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Distinguish between the multiplier and the -accelerator as used in national income statistics. Now smaller A stock price is modelled by a two period recombining

Distinguish between the "multiplier" and the -accelerator" as used in national income statistics.

Now smaller

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A stock price is modelled by a two period recombining binomial model with the following parameters where each period represents a day. Assume that there are 365 days in a year. = 5% p.a. (risk-free rate, continuously compounded) 6 = 30% p.a. = volatility of share price process so = 100 = share price at time () u = exp(o.365 ") = return per unit investment of an up jump probability of an up jump = 60% (i) By considering the risk neutral probability or otherwise, evaluate the state price y(s) (at time zero) for each of the three possible states the share price is in after two steps (assume that one step is one day). [3] (1i) Calculate the state price deflator (at time 0) for each of the three possible states. [2]Discuss the distinct characteristics of the indifference curyes. Discuss five ways in which inflation might cause unemployment in an economy. Explain the term partial equilibrium as used in economics. Describe in detail the methods that can be adopted by country X to strengthen its currency. Discuss in detail the differences between the quantity theory of money and the liquidity preference theory of money. Describe the conditions for effective price discrimination in an economy. Discuss at least six reasons as to why a country might impose international trade restrictions

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