Microeconomics (2nd Edition) (Pearson Series in Economics)
Microeconomics (2nd Edition) (Pearson Series in Economics)
2nd Edition
ISBN: 9780134492049
Author: Daron Acemoglu, David Laibson, John List
Publisher: PEARSON
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Chapter 15, Problem 1P
To determine

The doubling time at interest rates 2%, 5% and 10%.

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A mathematical approximation called the rule of 70 tells us how long it will take for something to double in size if it grows at a constant rate. The doubling time is approximately equal to the number 70 divided by the percentage rate of growth. Thus, if Oman's real GDP per person is growing at 7 percent per year, it will take about 10 years (= 70 ÷ 7) to double. Apply the rule of 70 to solve the following problem: Real GDP per person in Oman in 2020 was about $13,000 per person, while it was about $52,000 per person in the United States. If real GDP per person in Oman grows at the rate of 2 percent per year, about how long will it take Oman's real GDP per person to reach the level that the United States enjoyed in 2020? (Hint. How many times would Oman's 2020 real GDP per person have to double to reach the United States' 2020 real GDP per person?) years
An investment promises to pay into an account that pays you 6 percent annually, $150 per month for the next twenty-two years.  Suppose the first deposit into the account is made one month from today what is the value of the amount which will be in the account at the end of thirty years?   Rounded to 2 decimal places. (Answer up to 2 decimal places)
Please answer everything. Define each of the following loan terms, and explain how they are related to one another: the prime rate, the rate on commercial paper, the simple interest rate on a bank loan calling for interest to be paid monthly, and the rate on an installment loan based on add-on interest. If the stated rate on each of these loans was 5%, would they all have equal, effective annual rates? Explain. Kindly SKIP if you're not diligent to answer them. Thank you!
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