Question

1. 		increase; increasing
   		increase; decreasing
   		decrease; increasing
   		decrease; decreasing

  

QUESTION 38

1. Suppose that a baseball player eligible for free agent status signs a contract with a new team that promises to pay him $100,000 more than his current team for each of the next three years. Assuming the discount rate is 6 percent, what is the maximum the current costs of moving could be and still have this investment be worthwhile?

   		$251,886
   		$267,301
   		$283,019
   		$283,339

QUESTION 39

1. Which of the following is not a commonly used definition of the full-employment (natural) rate of unemployment?

   		The unemployment rate that prevails in normal times
   		The unemployment rate where the number of job vacancies equals the number of new labor force entrants
   		The unemployment rate associated with zero excess demand for labor
   		The unemployment rate at which all unemployment is voluntary

Answer 1

Q38) Maximum current costs that can be there = Present value fo the additional income with new team

= 100000/1.06 + 100000/1.06² + 100000/1.06³

= 267301

Thus, the answer is (b) $267301

39) The answer is (a)

The unemployment rate that prevails in normal times

This is not a correct definition as even in normal times, the economy can experience some unemployment. It is only when output is equal to the potential output, that there is full employment.

All other options are correct as they give correct definitins of full employment.

answered by: anonymous