks gained 139.2 ( 3139.2 - 3000)
Amount of saving account
5,000 X 0.40 = 2,000
After 2 years
2,200 X ( 1 + 0.049)^(2) = 2,200.802
So gained 200.802 (2200.802 - 2000)
Total amount after 2 years
3,139.2 + 2,200.802 = 5,340.002
Gained 340.002 (5340.002 -5000)
Explanation:
Ok so the Taylor Rule is one kind of targeting monetary policy rule of a central bank. The Taylor rule was proposed by the American economist John B. Taylor in 1992, who is currently the George P.Shultz Senior Fellow In Economics at and the director of Standford’s Introductory Economics Centre.
Also the Taylor Rule suggests that the Federal Reserve should raise rates when inflation is above target or when gross domestic product (GDP) growth is too high and above potential. It also suggests that the Fed should lower rates when inflation is below the target level or when GDP growth is too slow and below potential.
