An economy has the following money demand function: (M/P)d = (1/3)Y/i.zdO9ZIMjRooPJbumQHR6cCtI3SV9BpvaQlCPZndUceEYqFAlF8fOX5BgZrX9R+AYdNbSiHIa7LazBUxRktntl+joMxcMMNiasLCkx7/v3SKhS+BGptmsEp1R0HG3+djd6YjJl00wA5iLmNZBQviY7m5AzPgdOFazwiPDWutNdplLo2KwgDIbHqd/RUTD1Pf/g8J1qfJVJUKTmtkzb2Av5Nl95M2VHM/Adyk5JVoM+aDkNbUtEOAbX+beDjmeV4ph5qycpPTDMhEHC6NZIy1V5lYro8G2yWNBCqnjR0YHAYjiDywelGEQw2L/oLhJaw5jkldd/NW83KW+lObkqAICnorG504wiz4EGaAflqhxvM4=
Larry is the sole owner of Larry’s Moving Company, Incorporated (LMC). In one year, LMC collects $2,000,000 from customers to help them move. LMC’s equipment depreciates in value by $200,000. LMC pays $1,400,000 to its workers, who pay $500,000 in taxes on this income. LMC pays $175,000 in corporate income taxes and pays Larry a dividend of 100,000. Larry pays taxes of $50,000 on this dividend income. LMC retains $125,000 of earnings in the business to finance future expansion. How much does this economic activity contribute to each of the following?
Compensation of Employees = XWtS3w8oM7UrX9rIQbb7vA==
Proprietors’ Income = 1Wh3cvJ2xF4=
Corporate Profits = mBPYmPbDkTNZpgGg
By what percentage did prices rise between 2010 and 2015? Give the answer for each good and also for the two measures of the overall price level. Compare the answers given by the Laspeyres and Paasche price indexes. Explain the difference.