5.688%
Explanation:
Given that
Purchase securities = $3,750,000
Sale value of securities = $3,780,000
Number of days given = 50 days
So, the formula to compute the repo rate is shown below:
Yield or repo rate is
= (Sale value of securities - purchase price) ÷ (Sale value of securities) × 360 days ÷ 50 days
= ($3,780,000 - $3,750,000) ÷($3,780,000) × 360 days ÷ 50 days
= 0.0079 × 7.2
= 5.688%
W\e assume the 360 days in a year
The income effect expresses the impact of increased purchasing power on consumption, while the substitution effect describes how consumption is impacted by changing relative income and prices. Some products, called inferior goods, generally decrease in consumption whenever incomes increase.
Explanation: