If the firm agrees to give in after a strike length of s. What length of strike will the firm choose, as a function of a and b? What are the firm’s payments to the union? Depict your solution in a graph.
Your bank has the following balance sheet
|Rate-sensitive||$100 million||Rate-sensitive||$75 million|
|Fixed-rate||100 million||Fixed-rate||125 million|
What would happen to bank profits if the interest rates in the economy go down? Is there anything that you could do to keep your bank from being so vulnerable to interest rate movements?