Externalities: an externality occurs when a person’s utility if affected by another person’s consumption or by a firms production activities or when a firms profits are affected by another firms production activities or an individual’s consumption and appropriate monetary consumption is not made.
Common property resources: a common property good is a good that is not owned bu anyone. Individuals acquire ownership of common property resources by simply taking them. Self-interested individuals are likely to take as much as they can as quickly as they can. In the case of common property resources the rush to be the first can lead to depletion.
Information failure: efficiency requires that information be freely disseminated and the only charge be for the cost of transmitting the information. The private market provides an inadequate supply of information.
Faimus answered the question on February 25, 2019 at 17:31
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Consider the following data Date Exchange rate January 2017 EURUSD 1.100 December 2017 EURUSD 1.144 Take USD as the home currency.
(Solved)
a) Consider the following data
Date-----Exchange rate
January 2017----EURUSD 1.100
December 2017----EURUSD 1.144
Take USD as the home currency.
According to purchasing power parity which currency area should have had the higher rate of inflation by 2017 and by how much?
b) If inflation in the USD were 3% higher than the EURO area, calculate the change in the real value of the dollar .what is the implication of this change?
C) What is the implication of a change in real exchange rate of a currency?
d)
Explain why you would expect interest rates in the US to be higher than in the EURO area.
e) Explain why you would expect there to be no difference in the interest rates of a government bond of any two countries in the euro area and also explain why in practice there are differences.
Date posted:
February 16, 2019
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Answers (1)
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a) Calculate to 4 decimal place the new exchange rate after a 2% increase in the value of the dollar given an exchange rate of...
(Solved)
a) Calculate to 4 decimal place the new exchange rate after a 2% increase in the value of the dollar given an exchange rate of EURUSD 1.1 .
b) Given the following exchange rate, calculate the GBPEUR rate to 4 decimal places.
EURUSD 1.1043
GBPUSD 1.2970
c) Explain the relationship between your answer above and triangular arbitrage.
Date posted:
February 16, 2019
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Answers (1)
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(Solved)
Different types of elasticity with examples.
Date posted:
February 14, 2019
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Answers (1)
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(Solved)
Give any three factors that limit the level of liquidity preference
Date posted:
January 24, 2019
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Answers (1)
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Date posted:
January 21, 2019
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Answers (1)
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(Solved)
Explain the ways in which the income elasticity of demand coefficient is interpreted
Date posted:
January 16, 2019
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Answers (1)
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(Solved)
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Date posted:
January 16, 2019
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Answers (1)
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Price elasticity of demand coefficient can be interpreted in several ways. Briefly explain them.
(Solved)
Price elasticity of demand coefficient can be interpreted in several ways. Briefly explain them.
Date posted:
January 16, 2019
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Answers (1)
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(Solved)
Differentiate between point and arc elasticity of demand.
Date posted:
January 16, 2019
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Answers (1)
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(Solved)
What is the usefulness of the concept of elasticity in economics?
Date posted:
January 16, 2019
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Answers (1)
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(Solved)
Highlight and explain the determinants of elasticity of supply
Date posted:
January 16, 2019
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Answers (1)
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(Solved)
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Date posted:
January 16, 2019
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Answers (1)
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(Solved)
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Date posted:
January 16, 2019
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Answers (1)
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(Solved)
Give any conditions for disequilibrium of demand and supply.
Date posted:
January 16, 2019
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Answers (1)
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(Solved)
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Date posted:
January 16, 2019
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Answers (1)
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(Solved)
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Date posted:
January 16, 2019
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Answers (1)
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(Solved)
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Date posted:
January 15, 2019
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Answers (1)
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(Solved)
Discuss the concept of factor pricing.
Date posted:
December 30, 2018
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Answers (1)
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(Solved)
Ways through which the government could influence the allocation of resources in a free market economy
Date posted:
December 30, 2018
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Answers (1)
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(Solved)
Distinguish between general and partial equilibrium.
Date posted:
December 15, 2018
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Answers (1)