Draw And Show The Shift In Aggregate Demand Or Aggregate Supply Curve (Long Run Curve Included), When There Is A Decrease In Productivity Of The Labour Force In The Future Due To Poor Education Of A Country
Answers
Education is an important part of human being life. It plays a major role in improving and building the character of a person. education is important for nations also. It helps in developing the workforce for the nation which contributes to economic growth.
An Output gap represents the difference between actual output and potential out of the economy. This gap may be positive or negative. The positive gap shows that the economy is outperforming, its output is higher than the maximum capacity output of the economy. If it is negative it shows that output is below the full capacity of the economy. Both are not favorable for the economy.
Lack of education impact on the labor market will decline the productivity of laborers; products are not able to generate market demand due to the latest technology products that will lower overall market demand and low demand for product increase unemployment in the economy. This will shift the potential output curve (LRAS) of the economy leftward.
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Related Questions
What was the causation on American Airlines Flight 1420 and
why?
Answers
The crash of American Airlines Flight 1420 on June 1, 1999, was caused by the flight crew's failure to arm the spoilers during the landing preparation, coupled with their decision to land in severe weather conditions. This resulted in the plane overshooting the runway.
Flight 1420 was landing in a severe thunderstorm at Little Rock National Airport. The flight crew failed to arm the spoilers, devices that increase drag to slow the plane down, during the pre-landing checklist. This, along with the poor weather conditions, resulted in a higher-speed landing than usual. Unable to stop in time, the MD-82 aircraft overran the end of the runway, broke apart, and caught fire. Furthermore, the National Transportation Safety Board (NTSB) investigation revealed that the flight crew's decision-making was likely impaired by fatigue, with the accident happening several hours past their usual bedtime. These factors collectively led to the tragic accident.
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Which of the following microeconomic reforms, is best suited to
decrease unemployment?
a. not changing minimum wages
b. decreasing unemployment benefits
c. raising import taxes on condiments
d. sustai
Answers
The microeconomic reform that is best suited to decrease unemployment is sustaining decrease in the real wages. Hence, the correct option is d. Sustain, which is the main answer for the question.
Let's understand the other options:
a. Not changing minimum wages - This option will not lead to any decrease in unemployment. Minimum wages have no direct impact on employment levels.
b. Decreasing unemployment benefits - This option can have an indirect impact on reducing unemployment by motivating unemployed individuals to accept available job offers. However, it is not the best-suited reform for decreasing unemployment.
c. Raising import taxes on condiments - This option has no direct or indirect impact on unemployment. It is not related to labor market reforms.
So, option d. Sustain is the best-suited microeconomic reform to decrease unemployment.
Microeconomic reforms are concerned with enhancing the efficiency of individual markets within the economy. The labor market is one of the most critical markets in any economy and labor market reforms can help in addressing issues related to unemployment, wage rates, and job creation.
There are several microeconomic reforms that can be implemented to reduce unemployment rates. One of the most effective labor market reforms is to sustain a decrease in real wages. When real wages decrease, it becomes cheaper for firms to hire workers, leading to an increase in the demand for labor. As a result, the unemployment rate decreases and job creation increases.
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Xyth Corporation has a current stock price of $25, a beta of 1.25, depreciation of $10 per share, a price-earnings multiple of 12, and has 1,000,000 common stock shares outstanding. Using the price-earnings methodology, what is Xyth corporation's expected, next year's future earnings per share?
a. $2.08
b. $1.79
c. $2.02
d. $1.93
Answers
The correct option is a. Therefore, next year's future earnings per share is $2.08.
How to Calculate Future Earning per share?Xyth Corporation's expected, next year's future earnings per share can be calculated using the price-earnings methodology. The formula to calculate future earnings per share is:
Future Earnings per Share = Current Stock Price / Price-Earnings Multiple
Given that Xyth Corporation has a current stock price of $25 and a price-earnings multiple of 12, we can substitute these values into the formula:
Future Earnings per Share = $25 / 12
Calculating this, we find that Xyth Corporation's expected, next year's future earnings per share is approximately $2.08.
Therefore, the correct answer is option a. $2.08.
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Question 51 pts Earliest due date sequencing rule always outperforms other rules. Group of answer choices True False Question 6 Question 61 pts The work center master file contains data such as capacity and efficiency. Group of answer choices True False .Flag question: Question 7 Question 71 pts Taguchi quality loss function states that further deviation from your target value means higher losses financially. Group of answer choices True False.Flag question: Question 8 Question 81 pts Customer relationship management functions were designed into original MRP systems, but they are no longer components of ERP systems. Group of answer choices True False.Flag question: Question 9 Question 91 pts Customer satisfaction is the only objective of product/service designs. Group of answer choices True False.Flag question: Question 10 Question 101 pts MRP is generally practiced on items with dependent demand. Group of answer choices True False.Flag question: Question 11 Question 111 pts Reduced inventory levels and faster response to market changes are both benefits of MRP. Group of answer choices True False.Flag question: Question 12 Question One criterion for developing effective schedules is minimizing completion time. Group of answer choices True False .Flag question: Question 13 Question 131 pts First come first serve is a rule that is perceived as fair by customers. Group of answer choices True False.Flag question: Question 14 Question 141 pts Gantt charts are generally defined as a sequencing tool. Group of answer choices True False.Flag question: Question 15 Question 151 pts If X consists of one A and one B, and each A consists of one F and two Gs, then A is the "parent" component of G. Group of answer choices True False
Answers
Question 5: Earliest due date sequencing rule always outperforms other rules.
False.
The statement that the earliest due date sequencing rule always outperforms other rules is not accurate. Different sequencing rules exist in production scheduling, and each rule has its own strengths and weaknesses. The effectiveness of a sequencing rule depends on various factors such as the production environment, specific objectives, and characteristics of the jobs or tasks being scheduled.
While the earliest due date sequencing rule prioritizes jobs with earlier due dates, it may not always be the most efficient or effective approach. Other sequencing rules, such as shortest processing time or critical ratio, may yield better results in terms of minimizing makespan, reducing idle time, or improving resource utilization, depending on the specific context.
The choice of a sequencing rule should consider the unique characteristics of the production system and align with the desired objectives of the scheduling process.
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Question: Interest Rates Are A Function Of Three Key Things (Check Slides If You Aren't Sure What This Is!). Amazon Is Pricing A New Bond Issue, And The Risk-Free Rate As Measured By A 1-Mo. US T-Bill Is 3.2%. The Duration Of The Bond Issue Will Be 10 Years. The Spread Between A 10-Year US Treasury Bond And 1-Mo US T-Bill Is 2.2%. Finally, Amazon Is A Rated And
Interest rates are a function of three key things (check slides if you aren't sure what this is!).
Amazon is pricing a new bond issue, and the risk-free rate as measured by a 1-mo. US T-bill is 3.2%. The duration of the bond issue will be 10 years. The spread between a 10-year US Treasury bond and 1-mo US T-bill is 2.2%. Finally, Amazon is A rated and US Treasury bills are AAA rated. The spread between yields on A and AAA bonds is 1.3%. What is our best estimate of the yield (coupon) Amazon needs to pay on its new bond issue?
Group of answer choices
3.2%
5.4%
6.7%
9.9%
Answers
Therefore, our best estimate of the yield (coupon) A-mazon needs to pay on its new bond issue is 6.7%. Answer: 6.7%.
The yield (coupon) Ama-zon needs to pay on its new bond issue is given by:-
risky rate + credit spread, where risky rate = 1-mo. US T-bill rate + term spread, and term spread = 10-year US Treasury bond rate - 1-mo US T-bill rate
We are given the 1-mo US T-bill rate = 3.2%, term spread = 2.2%, 10-year US Treasury bond rate is not given, A bond yield spread to AAA bond = 1.3%, Amazon is rated A, and US Treasury bills are AAA rated.
Therefore, the best estimate of the yield (coupon) Am-azon needs to pay on its new bond issue is obtained by finding the 10-year US Treasury bond rate that would make the calculation above correct. This value is:
risky rate = 3.2% + 2.2% = 5.4%, credit spread = 1.3%, hence, yield = 5.4% + 1.3% = 6.7%.
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Dairies make low-fat milk from full-cream milk, and in the process, they produce cream, which is made into ice cream.
Explain the effect of each event on the supply of low-fat milk and draw one curve for each event that supports your conclusion.
The following events occur one at a time:
1.1. The wage rate of dairy workers rises. (0.25)
1.2. The price of cream rises. (0.25)
1.3. The price of low-fat milk rises. (0.25)
1.4. With a drought forecasted, dairies raise their expected price of low-fat milk next year. (0.25)
1.5. New technology lowers the cost of producing ice cream. (0.25)
Answers
1.1. The wage rate of dairy workers rises: This event would increase the cost of production for dairies. As a result, the supply of low-fat milk is likely to decrease because higher wages would lead to higher production costs, making it less profitable for dairies to produce low-fat milk. The supply curve for low-fat milk would shift to the left.
1.2. The price of cream rises: Since cream is a byproduct of producing low-fat milk, an increase in the price of cream would make it more lucrative for dairies to produce cream instead of low-fat milk. This would reduce the supply of low-fat milk as dairies allocate more resources to producing cream. The supply curve for low-fat milk would shift to the left.
1.3. The price of low-fat milk rises: If the price of low-fat milk increases, it would incentivize dairies to produce more of it. This would result in an increase in the supply of low-fat milk as dairies aim to take advantage of the higher prices. The supply curve for low-fat milk would shift to the right.
1.4. With a drought forecasted, dairies raise their expected price of low-fat milk next year: Anticipating a future increase in the price of low-fat milk, dairies may reduce their current supply to ensure they have enough inventory for the expected higher prices. This would lead to a decrease in the supply of low-fat milk in the present. The supply curve for low-fat milk would shift to the left.
1.5. New technology lowers the cost of producing ice cream: When the cost of producing ice cream decreases due to new technology, dairies may shift their focus towards producing more ice cream as it becomes more profitable. This would reduce the supply of low-fat milk as resources are reallocated to ice cream production. The supply curve for low-fat milk would shift to the left.
Therefore, various events can impact the supply of low-fat milk in the market. Changes in production costs, input prices, future expectations, and technological advancements all play a role in shaping the supply curve for low-fat milk.
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A 'retirement test'
O is never used in the countries tht have social insurance
O determines how much of the retirement income a person receives depending on their age and gender
O determines whether a person's pension gets reduced if the recipient works and continues to earn income
O is a midterm test in ECON 280
Answers
A 'retirement test' is a term that refers to determining whether a person's pension gets reduced if they work and continue to earn income. This test is not used in countries that have social insurance. It helps determine how much retirement income a person receives based on their age and gender.
A "retirement test" is an evaluation or assessment that analyses how continuing to work and earning additional income may impact or lessen a person's pension or retirement income. The relevant social security or pension agencies frequently administer this test to assess a retiree's eligibility and benefit amount based on their job and income status.
It is crucial to highlight that the other alternatives you listed, such as option, which states that a person's retirement income is based on their age and gender and that option is never utilised in nations with social insurance, do not adequately describe a "retirement test."
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To maximize net benefits, a manager should continue to increase the managerial control variable until: total benefits equal total costs net benefits are zero marginal benefits equal marginal costs average cost equals average benefits
Answers
The answer is "marginal benefits equal marginal costs".
The idea behind managerial control is to maximize the net benefits of an organization. Managers need to find the optimal level of the managerial control variable to achieve this goal. At this level, total benefits equal total costs, and net benefits are maximized. To achieve this goal, managers should continue to increase the managerial control variable until marginal benefits equal marginal costs.
Marginal benefits and marginal costs refer to the additional benefits or costs that arise from each additional unit of input. Marginal benefits refer to the additional benefits that arise from increasing the managerial control variable by one unit. Marginal costs refer to the additional costs that arise from increasing the managerial control variable by one unit. When marginal benefits equal marginal costs, managers have achieved the optimal level of the managerial control variable.
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_____ sustainability is driven by ethics and human ideals of
protecting the planet and its people for the well-being of future
generations. Group of answer choices Environmental Social Political
Econo
Answers
The answer is social sustainability.
Social sustainability is the aspect of sustainability that is concerned with the well-being of people and communities. It is driven by ethics and human ideals of protecting the planet and its people for the well-being of future generations.
Social sustainability includes factors such as:
Quality of life: Social sustainability is about ensuring that people have a good quality of life, both now and in the future. This includes things like access to education, healthcare, and housing.
Equality: Social sustainability is also about ensuring that everyone has equal opportunities, regardless of their background or circumstances. This includes things like fighting discrimination and promoting social justice.
Sustainable communities: Social sustainability is also about building sustainable communities. This means creating communities that are resilient to shocks and stresses, and that are able to meet the needs of their residents now and in the future.
Social sustainability is an important part of overall sustainability. It is essential to ensure that the planet is protected for future generations, but it is also important to ensure that people are able to live good lives in the present. By focusing on social sustainability, we can create a better future for everyone.
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Under common law, the terms included in a conditional acceptance
are bound to the parties if the other party demonstrates conduct
therefore creating an express contract. True or false?
a. True
b. Fals
Answers
The answer is False.
Under common law, a conditional acceptance is not a binding contract. A conditional acceptance is an offer that is subject to a condition. If the condition is not met, then the offer is not accepted and there is no contract.
For example, let's say that I offer to sell you my car for $10,000, but only if you can pay me in cash. If you say, "I accept your offer, but only if you can deliver the car to me by next week," then your acceptance is conditional. If I cannot deliver the car by next week, then your acceptance is not binding and there is no contract.
Even if the other party demonstrates conduct that suggests that they are accepting the offer, this does not necessarily mean that they are bound to the terms of the conditional acceptance. For example, let's say that I offer to sell you my car for $10,000, but only if you can pay me in cash. If you say, "I accept your offer," and then you start to drive away in my car, this does not mean that you are bound to the terms of the conditional acceptance. You are still free to back out of the deal if you cannot pay me in cash.
In order for a conditional acceptance to be binding, the condition must be met. If the condition is not met, then the offer is not accepted and there is no contract.
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Briefing paper for management training day on ‘Understanding the implications for business organisations of operating in the international economic environment’
The speech was successful and the feedback from the audience was very positive. One of the attendees is a manager in an organisation operating internationally. He has asked you to participate in a training day with his management team and lead a discussion group. He has asked you to concentrate on the implications for business organisations of operating in the international economic environment. Prepare a briefing paper for circulation to the group before the meeting which:
• analyses features of the international economic environment as they relate to business
• assesses the implications for business organisations of operating in the international
economic environment.
Extension activities:
To gain a merit grade you must also:
assess the risks involved for business organisations in operating in the international economic environment To gain a distinction grade you must also:
recommend, with justifications, actions a business organisation can take to minimise the risks of operating in an international economic environment.
Answers
Understanding the implications of operating in an international economic environment is essential for businesses. The international economic environment is characterised by features such as globalisation, trade liberalisation, economic interdependence, and the emergence of new economies.
The international economic environment is characterised by globalisation. Globalisation refers to the integration of economies, societies, and cultures through cross-border transactions. This feature has enabled businesses to expand their operations beyond their national boundaries, enabling them to reach a global market.
The growth in global trade has resulted in opportunities for businesses to access new markets and sources of raw materials. The trade liberalisation policy implemented by countries has encouraged businesses to invest in the international market. The policy aims to reduce tariffs and quotas on goods and services, making it easier for businesses to trade in different countries. The benefits of trade liberalisation are that it helps to increase competition, improve productivity, and reduce costs.
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T and M own a property as joint tenants. M sells Ms interest to
K. K and Ts interests are defined as?
A) Joint tenancy
B) tenancy in common
C ) tenancy by the entirety
D ) tenancy in severalty
Answers
T and M own a property as joint tenants. When M sells their interest to K, the interests of K and T are defined as "tenancy in common." So, the correct option is B.
In a tenancy in common, each owner has a distinct and separate share of the property. Unlike joint tenancy, there is no right of survivorship in tenancy in common. This means that if one owner passes away, their share will not automatically transfer to the other owner. Instead, it will be passed on according to their will or the laws of inheritance.
Tenancy by the entirety, on the other hand, is a form of ownership available only to married couples and is not applicable in this scenario. Tenancy in severalty refers to sole ownership of the property by a single person, so it is also not applicable here. Hence, the correct option is B) tenancy in common
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jack Straw grows soybeans on a 2,000-acre farm outside Wichita Kansas. It is late May and Jack has just finished planting. His typical yield is 100 bushels per acre, so he expects to harvest 200,000 bushels of soybeans in the fall. Soybean futures contracts trade on the CME. The soybeans contract calls for the delivery of 5,000 bushels of soybeans. Assume that Jack enters the appropriate futures position (in the December contract) to hedge his price risk at a futures price of $5.3325/bu. In the fall, Jacks sells his harvest to his local grain elevator, who pays him the prevailing spot price of $4.3325/bu. Simultaneously, Jack executes an offset trade in the futures market. Assume that, due to convergence, the futures price on that date is equal to the spot price. What is Jack’s cumulative profit from the futures transaction and what are his proceeds from selling his wheat?a. What is the Cumulative Profit (in dollars)?b. What are the proceeds (in dollars)?
Answers
Proceeds Jack received $866,500 for selling his soybeans.
Cumulative Profit
The gain or loss incurred by Jack through futures trading can be calculated using the following formula:
Gain or loss = (Futures Price - Initial Futures Price) x Number of contracts x Multiplier.
Gain or loss = ($4.3325/bu - $5.3325/bu) x 200,000 bushels / 5,000 bushels x $50 per contract.
Gain or loss = (-$1/bu) x 40 x $50.
Gain or loss = -$2,000.
Jack lost $2,000 in futures trading.
As a result, his total profit or loss for the transaction will be determined by the amount received for his soybean sales subtracted by his futures loss.
Proceeds from selling the soybeans = 200,000 bushels x $4.3325/bushel.
Proceeds = $866,500.
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Kendra Enterprises has never paid a dividend. Free cash flow is projected to be $80,000 and $100,000 for the next 2 years, fespectively: after the second yeac, FCF is expected to grow at a constant rate of 7%, The company's weighted average cost of capital is 16%, 6. What is the terminal, or horizon, value of operations? (Hint: Find the value of all free cach flows beyond Year 2 discounted back to Year 2. ) Round your answer to the nearest cent. b. Calculate Kendra's value operations. Do not round intermediath calculations. Round your answer to the nearest cent. 5
Answers
The value of Kendra Enterprises' operations is approximately $1,067,744.87.
To calculate the terminal value of operations, we need to find the present value of all free cash flows beyond Year 2 discounted back to Year 2.
Given the projected free cash flows for the next 2 years:
Year 1 FCF = $80,000
Year 2 FCF = $100,000
After Year 2, the FCF is expected to grow at a constant rate of 7%. We can calculate the FCF for Year 3 and beyond using the formula:
FCF (Year t) = FCF (Year t-1) * (1 + Growth Rate)
Year 3 FCF = $100,000 * (1 + 7%) = $107,000
Year 4 FCF = $107,000 * (1 + 7%) = $114,490
Year 5 FCF = $114,490 * (1 + 7%) = $122,368.30
To calculate the terminal value, we need to discount the future FCFs to Year 2 using the weighted average cost of capital (WACC) as the discount rate.
Terminal Value = FCF (Year 3) / (WACC - Growth Rate)
Terminal Value = $107,000 / (16% - 7%) = $1,342,500
Next, we need to calculate the present value of the terminal value and the FCFs for Year 1 and Year 2. We discount the terminal value and the Year 1 and Year 2 FCFs to Year 2 using the WACC as the discount rate.
Present Value of Terminal Value = Terminal Value / (1 + WACC)^2
Present Value of Terminal Value = $1,342,500 / (1 + 16%)^2 = $923,913.04
Present Value of Year 1 FCF = $80,000 / (1 + 16%)^1 = $68,965.52
Present Value of Year 2 FCF = $100,000 / (1 + 16%)^2 = $74,866.31
To calculate the value of operations, we sum the present values of the FCFs and the present value of the terminal value.
Value of Operations = Present Value of Year 1 FCF + Present Value of Year 2 FCF + Present Value of Terminal Value
Value of Operations = $68,965.52 + $74,866.31 + $923,913.04 = $1,067,744.87
Therefore, the value of Kendra Enterprises' operations is approximately $1,067,744.87.
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You have $80,000 in your retirement fund that is earning 5.5 percent per year, compounded quarterly. How many dollars in withdrawals per month would reduce this nest egg to zero in 10 years?
Answers
The monthly withdrawals required to reduce the fund to zero in ten years will be $901.27 (because there are twelve months in a year).Given: $80,000 is invested in a retirement fund. The rate of interest is 5.5 percent per year.
It is compounded quarterly. We need to find how much we need to withdraw per month to reduce the nest egg to zero in ten years. This is a case of an annuity with periodic payments made at the end of each period. We have to find the periodic payment in such a way that the value of the annuity equals $80,000 in ten years. We know that the formula for the present value of an annuity due with periodic payments R, payable for n periods at interest rate i, is:
PV = (R/i) *[tex][1 - 1/(1+i)^n][/tex]
For a future value FV, this formula becomes:
FV = R * [tex][(1+i)^n - 1/i][/tex]
Using this formula, we get:FV = $0 (as the fund should be reduced to zero at the end of ten years), PV = $80,000, n = 10 years,i = 5.5%/4 (quarterly compounding) = 1.375%.
Quarterly compounding means that there are 4 compounding periods in a year.Rewriting the FV formula in terms of R, we get:
R = (i*PV) / [[tex](1+i)^n[/tex] - 1]R
= (0.01375 * $80,000) / [[tex](1 + 0.01375)^40[/tex]- 1]R
= $901.27
Thus, the monthly withdrawals required to reduce the fund to zero in ten years will be $901.27 (because there are twelve months in a year).
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Quantitative Problem: You are given the following information for Wine and Cork Enterprises (WCE): r RF
=3%;r M
=10%;R M
=7%, and beta =1.3 What is WCE's required rate of return? Do not round intermediate calculations. Round your answer to two decimal places. % % % %
Answers
Wine and Cork Enterprises (WCE): r RF =3%;r M =10%;R M =7%, and beta =1.3 WCE's required rate of return is 12.1%. Option A is correct .
We can use the Capital Asset Pricing Model (CAPM) formula.
The CAPM formula is:
r WCE = r RF + beta × (r M - r RF)
where:
r WCE = required rate of return for WCE
r RF = risk-free rate of return
beta = beta coefficient for WCE
r M = expected market rate of return
r RF = 3%
r M = 10%
beta = 1.3
Let's plug in the values:
r WCE = 3% + 1.3 × (10% - 3%)
r WCE = 3% + 1.3 × 7%
r WCE = 3% + 9.1%
Now, let's calculate the final answer:
r WCE = 12.1%
Therefore, WCE's required rate of return is 12.1%.
Incomplete question :
Quantitative Problem: You are given the following information for Wine and Cork Enterprises (WCE): r RF =3%;r M =10%;R M =7%, and beta =1.3 What is WCE's required rate of return? Do not round intermediate calculations. Round your answer to two decimal places.
a. 12.1 %
b. 8.9 %
c. 12. 8%
d. 6.8 %
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Under what balance sheet circumstances would it be desirable to
sell a floor to help finance a cap? When would it be desirable to
sell a cap to help finance a floor?
Answers
Selling a floor and a cap are risk management strategies to hedge against adverse movements in interest rates. Selling a floor to finance a cap may be desirable when interest rates are expected to remain low or decrease further, or when an entity's risk exposure has shifted away from interest rate declines.
On the other hand, selling a cap to finance a floor can be advantageous when interest rates are anticipated to rise or when there is increased risk exposure to interest rate increases.
The decision depends on the specific balance sheet circumstances and risk objectives of the entity. Careful analysis, considering factors such as market conditions and risk tolerance, is crucial when implementing these strategies, and seeking guidance from financial professionals is recommended.
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When the price is established by the interaction between the competitors, customers, and the pricing company, it is said that it is a case of a
Market approach
Cost approach
Indirect cost approach
Direct cost approach
Target approach
Answers
When the price is established by the interaction between competitors, customers, and the pricing company, it is a case of a market approach.
In a market approach to pricing, the price is determined based on factors such as competition, customer demand, and the pricing strategies of the company. It involves considering the prevailing market conditions, competitor prices, and customer preferences to set an appropriate price for a product or service. The market approach takes into account the dynamics of supply and demand and aims to find a balance that maximizes profitability while remaining competitive in the market. It allows companies to adjust their pricing strategies based on market trends and customer behavior. By considering various external factors, a market approach enables businesses to respond effectively to market forces and optimize their pricing strategies for success.
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QUESTION S
When the NPV of a capital expenditure proposal is greater than zero, what would be the most likely conclusion about the IRR? O a IRR will be greater than the cost of capital Ob IRR may be greater or less than the cost of capital Oc IRR cannot be determined from the NPV information Od IRR will be equal to cost of capital.
Answers
The most likely conclusion about the Internal Rate of Return (IRR) when the Net Present Value (NPV) of a capital expenditure proposal is greater than zero is that the IRR may be greater or less than the cost of capital (option B).
The IRR is the discount rate at which the NPV of a project becomes zero. When the NPV is greater than zero, it indicates that the project's cash inflows exceed the initial investment and the required rate of return. In this case, it implies that the project is generating positive returns and is considered financially viable.
However, the exact value of the IRR cannot be determined solely based on the NPV information. The IRR represents the rate of return at which the NPV becomes zero, but it can vary depending on the cash flows and timing of the project. It is possible for the IRR to be greater than the cost of capital, indicating a higher return than expected, or it could be lower, suggesting a lower return than the cost of capital.
Therefore, the most likely conclusion is that the IRR may be greater or less than the cost of capital when the NPV of a capital expenditure proposal is greater than zero.
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Consider an individual with wealth M. Facing one of the two possible states of nature. State-1 and State-2 with probabilities P and 1-L respectively. In State-l the individant suffers loss equal to L, which is less thari M. The individual can purchase an insurance that will pay benefit equal to B in State-1 and zero in State-2. The cost of insurance is AB, whether or not the loss occurs, where is a constant. The state dependent utility function is U = n(X) for stales-I and U=en(x) for state-II, where X is wealth available after adjustment of loss, insurance benefit and insurance cost, etc. A) Find the value of it at which the expected net benefit from insurance is equal to zero, that is, the insurance is actuarially fair
b) Write down and explain the expected utility function of the individual and specify a criterion for the choice of insurance amount B that the individual would like to buy. C) Solve for the value of B using the criterion specified in part b assuming that 2 = 1 d) How would you modify your result in part (c) ifi)* < 1 and ii) > 1?
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a) The actuarially fair value of the insurance benefit, B, is the value at which the expected net benefit from insurance is equal to zero. To find this value, we need to compare the expected cost of insurance to the expected benefit. The expected cost of insurance is AB, where A is a constant representing the cost of insurance. The expected benefit in State-1 is B with probability P. Therefore, the expected net benefit is B * P - AB. Setting this equal to zero and solving for B, we can find the actuarially fair value of the insurance benefit.
Explanation:
a) To find the actuarially fair value of the insurance benefit, we compare the expected cost of insurance to the expected benefit. The expected cost of insurance is AB, where A is a constant representing the cost of insurance. The expected benefit in State-1 is B with probability P. Therefore, the expected net benefit from insurance is B * P - AB. If we set this equal to zero, we can solve for B to find the value at which the expected net benefit is zero, indicating that the insurance is actuarially fair.
b) The expected utility function of the individual can be written as E[U(X)] = P * n(X) + (1 - P) * e(X), where n(X) represents the utility function in State-1 and e(X) represents the utility function in State-2. The individual's utility depends on the state of nature and their wealth available after adjusting for the loss, insurance benefit, and insurance cost.
To choose the insurance amount, B, the individual would consider maximizing their expected utility. The criterion for the choice of insurance amount would be to select the value of B that maximizes the expected utility function E[U(X)]. This means finding the insurance benefit that provides the highest level of overall expected utility for the individual, considering the probabilities of the two states of nature and the associated utility functions.
c) To solve for the value of B using the criterion specified in part b, we would need more information about the specific utility functions n(X) and e(X), as well as the probabilities P and 1 - P. With these details, we can calculate the expected utility for different values of B and determine the optimal insurance amount that maximizes the expected utility.
d) If * < 1, it implies that the individual is risk-averse. In this case, the individual would prefer to purchase insurance and may be willing to pay a higher cost to obtain a higher insurance benefit. The optimal value of B may be higher compared to the case when * = 1.
If * > 1, it indicates that the individual is risk-seeking. In this scenario, the individual may be less inclined to purchase insurance and may prefer to take on the risk and potential losses. The optimal value of B may be lower or even zero, depending on the individual's risk preferences.
The modification of the result in part (c) would depend on the individual's risk attitude, as reflected by the value of *. It is important to consider the individual's risk preferences and attitude towards uncertainty when determining the optimal insurance amount.
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The following is comment posted on "The Economist" web site from August, 31st 2011: "As with cocaine use, the price elasticity of demand for prostitution is probably pretty low, so the demand curve is close to vertical. That means price won't affect demand much at all." From what you have learned online and in class on the coverage of elasticity, in this week's discussion please do the following: 1) Analyze and critique the comment through the prism of the concept of elasticity of price. Would demand in each of these markets be perfectly inelastic or as the commentor states is "close" to being perfectly inelastic? How might criminal treatment of these market activities from state-to-state or country-to- country, impact the overall elasticity demand of these activities? 2) From the discussion and applying the concept of the elasticity of price, does the comment have economic merit and strengthens or weakens the argument for the legalization and regulation of certain narcotics and the sex trade (i.e. prostitution) for the purpose of tax collection? Consider other states in the U.S. and countries that have adopted similar regulatory programs for public health policy and tax revenue collection. Would such "de-criminalization followed with regulation, introduce more competing variety in the marketplace causing the demand for such
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Elasticity of price measures the responsiveness of quantity demand to change in the price of a commodity. Elasticity of demand is a vital concept that economists use to determine the impact of changes in price on the quantity demanded of a product. Price elasticity of demand (PED) is defined as the percentage change in quantity demanded that occurs due to a percentage change in price.
In response to the comment posted on "The Economist" web site from August 31st, 2011, there is a critique of the comment using the concept of elasticity of price. According to the comment, demand in both markets (prostitution and cocaine) is perfectly inelastic, or almost inelastic. This is unlikely to be correct since it is unlikely that any commodity's demand would be perfectly inelastic.
Criminal treatment of prostitution and drug use would influence the elasticity of demand for these activities in different countries and states. Legalizing and regulating prostitution would result in an increase in the elasticity of demand for prostitution. In addition, criminalizing prostitution would lead to a decrease in the elasticity of demand, making it more inelastic, while decriminalizing prostitution would increase the elasticity of demand, making it more elastic.
The statement about the cocaine and prostitution market, "As with cocaine use, the price elasticity of demand for prostitution is probably pretty low, so the demand curve is close to vertical. That means price won't affect demand much at all," is incorrect. This statement lacks economic merit since it suggests that the price of cocaine and prostitution has no impact on the demand for these commodities.
The legalization and regulation of prostitution and narcotics would not introduce more competition in the marketplace, resulting in an increase in the demand for these commodities. Instead, legalizing and regulating prostitution would result in an increase in the elasticity of demand for prostitution.
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A company has just paid its annual dividend of $1.65 yesterday, and it is unlikely to change the amount paid out in future years. If the required rate of return is 12 percent p.a., what is the share worth today? (to the nearest cent; don’t include $ sign)
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The share is worth approximately $13.75 today (to the nearest cent).
To determine the value of the share today, we can use the Gordon Growth Model, also known as the Dividend Discount Model (DDM). The DDM calculates the present value of future dividends, taking into account the required rate of return.
In this case, since the dividend amount is expected to remain constant, we can use the Gordon growth model, a simplified version of the DDM. The Gordon growth model assumes a constant growth rate for dividends.
The formula for the Gordon Growth Model is as follows: Share Price = Dividend / (Required Rate of Return - Dividend Growth Rate)
Given: Dividend = $1.65, Required Rate of Return = 12% = 0.12, Dividend Growth Rate = 0% (assuming the dividend amount will not change)
Plugging these values into the formula, we can calculate the share price:
Share Price = $1.65 / (0.12 - 0)
Share Price ≈ $13.75
Therefore, the share is worth approximately $13.75 today (to the nearest cent).
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The Board of Penco approved your recommendations and decided to purchase stock in the two organisations you recommended. In fact, based on your recommendations, they decided to invest more than anticipated. The previous budget was £2,000,000 but the board wants to invest £1,500,000 in each of the two organisations you recommended which means that an extra £1,000,000 is required.
Instructions:
Write a short report containing:
• An introduction discussing the need for short term working capital and long-term funds.
A main body comparing the sources of funding, including their pros and cons.
⚫ A justified recommendation of your choices of funding for the additional £1,000,000 using a range of criteria related to cost and risk.
ASSIGNMENT BRIEFS | SEPTEMBER 2020
19
OTHM LEVEL 7 DIPLOMA IN STRATEGIC MANAGEMENT AND LEADERSHIP | ASSIGNMENT BRIEFS
Delivery and Submission:
1x Report (1500 words) excluding TOC, diagrams, references and appendices
Answers
Title: Funding Options for Additional £1,000,000 Investment
The need for short-term working capital and long-term funds is essential for businesses to support their operations, growth, and strategic initiatives. Short-term working capital refers to the funds required to meet day-to-day operational expenses and manage fluctuations in cash flow.
On the other hand, long-term funds are utilized for capital investments, expansion projects, and strategic acquisitions. In this report, we will compare different sources of funding and provide a justified recommendation for the additional £1,000,000 investment required by the Board of Penco.
Main Body: Debt Financing: Pros: Lower cost compared to equity financing, as interest payments are tax-deductible.
Allows the business to retain ownership and control.
Cons: Increased financial risk due to interest payments and debt obligations.
Potential difficulties in obtaining favorable terms, particularly if the business has a limited credit history.
Equity Financing: Pros: Provides additional capital without incurring debt obligations.
Potential access to expertise and resources of the investors.
Cons: Dilution of ownership and control as new investors are brought in.
Increased scrutiny and reporting requirements.
Internal Financing:
Pros: No interest payments or dilution of ownership.
Greater control over funds and decision-making.
Cons: Limited availability of internal funds, particularly if the business has already allocated resources elsewhere.
May strain the existing financial resources if a substantial amount is needed.
Justified Recommendation: Considering the criteria of cost and risk, the recommended choice for funding the additional £1,000,000 investment is debt financing.
This option allows the business to secure the required funds while maintaining ownership and control. Additionally, with interest payments being tax-deductible, the cost of debt financing can be relatively lower compared to equity financing.
However, careful evaluation of interest rates, repayment terms, and the ability to meet debt obligations should be undertaken to mitigate financial risks.
The Board of Penco should opt for debt financing to meet the additional investment requirement of £1,000,000. This choice balances the need for additional capital with cost-effectiveness and risk management.
It is advised that the board evaluates potential lenders, negotiates favorable terms, and ensures that the business's financial health can sustain the debt obligations.
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Suppose you have $40,000 to invest. You're considering Miller-Moore Equine Enterprises (MMEE), which is currently selling for $50 per share. You also notice that a call option with a strike price of $50 and six months to maturity is available. The premium is $2.5. MMEE pays no dividends. What is your annualized return from these two investments if, in six months, MMEE is selling for $55 per share? What about $46 per share? (A negative value should be indicated by a minus sign. Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.)
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Suppose an investor has $40,000 to invest. They consider investing in Miller-Moore Equine Enterprises (MMEE), which is currently selling for $50 per share. The investor also notices that a call option with a strike price of $50 and six months to maturity is available. The premium is $2.5. MMEE pays no dividends.
The annualized return from the two investments is as follows:
Case 1: If MMEE sells for $55 per share in six months, this means that the stock price has increased by 10 dollars. Therefore, the return from buying the stock is 10/50 = 0.2
= 20%. Now, let's consider the call option .The call option has a strike price of $50 and a premium of $2.5. So, the investor pays $2.5 x 100 = $250 for the call option. If MMEE sells for $55, the investor can buy the stock for $50 using the option and sell it for $55 in the market, making a profit of $5 per share. Therefore, the return from the call option is 5/2.5 = 2 = 200%.The total return from both investments is:Total return = return from stock + return from optionTotal return = 20% + 200% = 220%The return is for 6 months, so the annualized return is: Annualized return = (1 + total return)^(12/6) - 1Annualized return = (1 + 2.2)^(12/6) - 1
Annualized return = 7.924 - 1
Annualized return = 6.924 or 692.4%Therefore, if MMEE sells for $55 per share in six months, the annualized return from the two investments is 692.4%.
Case 2: If MMEE sells for $46 per share in six months, this means that the stock price has decreased by 4 dollars. Therefore, the return from buying the stock is -4/50 = -0.08 = -8%.
Now, let's consider the call option. If MMEE sells for $46, the investor will not exercise the option since they can buy the stock for less in the market. Therefore, the return from the call option is -2.5/50 = -0.05
= -5%.The total return from both investments is: Total return = return from stock + return from option Total return
= -8% + (-5%)Total return
= -13%The return is for 6 months, so the annualized return is: Annualized return
= (1 + total return)^(12/6) - 1Annualized return
= (1 - 0.13)^(12/6) - 1Annualized return
= -0.1218 or -12.18%Therefore, if MMEE sells for $46 per share in six months, the annualized return from the two investments is -12.18%.
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suppose a certain market can be described as the following
Qd=100-2p
Qs=5+3p
at competitive equilibrium what is the value accruing to all
consumers in the industry above what they pay for?
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The value accruing to all consumers in the industry above what they pay for, which is the consumer surplus, is 409.5.
To find the value accruing to all consumers in the industry above what they pay for at competitive equilibrium, we need to calculate the consumer surplus.
Consumer surplus represents the difference between the total value consumers are willing to pay for a good and the total amount they actually pay. In this case, the consumer surplus can be determined by finding the area under the demand curve (Qd) and above the market price (p).
The demand equation is given by:
Qd = 100 - 2p
At competitive equilibrium, the quantity demanded (Qd) is equal to the quantity supplied (Qs). Therefore, we set Qd equal to Qs:
100 - 2p = 5 + 3p
Simplifying the equation:
2p + 3p = 100 - 5
5p = 95
p = 19
Now, we can substitute the equilibrium price (p = 19) back into the demand equation to find the equilibrium quantity (Q):
Qd = 100 - 2p
Qd = 100 - 2(19)
Qd = 100 - 38
Qd = 62
So, at the competitive equilibrium, the price is 19, and the quantity is 62.
To calculate the consumer surplus, we need to find the area under the demand curve (Qd) and above the equilibrium price (p = 19). This can be visualized as a triangle:
Consumer Surplus = (1/2) * (Qd - Qs) * (p - 0)
Substituting the values:
Consumer Surplus = (1/2) * (62 - 19) * (19 - 0)
Consumer Surplus = (1/2) * 43 * 19
Consumer Surplus = 409.5
Therefore, the value accruing to all consumers in the industry above what they pay for, which is the consumer surplus, is 409.5.
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15. If a savings account earns 2.5% compounded monthly, how many years will it take to double any investment
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If a savings account earns 2.5% interest compounded monthly, the number of years it takes to double any investment can be calculated using the rule of 72.
To determine the number of years it takes to double an investment, we can use the rule of 72. The rule of 72 is a simplified formula that provides an estimate for the doubling time of an investment based on the annual interest rate.
In this case, the savings account earns an interest rate of 2.5% compounded monthly. To convert the annual interest rate to a monthly rate, we divide it by 12, giving us 0.025/12 = 0.002083.
Using the rule of 72, we divide 72 by the annual interest rate (0.002083) to find the approximate number of years it takes to double the investment. Therefore, 72 / 0.002083 = 34.6 years (approximately).
So, it would take approximately 34.6 years for the investment in the savings account to double with a 2.5% interest rate compounded monthly.
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Please Discuss The Impacts Of Renewable Energy For Australian Electricity Markets And Participants. The Discussion Can Include Impacts On: - Market Concentration (Remember To Think About The Definition Of A Market-The Distinction Between Retail And Wholesale Markets Is Relevant In This Context) Prices Expenditure Equity (Remember The Potential For
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The impacts of renewable energy on Australian electricity markets and participants include changes in market concentration, prices, expenditure, and equity, with potential benefits for competition, cost reduction, environmental sustainability, and social equity.
The introduction and expansion of renewable energy sources in Australian electricity markets have several impacts on market participants and the market structure.
Firstly, renewable energy technologies, such as solar and wind, often allow for distributed generation, which can reduce market concentration by enabling a more diverse range of participants to enter the market, including households and small-scale producers.
This increased competition can lead to lower prices for consumers.
Additionally, the increased penetration of renewable energy can contribute to a reduction in wholesale electricity prices over time, as renewables have lower operating costs compared to traditional fossil fuel sources.
This can result in decreased expenditure for consumers and businesses.
Moreover, the expansion of renewable energy supports environmental sustainability by reducing greenhouse gas emissions and promoting a transition to cleaner energy sources.
This aligns with global efforts to mitigate climate change and can contribute to a more sustainable and resilient energy system.
Overall, the impacts of renewable energy on Australian electricity markets and participants include increased competition, potential price reductions, reduced expenditure, environmental benefits, and opportunities for social equity.
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Renewable energy has significant impacts on Australian electricity markets and participants, including reducing market concentration, influencing prices, altering expenditure patterns, and enhancing equity in the energy sector.
The adoption of renewable energy in Australian electricity markets has several notable effects. First, it contributes to reducing market concentration by diversifying the energy mix and encouraging the entry of smaller renewable energy providers. T
his helps foster competition and decreases the dominance of a few large players, leading to a more decentralized market structure. Renewable energy sources, such as solar and wind, have a declining cost trend, resulting in lower wholesale electricity prices.
This, in turn, can benefit consumers by potentially reducing retail prices and lowering household expenditure on energy bills. Additionally, renewable energy's cost stability compared to fossil fuels can provide long-term price certainty, further benefiting consumers and businesses.
The transition to renewable energy also has implications for expenditure patterns. Investments in renewable energy infrastructure, such as solar farms or wind turbines, create economic opportunities and stimulate job growth in the renewable energy sector.
This can lead to increased spending on renewable energy projects, positively impacting employment and local economies.
Furthermore, renewable energy promotes equity in the electricity sector. It offers the potential for decentralized energy production, empowering households, communities, and businesses to generate their own electricity through rooftop solar or other renewable systems.
Overall, the integration of renewable energy into Australian electricity markets has transformative effects, including reducing market concentration, influencing prices, altering expenditure patterns, and enhancing equity by providing opportunities for decentralized energy generation and fostering a sustainable energy future.
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An organization is having difficulty finding skilled labor for an upcoming project. The HR director recommends using a staffing agency to find employees. Which of the following is a critical consideration when determining the best staffing arrangement? Answers1) Client approval2) Legal risks 3)Geographic location 4) Benchmark with competitors
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When an organization is having difficulty finding skilled labor for an upcoming project, the HR director may recommend using a staffing agency to find employees. However, when determining the best staffing arrangement, it is important to consider a number of factors including geographic location,
Staffing agencies are responsible for ensuring that their employees are properly screened and trained, and that they meet all of the legal requirements for the job. Failure to do so can result in legal liability for both the staffing agency and the client organization.Client approval is also critical when determining the best staffing arrangement. The staffing agency should work closely with the client to ensure that they are providing the right candidates for the job and that they are meeting the client's expectations. If the client is not satisfied with the quality of the staffing, it can result in lost business and a damaged reputation.Finally, benchmarking with competitors is an important factor to consider when determining the best staffing arrangement. The organization should research what their competitors are doing in terms of staffing and determine whether they are using staffing agencies or other methods to find skilled labor.
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Q1. As discussed in a lecture/presentation, which of the following is not typically considered a target group for marketers who utilize sales promotion in their IMC plan? Group of answer choices
1. Consumers
2. Company sales representatives
3. Wholesalers & retailers
4. Media firms
5. All of the above are targets for sales promotion, as discussed.
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All of the above are targets for sales promotion, as discussed.
In an IMC (Integrated Marketing Communications) plan, sales promotion is commonly used to target specific groups of stakeholders. Consumers, company sales representatives, wholesalers & retailers, and media firms are all typically considered target groups for marketers who utilize sales promotion. Sales promotion techniques are designed to incentivize and motivate these groups to take specific actions that benefit the brand or company.
For example, consumers may be offered discounts or free samples, sales representatives may receive bonuses for meeting targets, wholesalers & retailers may be given special promotions or incentives for stocking and promoting the product, and media firms may be engaged in cooperative advertising or sponsorships. Therefore, option 5 is correct, as all of the above groups are potential targets for sales promotion in an IMC plan.
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Macroeconomics - The Influence of Monetary and Fiscal Policy on Aggregate Demand
Consider the following policies:
The government increases taxes on households.
The government increase spending on goods and services.
The Federal Reserve conducts an open market sale of bonds.
The government decreases spending on goods and services.
The Federal Reserve decreases the discount rate and interest on reserves.
The government decreases taxes on households.
State the following about each policy:
a) Is this a fiscal policy or monetary policy?
b) Is this an expansionary or contractionary policy?
c) Which component of aggregate demand is affected by this policy? Explain how and why.
d) How does this policy affect the money market? Does it first affect money demand, or money supply?
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a) Fiscal policy
b) Contractionary policy
c) Consumption
d) It affects money demand first, leading to adjustments in the money supply by the central bank.
a) The public authority increments charges on families: This is a monetary strategy.
b) This is a contractionary strategy.
c) The part of total interest impacted by this strategy is utilization. By expanding charges on families, the public authority diminishes the discretionary cashflow accessible to customers, subsequently diminishing their buying power.
Thus, families have less cash to spend on labor and products, prompting a reduction in utilization consumption. This, thus, decreases the general total interest in the economy.
d) This strategy essentially influences the cash interest in the currency market. At the point when the public authority increments charges on families, it diminishes their extra cash, prompting a decline in their utilization.
Accordingly, families might save more, which diminishes their interest for cash. The lessening in cash request comes down on the loan cost.
To keep up with the loan cost focus on, the national bank (Central bank) may answer by decreasing the cash supply through open market activities or other financial instruments. In this way, the strategy at first influences cash interest, prompting resulting changes in the cash supply by the national bank.
Note: The response accommodated part d) accepts that the public authority's assessment increment isn't counterbalanced by an expansion in government spending or other monetary measures. On the off chance that the public authority at the same time increments spending by an equivalent sum, the effect on the currency market might be unique.
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