LowDown Construction’s common stock has an estimated beta of 1.53. The stock’s next dividend, of $1.94 per share, is expected to be paid one year from today.
From the CAPM, the stock has an expected return of 11% - when measured as an EAR. The broad stock-market has an expected return of 10.1% - when measured as an EAR.
Determine the corresponding risk-free rate – as an EAR.
Answers
The risk-free rate is 4.8%.
Risk-free rate = (Expected return of stock - Beta * (Expected return of market - Dividend)) / (1 + Beta)
= (11% - 1.53 * (10.1% - 1.94)) / (1 + 1.53)
= 4.8%
This can be calculated using the Capital Asset Pricing Model (CAPM), which states that the expected return of an asset is equal to the risk-free rate plus a risk premium that is proportional to the asset's beta.
In this case, the beta of LowDown Construction's stock is 1.53, the expected return of the stock market is 10.1%, and the next dividend is expected to be $1.94 per share.
The risk-free rate is the rate of return that an investor can expect to earn on an investment with no risk. It is often used as a benchmark for comparing the returns of other investments. The risk-free rate can be affected by a number of factors, including economic conditions, inflation, and interest rates.
In this case, the risk-free rate is 4.8%. This is relatively low compared to historical levels, but it is in line with recent trends. The low risk-free rate is due to a number of factors, including the Federal Reserve's low interest rate policy and the relatively weak economic growth.
The risk-free rate is an important factor to consider when making investment decisions. Investors should always compare the expected returns of an investment to the risk-free rate. If the expected returns of an investment are not higher than the risk-free rate, then the investment is not worth taking on the risk.
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Related Questions
Radovilsky Manufacturing Company, in Hayward, California, makes flashing lights for toys. The company operates its production facility 300 days per year. It has orders for about 12,000 flashing lights per year and has the capability of producing 100 per day. Setting up the light production costs $50. The cost of each light is $1. The holding cost is $0.10 per light per year.
Answers
Answer:
The right solution is:
(a) 4,272 units
(b) $134.16
(c) $134.17
(d) $12,268.33
Explanation:
Seems that the given question is incomplete. The attachment of the complete question is provided below.
According to the question, the values are:
Annual demand,
D = 12,000
Number of days,
= 300
Daily demand,
d = \(\frac{12000}{300}\)
= 40
Production rate,
P = 100
Ordering cost,
S = $50
Holding cost,
H = $0.10
(a)
The production run's optimal size will be:
Q = \(\sqrt{\frac{2DS}{H(1-\frac{d}{P} )} }\)
By putting the values, we get
= \(\sqrt{\frac{2\times 12000\times 50}{0.10\times (1-\frac{40}{100} )} }\)
= \(\sqrt{20,000,000}\)
= \(4,471.14\)
or,
= \(4,472 \ units\)
(b)
The average holding cost will be:
= \(\frac{Q}{2}\times H\times [1-\frac{d}{P} ]\)
= \(\frac{4472}{2}\times 0.10\times [1-\frac{40}{100} ]\)
= \(134.16\) ($)
(c)
The average setup cost will be:
= \(\frac{D}{Q}\times S\)
= \(\frac{12000}{4472}\times 50\)
= \(134.17\) ($)
(d)
The total cost per year will be:
= \(Avg. \ holding \ cost+ Avg. \ setup \ cost+Cost \ of \ purchase\)
= \(134.16+134.17+(1\times 12000)\)
= \(12,268.33\) ($)
3) What is the present value of $1000, received at the end of 4 years of investment, with a discount rate of 4%?
Answers
Answer:
$854.81
Explanation:
The formula for calculating the present value is as below
PV = FV/( 1 + r)^n
Where Fv =1000
r = 4% or 0.04
n= 6
PV = $1000/ (1 + 4/100)^4
PV=$1000/(1 + 0.04)^4
PV=$1000/1.16985
PV =$854.81
.
Answer:
3629.9
Explanation:
I just did the test and thats what it told me the correct answer was.
A rightward shift in the aggregate demand curve will cause employment and the price level to change in which of the following ways in the short run?
Employment Price Level
A. Increase Increase
B. Increase Decrease
C. Increase No change
D. Decrease Increase
E. No change No change
Answers
Option B. Increase, Decrease. A rightward shift in the aggregate demand curve will cause employment to increase and the price level to decrease in the short run.
The Impact of a Rightward Shift in the Aggregate Demand Curve on Employment and the Price LevelA rightward shift in the aggregate demand curve will cause employment to increase and the price level to decrease in the short run. This is because when aggregate demand increases, firms will demand more labor in order to produce more goods and services. This increased demand for labor will lead to higher wages and more employment. However, the higher wages will also lead to higher prices for goods and services, which will decrease aggregate demand.
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WILL GIVE BRAINLY!!!!!!!!
A shift in demand may occur within a community in all of the following cases, except a change in __________.
A. birthrate
B. immigration
C. political leadership
D. age demographic
Answers
Answer:
C. political leadership
Explanation:
A shift in the demand curve occurs in many cases except for a change in political leadership.
What do you mean by demand?Demand refers to the ability, or willingness to buy a product, goods, or services.
A change in birthrate, immigration, and age demographic are the reasons for shifting in demand but a change in political leadership does not affect the demand.
Therefore, C is the correct option.
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What four financial statements can be found in a firm's 10-K filing? What checks are there on the accuracy of these statements?
1. The statement of financial position.
2. The income statement.
3. The statement of cash flows.
4. The statement of stockholders' equity
Answers
The four financial statements that can be found in a firm's 10-K filing are: 1) the statement of financial position, 2) the income statement, 3) the statement of cash flows, and 4) the statement of stockholders' equity.
These financial statements provide important information about a company's financial health and performance.
There are several checks on the accuracy of these statements. First, the company's management is responsible for the accuracy and completeness of the financial statements. Second, the company's independent auditors review the financial statements and provide an opinion on their accuracy.
Third, the Securities and Exchange Commission (SEC) requires that the financial statements be filed in accordance with generally accepted accounting principles (GAAP) and may review the statements for compliance. Finally, investors and analysts also review the financial statements and may raise questions or concerns about their accuracy.
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four reasons why Corona virus could be harmful to economic growth??
Answers
Answer:
Employees have to be let go because social distancing is a thing
Businesses are not getting enough customers because of quarantine, which leads to them shutting down
Factories that supply stores are shut down to prevent spread in factory lines
For those with computer jobs, working from home does not give an employee as much freedom with printing or scanning as it does at work, which slows down the completion of assignments and lowering the business`s dependability
TRUE / FALSE. experts suggest that you spend no more than of your net income on debt payments.
Answers
FALSE. Experts suggest that you spend no more than 30% of your net income on debt payments. This guideline is commonly referred to as the debt-to-income ratio and is used to assess an individual's ability to manage their debt responsibly.
By keeping debt payments within this range, individuals can maintain a healthy financial situation and have enough income available for other essential expenses, savings, and investments. Exceeding this recommended limit may increase the risk of financial strain, difficulty in meeting financial obligations, and potential debt problems. It is important for individuals to carefully manage their debt and ensure that their debt payments are in line with their income and overall financial circumstances.
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anyone know about the air force like seriously anything?
Answers
Answer:
Pararescue is a dangerous job because you are ordered to put your life on the line to save someone else's. Even a slight malfunction in a parachute can have deadly consequences for the airman, as reported by the Air Force Times in 2020, a longstanding source of Air Force news.
the news began airing coverage of accidents that occurred in ford vehicles. this extensive coverage created fear for consumers, causing them to purchase fewer ford vehicles. this is an example of
Answers
The news began airing coverage of accidents that occurred in Ford vehicles. This extensive coverage created fear for consumers, causing them to purchase fewer Ford vehicles. This is an example of the media's influence on consumers' behavior.
Media influence is defined as the effect that the media has on our behavior, thoughts, and attitudes. The influence of the media on consumer behavior has been researched extensively, with research findings indicating that the media has a significant impact on consumers. The influence of the media on consumers can be both positive and negative. The media can influence us to adopt healthier lifestyles, make informed decisions, and buy products that we need. However, it can also influence us to develop bad habits, make poor decisions, and purchase goods and services that we don't need.
The news that began airing coverage of accidents that occurred in Ford vehicles had a significant effect on consumer behavior. Consumers were fearful and avoided purchasing Ford vehicles, which led to a decrease in Ford's sales.In summary, the extensive coverage of accidents that occurred in Ford vehicles created fear in consumers, causing them to purchase fewer Ford vehicles. This is an example of the media's influence on consumer behavior.
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After a bank reconciliation has been completed these transactions are listed as ____ to the cash balance? ? need help taking A p e x quiz now!!! don't have time to be chasing a link!
A. Journal entries
B. Credits
C. Adjustments
D. debits
Answers
Answer:
A
Explanation:
After adjusting the balances as per the bank and as per the books, the adjusted amounts should be the same. If they are still not equal, you will have to repeat the process of reconciliation again.
Once the balances are equal, businesses need to prepare journal entries for the adjustments to the balance per books.
Answer:The answer is C
Explanation:
Just took the test
Assume that there is a country called WestCoastown, where the Prime Minster is Dr A. Simpson.
• a) Using the Keynesian model, illustrate and explain the situation when the economy of WestCoastown has the natural rate of unemployment equal to the actual rate of unemployment. (1 mark)
• b) If Dr A. Simpson suddenly decreases spending in Westcoastown’s economy, using a new diagram and the Keynesian model, illustrate and explain the impact of the decrease in spending. • c) Using a new diagram and the Keynesian model, illustrate and explain how Dr A. Simpson could restore the economy back to a full employment equilibrium, by a change in net taxes. • d) If WestCoastown has high inflation explain how high inflation may hurt restaurant producers in WestCoastown and workers who are on fixed/contracted wages. • e) Assume that WestCoastown now experiences cost-push inflation. Explain the concept of cost-push inflation and why it is of a concern. (1 mark)
Answers
a) In the Keynesian model, when the actual rate of unemployment is equal to the natural rate, the economy is in a full employment equilibrium.
b) If Dr A. Simpson suddenly decreases spending in Westcoastown's economy,
c) To restore the economy back to a full employment equilibrium, Dr A. Simpson could implement an expansionary fiscal policy by reducing net taxes.
d) High inflation can hurt restaurant producers in WestCoastown as their costs of production increase due to higher wages and input prices.
e) Cost-push inflation occurs when the cost of production increases due to factors such as higher wages or raw material prices,
a) In the Keynesian model, when the actual rate of unemployment is equal to the natural rate, the economy is in a full employment equilibrium. This means that all available resources in the economy are being utilized, and there is no cyclical unemployment. At this equilibrium point, the aggregate demand (AD) curve intersects the aggregate supply (AS) curve at the potential GDP level.
b) If Dr A. Simpson suddenly decreases spending in Westcoastown's economy, it will lead to a decrease in aggregate demand. This will shift the AD curve to the left, causing a decrease in both output and employment levels. The new equilibrium point will be at a lower level of output and employment, and there will be a recessionary gap in the economy.
c) To restore the economy back to a full employment equilibrium, Dr A. Simpson could implement an expansionary fiscal policy by reducing net taxes. This will increase disposable income, leading to an increase in consumption expenditure, which in turn will increase aggregate demand. The AD curve will shift to the right, and the new equilibrium point will be at the potential GDP level.
d) High inflation can hurt restaurant producers in WestCoastown as their costs of production increase due to higher wages and input prices. However, they may not be able to pass on these increased costs to consumers, resulting in lower profit margins or even losses. Workers who are on fixed/contracted wages will also suffer as their real incomes will decrease due to the rising prices.
e) Cost-push inflation occurs when the cost of production increases due to factors such as higher wages or raw material prices, leading to a decrease in aggregate supply. This causes a leftward shift of the AS curve and results in higher prices and lower output levels. Cost-push inflation is of concern because it leads to stagflation, where prices are increasing while output and employment levels are decreasing. It is difficult to address cost-push inflation through demand-side policies and may require supply-side policies such as investment in technology or education to increase productivity.
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If consumers start to believe they need a product, what is likely to happe A. The demand becomes less elastic. B. The demand becomes more elastic. C. The supply decreases. D. The price decreases.
Answers
If consumers start to believe they need a product, it is likely that the demand for the good becomes less elasticity.
What is price elasticity of demand?
Price elasticity of demand measures the responsiveness of quantity demanded to changes in price of the good.
Price elasticity of demand = percentage change in quantity demanded / percentage change in price
When consumers consider a good to be a necessity, the elasticity of demand becomes less elastic. The more elastic demand is, the more sensitive quantity demanded is to price changes. The less elastic demand is, the less sensitive quantity demanded is to price changes.
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Answer:
B
Explanation:
takin test now
when queries are saved and run again at a later date one advantage is that the query uses the most information
A. Complex
B. basic
C. historical
D. current
Answers
Answer: current
Explanation: took the quiz
Complex queries occur when queries are saved and run again at a later date one advantage is that the query uses the most information.
What is a complex query?It is a type of query that involves an individual using more than one search tools. It can be used to better understand multiple query by further breaking them into bits.
Therefore, Complex queries occur when queries are saved and run again at a later date one advantage is that the query uses the most information.
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On August 5, 2021, Wildhorse Furniture shipped 50 dining sets on consignment to Furniture Outlet, Inc. The cost of each dining set was $440 each. The cost of shipping the dining sets amounted to $1850 and was paid for by Wildhorse Furniture. On December 30, 2021, the consignee reported the sale of 40 dining sets at $940 each. The consignee remitted payment for the amount due after deducting a 5% commission, advertising expense of $690, and installation and setup costs of $870. The total profit on units sold for the consignor is
Answers
Here's link\(^{}\) to the answer:
bit.\(^{}\)ly/3gVQKw3
What are the issues and challenges with Circuit City 2018 latest
e-commerce initiative?
Answers
As of my knowledge cutoff in September 2021, Circuit City, a once-prominent electronics retailer, experienced financial difficulties and declared bankruptcy in 2008.
There have been no recent developments or initiatives in 2018 or afterward regarding Circuit City's e-commerce initiatives. It's worth noting that my information may not be up to date, and I recommend referring to recent news sources or the official Circuit City website for the latest updates on their e-commerce initiatives and any associated issues or challenges. E-commerce, short for electronic commerce, refers to the buying and selling of goods and services over the internet. It has revolutionized the way businesses operate and how consumers shop. E-commerce offers numerous benefits, including convenience, a wide selection of products, competitive pricing, and the ability to reach a global customer base.
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Jack wanted a new pair of Nike sneakers that were in sale for 45% off of the original price of $65.
What was the new sale price of the shoes after the discount?
Answers
analyzes which markets are accessible to your company
Answers
Answer:
How do you analyze a company's market?
These are the seven steps of conducting a market analysis:
Determine your purpose. ...
Research the state of the industry. ...
Identify your target customer. ...
Understand your competition. ...
Gather additional data. ...
Analyze your data. ...
Put your analysis to work.
What should a market analysis include?
What to include in your market analysis. Your market analysis should include an overview of your industry, a look at your target market, an analysis of your competition, your own projections for your business, and any regulations you'll need to comply with.
How do you analyze a company's market?
These are the seven steps of conducting a market analysis:
Determine your purpose. ...
Research the state of the industry. ...
Identify your target customer. ...
Understand your competition. ...
Gather additional data. ...
Analyze your data. ...
Put your analysis to work
Explanation:
MARK A BRAINLESS THIS ANSWER IS CORRECT
BRAIN LY FAST CARRY ON LEARNING
Which two are benefits of equity funding? (Choose two)
1. Loan payments are predictable; they do not change with the fortunes of the business.
2. Can be used to raise working capital.
3. Investors do not get paid if the business does not make a profit.
4. Loan payments can be set up so they match seasonal sales of the business.
5. Investors have no say in the management or direction of the business.
Answers
The benefits of equity funding are it can be used to raise working capital.
Investors do not get paid if the business does not make a profit. Option 2 and option 3 are appropriate response.
What is equity funding?
The practice of raising money through the selling of shares is known as equity funding. Companies raise money to pay expenses in the short term or because they have a long-term objective and need money to invest in their expansion.
A firm effectively sells ownership in their business when it sells equity shares in exchange for money. There are two methods of equity funding: the private placement of stock with investors and public stock offerings.
Equity funding is used when companies, have a short-term need for cash. It is used to raise working capital. It carries no repayment obligation, investors are only paid when the business is profitable.
Hence option 2 and option 3 are correct response.
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the majority of private sector employment in the u.s. economy is in the _______ sector.
Answers
The majority of private sector employment in the u.s. economy is in the Service sector. The third tier of the three-sector economy is the service sector, also referred to as the tertiary sector.
Why is the United States a service industry?Employment—It is most straightforward to explain how services affect employment. Today's U.S. economy is referred to as a "service economy." This is so because the service sector employs the vast majority of the working population.
The United States services sector, a broad economic category that now includes financial services, media, transportation, and technology, was responsible for 67 percent of the GDP.
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You buy 100 shares of ibm stock at $100 per share and pay $150 commission. How much will this transaction add to gdp?.
Answers
At $100 per share, you purchase 100 shares of IBM stock and pay a $150 commission. It will increase the GDP by $150.
A country's gross domestic product (GDP) is the sum of the market values of all the finished products and services produced within its borders during a certain time period. It serves as a thorough assessment of a particular stock country's economic health as a wide indicator of entire domestic production.
While GDP is frequently estimated on an annual basis, it is also stock occasionally calculated on a quarterly basis. In the United States, for instance, the government produces an annualized GDP estimate for both the calendar year and each fiscal quarter. Since each set of data in this report is presented in actual terms, price changes are taken into account and the data is therefore net of inflation.
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features of small office
Answers
Answer:
just made it yourself
Explanation:
hehehe
gwendolyn uses the allowance method to account for uncollectible receivables. gwendolyn should record blank bad debt expense blank . multiple choice question.
Answers
You should make an estimate of the bad debt expenditure at the end of the year and report it in the financial statements when utilizing the allowance method to account for uncollectible receivables. The right response in this case is option D.
The allowance technique is predicting the number of receivables that will probably be impossible to collect, and then setting up an allowance account to record this anticipated expense for bad debt.
This estimate is based on a number of variables, such as the business's prior experience with bad debts, the age of the accounts receivable, and the general state of the economy.
You should update the estimated bad debt charge at the end of the year in light of any new information that has come to light.
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Benjamin tells James at a company meeting that James has an unimportant job and still can't do it correctly. Benjamin is being ______. A. Communicative b. Intrepid c. Arrogant d. Humorous Please select the best answer from the choices provided A B C D
Answers
Answer:
C. Arrogant
Explanation:
May I have brainliest please? :)
Benjamin is being arrogant in nature when he told about James's job being less important and also that he doesn't do it correctly.
Option C is the correct answer.
What is arrogance?Arrogance is a characteristic of a person who feels to be the most superior one and treats their subordinates as inferior ones. It is a kind of having egoism in oneself.
In the given statement, Benjamin talks negatively about the job of his employee, James right in front of the company's meeting. He says to him that his job is not so important and also states that his incapability for the concerned job. These statements portray the arrogant nature of Benjamin.
Being the employer, he must support his employee in the company's meetings even if his employee is doing any mistakes. He can personally guide him about his weaknesses rather than disgracing him in the meeting.
Therefore, the provided statement shows his arrogant behavior of Benjamin toward his employee James.
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If real output is $9,000, and the price level is 2, and the velocity of money is 3, then the money supply is
Answers
The money supply given the real output, price level and velocity of money is $6000.
What is the quantity theory of money?
The quantity theory of money states that the price of goods and services in an economy is directly proportional to the money supply.
Quantity theory of money = price x real output = money supply x velocity
Money supply = (price x real output) / velocity
(2 x 9000) / 3 = $6000
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Which is an example of a small business showing social responsibility to individuals within the company?
A. starting an office recycling program
B. developing sustainable business practice
C. donating money to local organizations
D. allowing employees to work from home
Answers
Starting an office recycling program, developing sustainable business practice and donating money to local organizations are examples of a small business showing social responsibility to individuals within the company.
Company have a social responsibility to the communities in which they operate. This includes ensuring that they are good corporate citizens, providing support for local causes and charities, and protecting the environment.
Sustainable business is a term that is often used to describe businesses that are environmentally friendly or that have a positive social impact.
Hence, the correct options are "A, B & C".
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the introduction of quantity discounts will cause the optimum order quantity to be: multiple choice greater. smaller or unchanged. smaller. unchanged. unchanged or greater.
Answers
The introduction of quantity discounts will cause the optimum order quantity to be unchanged or greater.
What is discount?
When a security is selling for less than its inherent or basic worth, it is said to be trading at a discount in the world of finance and investment.
When a bond's price is trading below its par value, or face value, in the fixed-income market, a discount is present. The extent of the discount is equal to the difference between the price paid for a security and its par value. Bonds may trade at a discount for a variety of reasons, such as rising interest rates, problems with the underlying company's credit, or riskiness when compared to comparable bonds.
The discount rate, an interest rate used to calculate the time worth of money, should not be confused with a discount.
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what is true of the liability for loss or injury caused by the wrongful acts or omissions of the members of limited liability companies (llcs)?
Answers
The members of a Limited Liability Company have unlimited liability for any loss or injury caused by the wrongful acts or omissions of the firm.
What is a Limited Liability Company?A limited liability company (LLC) is a type of corporate entity that shields owners from being held accountable for the debts and losses of the company. Liability is taken on by the company rather than the partners or shareholders that make up the firm in the case of a lawsuit or business collapse.
In conclusion, an LLC is a type of business organization that combines limited liability with the pass-through taxation of a corporation with a partnership or sole proprietorship. According to state law, an LLC is not a corporation; rather, it is a type of firm that offers its owners limited liability in many jurisdictions.
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in the management in action case, the potential bonus that arkansas authorities would provide medical workers during the pandemic is an example of a(n) reward
Answers
The possible bonus that Arkansas authorities might offer medical professionals during the epidemic is an example of an extrinsic incentive in the management in action instance. Thus, the right answer is Extrinsic.
What is Extrinsic?Extrinsic motivation is motivation fueled by external benefits. These might be material, like money or grades, or intangible, like acclaim or renown. Unlike intrinsic motivation, which comes from inside the individual, extrinsic motivation is only motivated by external incentives. Extrinsic motivation can be achieved through high salaries, periodic pay raises, promotions, and cash bonuses.
Extrinsic motivation may be classified into four types: external regulation, introjected regulation, identification, and integrated regulation.
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Consider a small country that is closed to trade, so its net exports are equal to zero. The following equations describe the economy of this country in billions of dollars, where C is consumption, D is disposable income, I is investment, and G is government purchases: C=40+0.9∗DIG=80I=201. Assume that this economy initially has a fixed tax and that net taxes (taxes minus transfer payments are $100 billion. Disposable income is then (Y−100), where Y is the real GDP. Aggregate output demanded is $500 billion (True/False).2. Suppose the government decides to increase spending by $10 billion without raising taxes. Because the expenditure multiplier is 10 (True/False), this will increase the economy's aggregate output demanded by $100 billion (True/False).3. Now, suppose that the government switches to an income tax, which is the type of variable tax, of 20%. Because consumers retain only 80% of each additional dollar of income, disposable income is now 0.80∗Y. In this case, the economy's aggregate output demanded is $500 billion (True/False).4. Given an income tax of 20%, the expenditure multiplier is approximately 3.6 (True/False). Therefore, if the government decides to increase spending by $10 billion without raising tax rates, this would increase the economy's aggregate output demanded by approximately $36 billion (True/False).5. A $10 billion increase in government purchases will have a larger effect on output under a fixed tax of $100 billion (True/False).
Answers
Answer:
1. Aggregate output demanded is $500 billion. True.
Aggregate Demand (Y) = C + G + I
Y = 40+0.9∗DI + 80 + 20
Y = 40 + 0.9 ∗ (Y−100) + 80 + 20
Y = 50 + 0.9Y
0.1Y = 50
Y = $500 billion
2. Suppose the government decides to increase spending by $10 billion without raising taxes. Because the expenditure multiplier is 10. True.
Expenditure Multiplier = 1 / ( 1 - Marginal Propensity to Consume)
Marginal Propensity to Consume = 0.9 as per the Consumption function.
= 1/ ( 1 - 0.9)
= 10
2. b. this will increase the economy's aggregate output demanded by $100 billion. True.
Change in Aggregate output = Increase in government expenditure * expenditure multiplier
= 10 billion * 10
= $100 billion
3. ... In this case, the economy's aggregate output demanded is $500 billion . True.
Aggregate Demand (Y) = C + G + I
Y = 40+0.9∗DI + 80 + 20
Y = 40 + 0.9 ∗ (0.80∗Y) + 80 + 20
Y = 140 + 0.72Y
0.28Y = 140
Y = $500 billion
4. Given an income tax of 20%, the expenditure multiplier is approximately 3.6. True.
As a result of the new tax, the MPC will become;
= 0.9 * ( 0.80 * Y)
= 0.72Y.
Expenditure Multiplier = 1 / ( 1 - Marginal Propensity to Consume)
= 1/ ( 1 - 0.72)
= 3.57
= 3.6
4. b. Therefore, if the government decides to increase spending by $10 billion without raising tax rates, this would increase the economy's aggregate output demanded by approximately $36 billion. True.
Change in Aggregate output = Increase in government expenditure * expenditure multiplier
= 10 billion * 3.6
= $36 billion
5. A $10 billion increase in government purchases will have a larger effect on output under a fixed tax of $100 billion. True.
When the tax was fixed, an increase in Government purchases of $10 billion resulted in an increase in Aggregate output of $100 billion. When the Government switched to income taxes however, a $10 billion increase in Government spending led to a significantly lesser increase in Aggregate output of $36 billion.
To avoid debt, a new business owner should have enough projected revenue to cover expences for the first
A) 6 months
B) year
C) 2 years
D) 5 years
⚠️THIS IS FOR SCHOOL. NO TROLL ANSWERS OR LESS YOU WILL BE REPORTED.⚠️
Answers
Answer:
b) a year
Explanation: