Write down a model that will allow you to analyze the BOP and exchange rate in a monetary framework. Then, discuss the consequences of an increase in the foreign inflation rate under fixed, flexible, and managed floating systems
What will be an ideal response?
R^ - E^ = P^F + Y^ - D^. If P^F increases, then with fixed rates R^ increases. With a float, E^ falls. With a managed float, (R^ - E^) increases with both R^ increasing and E^ falling.
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A state lottery has a Million Dollar Lottery game that pays $1,000 a week for life. Assuming a 6% nominal rate of interest and generously assuming an infinite lifetime, can this game be called a "Million Dollar Lottery"?
What will be an ideal response?
Compared to 1980, the top marginal federal income tax rate today is
a. substantially lower and the rate structure is less progressive than in 1980. b. substantially lower and the rate structure is more progressive than in 1980. c. substantially higher and the rate structure is less progressive than in 1980. d. substantially higher and the rate structure is more progressive than in 1980.