Homework Help for Economics

4. Consider a consumption profile that's measured in thousands of dollars per year over aperiod of four years: (20,22,23,25). These consecutive amounts of consumption yield different amounts of utility. What is the current utility of the consumption if the discount rate is 10%? (Round to the nearest 2 decimal places)

5. The winner of a lottery jackpot is offered to take the winning as a lump sum cash payment or in a yearly payment over 29 years(sometimes with a 5% yearly increase each year). Contrary to the advice of most financial advisers to take the annuity option(e.g.when interest rate is high), over 90% of winners take the immediate lump sum option. From a behavioral perspective, explain why most winners prefer to take the cash right away.

6. Each time I ask my students, during lecture, if they (option 1) want a break now or (option 2) they prefer that I keep going with the lecture and we will be finishing the class earlier they choose the 2nd option. Based on the neo classical model (e.g.DUM). Which option should be preferred? Using the behavioral way of thinking, why do you think students always choose option 2?

1.What are the two types of utility a consumer might get from a transaction? Briefly explain each one.|

2.Assume you are a researcher observing a trust game.The trustor (I) has $10 as initial investment. Whatever amount (I) decides to send to trustee(T),will be multiplied by 3. (T) in turn will decide to send whatever amount back to (I). In most studies (I) sends almost half of the $10 while (T) sends back a third of the amount received.

What if the initial investment is $500,000.How does this change the decisions made by both players? What's the likely effects of larger amounts on trust? Which of the two models (neoclassical vs behavioral) can explain this situation better?

3. Neoclassical economists and behavioral economists do not see "sunk cost" eye to eye. Will the sunk cost lead to more consumption? or to less consumption? Explain the difference between the two models.

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The 2014 balance sheet of Tian Tian Tennis Shop, Inc., showed $670,000 in the common
stock account and $401 million in the additional paid-in surplus account. The 2015 balance
sheet showed $825,000 and $4.4 million in the same two accounts, respectively. If the company
paid out $565,000 in cash dividends during 2015, what was the cash flow to stockholders for
the year? 

in a certain economy the expectations augmented phillips curve is  

a. Graph the phillips curve of this economy for an expected inflation rate of 0.075. If Fed chooses to keep the actual inflation rate at 0.075. what will be the unemployment rate?

b. An aggregate demand shock decreases the expected inflation to 0.055.Graph the new Phillips curve and comapre it to the curve you drew in part a . What happens to the unemplyment rate if the Fed holds actual inflation at 0.075 ? What happens to the Phillips curve and unemployment rate if fed announces that it will hold inflation at 0.075 after the aggregate demand shock and this announcement is fully believed by the public?

c. Suppose that a supply shock raises the xpected inflation rate to 0.095 and raises the natural unemplyment rae to 0.06 . Repeat part b 

 answer all questions.

The sample mean of the dependent and independent variables satisfy the estimated OLS sample regression line.

No perfect multicollinearity among explanatory variables.

The conditional variance of the dependent variable on the explanatory variables is constant.

Standard error of the regression is used to estimate the standard errors of the corresponding OLS regressors.

Perfect collinearity between explanatory variables.

Mean conditional independence of the error term.

Error term conditional on the explanatory variables of the regression model is normally distributed.

The zero conditional expectation of the error term on the explanatory variables.

The zero correlation between the fitted values and the residuals of a multiple regression model.

A random sample of the dependent and explanatory variables of a regression model is available.

1. Assumption of the classical linear regression model.
2. Not an assumption of the classical linear regression model.

What is demand in market?

What’s the total paying at closing?

PROBLEM 1 - Simple Interest

How much interest will you earn in 6 months on $1,000  if the bank pays 3% simple interest annually?

PROBLEM 2 - Compound Interest

Aaron is earning 5% interest on his savings account. He starts with $5,000.00.How much money will he have in 6 months?

PROBLEM 3 - Compound interest rate with additional contributions

John is earning 6% compound interest on his savings account. He starts out with $2,000 and deposits $200 more into the account every month. Calculate how much money he will have in 6 months.

PROBLEM 4 - Compound Interest  for longer term

Hank leaves his  money for 1 year to see how much more it will grow. He deposits $10,000 at 5% for 12 months. How much interest does he make?

PROBLEM 4 - Compound Interest  for longer term

Hank leaves his  money for 1 year to see how much more it will grow.

He deposits $10,000 at 5% for 12 months. How much interest does he make?

Pick one of the plan over another with regards to how it fits into the retirement planning

Do you believe these probabilities apply to you based on your personal traits and behaviors? Why or why not

Do you think you will live longer than your parents ? Why or why not ? What factors are at play?

How does knowing that you could live to be 100 impact on saving money?

A consumer is making saving plans for this year and the next. She knows her real income after taxes will be €20,000 in both years. Any part of her income saved this year will earn a real interest rate of 3% between this year and next year. Currently, the consumer has no wealth (no money in the bank or other financial assets, and no debts). There is no uncertainty about the future.

The consumer wants to save an amount this year that will allow her to

(1) make college tuition payments next year equal to €5000 in real terms; 
(2) enjoy exactly the same amount of consumption this year and next year, not counting tuition payments as part of next year’s consumption; and

(3) have neither assets nor debts at the end of next year.

a. How much should the consumer save this year? 
    How much should she consume?

What is the full form of SEBI?