The maturity risk premium on the 2-year Treasury security is C. 1.39%
Using this formula
rd = r* + IP + MRP
Where
rd represent Required rate of return on 2-year Treasury Security = 6 75%
r* represent real risk free return = 3.18%
IP represent Inflation Premium = 2.18%
MRP represent Maturity Risk Premium
Let plug in the formula
6.75% = 3.18% + 2.18% + MPR
6.75%=5.36%
MRP=6.75% -5.36%
MRP = 1.39%
Inconclusion the maturity risk premium on the 2-year Treasury security is C. 1.39%.
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Answer:
individuals will tend to become free riders, and private firms will have difficulty generating enough revenue to produce an efficient quantity of the good.
Explanation:
A public good is a good that is non excludable and non rivalrous. Everyone has assess to the statue and because one person is enjoying the view of the statue does not means another person cannot enjoy the view of the statue
The free rider problem is a form of market failure. It occurs when people benefit from a good or service of communal nature and do not pay to enjoy these services.
Because a public good is non-excludable, the problem of free rider increases so private firms would be unable to generate adequate revenue
Answer:
option c it will have negative consequences..
Answer:
The aggregate demand will fall
Explanation:
The aggregate supply measures the quantity of real GDP that can be supplied by in the economy at different price levels. it measures planned output if both prices and average wage rates can change, the Long run aggregate supply curve is assumed to be vertical (this means it remains constant when the general price level changes).
The leftward shift in aggregate supply means that at the same price levels the quantity supplied of real GDP has decreased. This is mostly due to natural disasters or other supply shocks like economic depression, when there is leftward shift in aggregate there would be fewer workers available to produce goods at any given price.
