Macroeconomics help !!!!?

Question

8.An increase in an investment tax credit would create a

A.shortage at the former equilibrium interest rate. This shortage would lead to a rise in the interest rate.

B.shortage at the former equilibrium interest rate. This shortage would lead to a fall in the interest rate.

C.surplus at the former equilibrium interest rate. This surplus would lead to a rise in the interest rate.

D.surplus at the former equilibrium interest rate. This surplus would lead to a fall in the interest rate.

9.A risk averse person might accept a bet with a 50% chance of losing $100 today if they had a 50% chance of winning

A.of winning $120 in two years and the interest rate was 11%.

B.of winning $114 in two years and the interest rate was 7%.

C.of winning $110 and two years and the interest rate was 3%.

D.A risk averse person would not accept any of the above bets.

10.Suppose that in the small country of Sociopolis there are 6 million people in the adult population, that the labor-force participation rate is 70 percent, and that there are 3.8 million people employed. To the nearest tenth, what is the unemployment rate?

A.10.5%

B.9.5%

C.6.7%

D.None of the above is correct.

Answer 1

8:  A.  An investment tax credit gives firms an incentive to borrow, so they will place greater demand on capital markets, driving interest rates up.

9:  D.  For A,B, and C the expected return (probability of winning times amount won minus probability of losing minus amount lost) is less than the interest rate.  A risk-averse (or even risk-neutral) person won't take any of these bets.  Only an idiot would, actually.

10.  B.    The employment rate equals the number of employed persons divided by the total labor force (6 million people times .70 =  4.2 million).    3.8 million divided by 4.2 million =  .9048.  The unemployment rate is 1 minus this number, or approximately .095, or 9.5%.  Sucks to live in sociopolis.

Answer 2

.#8.

A.shortage at the former equilibrium interest rate. This shortage would lead to a rise in the interest rate.

Q40 and answer key here: http://www.albion.edu/econ/hooks/Courses...

.#9.

D.A risk averse person would not accept any of the above bets.

50/50 is unfeasible combination for risk-averse person.

.#10.

B.9.5%

Labor-force=6*0.7=4.2 m

Unemployment = (4.2 - 3.8) / 4.2 = 0.4/4.2= 9.5%