The table below reflects the actual and structural budget deficit as a percentage of GDP.
|
Year |
Actual Defect |
Structural Deficit |
|
As % of GDP |
As % of GDP |
|
|
2010 |
2.8 |
2.9 |
|
2011 |
3.9 |
3.2 |
|
2012 |
4.6 |
3.4 |
|
2013 |
4.7 |
3.7 |
|
2014 |
3.9 |
3.7 |
|
2015 |
3.00 |
2.8 |
|
2016 |
2.3 |
2.6 |
|
2017 |
1.4 |
1.6 |
|
2018 |
0.3 |
1.0 |
a. Graph the above data with “years” in the horizontal axis, and “deficit as % of GDP” in vertical axis.
b. From 2010 to 2014 the actual budget deficit is above the structural budget deficit. Explain why.
c. From 2016 to 2018 the actual budget deficit is below the structural budget deficit. Explain why.
d. Which period was the fiscal policy contractionary?
e. Which period was the fiscal policy expansionary?
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suppose the nominal interest rate on a bank's savings account is 7% per year. if the inflation rate for the year was 2%, then the real interest rate is
select one:
a. -5%
b. 5%
c. 9%
d. 14%
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(b) Because of a decrease in the working-age population, Chinese labor force is now shrinking (The Economist, Feb 23, 2019). How does this change your answers in (a) – if at all?
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In such a challenging situation, recommend three suggestions how Malaysia can revitalise its economy for a better tomorrow than it is today. Please justify why your suggestion will work to revitalise the economy of Malaysia.
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The real risk-free rate is 2.75%. Inflation is expected to be 1.50% this year and 4.50% during the next 2 years. Assume that the maturity risk premium is zero.
What is the yield on 2-year Treasury securities? Do not round intermediate calculations. Round your answer to two decimal places.
What is the yield on 3-year Treasury securities? Do not round intermediate calculations. Round your answer to two decimal places.
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Additional investment in fixed assets but no additional working capital $100,000
Straight-line depreciation rate 25% but zero salvage value after four years
Annual sales revenues (constant for every year) $75,000
Operating costs (excl. depreciation) (also constant) $25,000
Tax rate 21.0%
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CSM Corporation has a bond issue outstanding at the end of the year. The bond has 15 years remaining to maturity and carries a coupon interest rate of 6%. Interest on the bond is compounded on a semiannual basis. The par value of the CSM bond is $1,000 and it is currently selling for $874.42. a. Solve for the yield to maturity. Show your work. b. Solve for the price of the bond if the yield to maturity is 2% higher. Show your work. c. Solve for the price of the bond if the yield to maturity is 2% lower. Show your work. d. What can you summarize about the relationship between the relationship between the price of the bond, the par value, the yield to maturity, and the coupon rate?
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