Answer: Option (a) is correct.
Explanation:
Correct Option: The supply of loanable funds but not the supply of dollars in the market for foreign-currency exchange.
If the budget deficit increases, then U.S residents will want to purchase fewer foreign assets and foreign residents wants to buy more of U.S assets.
The budget deficit in the economy has to be financed either by borrowing or by increasing taxes. This budget deficit occurred because of the tax cuts and higher government spending.
If a country running a budget deficit, which lead to reduction in national saving. We all know that interest rate is determined in the loan market, where savers supply the loans to the private borrowers.
So, if there is a fall in the national saving, this will reduced the supply of loans from savers, which raises the interest rate in an economy.
This will attract the foreign flow of capital. This means that demand for domestic assets increases because of the higher interest rate.
Now, if foreign residents want to take an advantage of higher interest rate then they first have to acquire domestic currency.
Therefore, higher interest increases the demand for domestic currency in a market of foreign exchange.
Answer: shifter discovers a loss of $3000
Explanation:
Because Shifter paid $5,000 more for the treasury stock than its fair value: 1,000 shares × ($20 − $15). The $2,000 fee (1,000 × $2) offsets that loss yielding a net loss of $3,000
Diplomacy best describes Jeremy’s ability to interact with his co-workers.
Answer:
20%
Explanation:
Given that
Advertising elasticity of demand = 0.25
Quantity demanded = 5% increase
Recall that
Elasticity = change in demand/change in advertising
That is
Change in advertising = Change in demand / elasticity of production
Therefore, change in advertising
= 5/0.25
= 20%
Advertising must increase by 20% in order to increase demand by 5%
Answer:
$578,408
Explanation:
face value = $503,500
maturity = 10 years x 2 = 20 periods
coupon rate = 8% / 2 = 4%
coupon = $20,140
YTM = 6% / 2 = 3%
using a financial calculator, the PV of the bonds = $578,408
Dr Cash 578,408
Cr Premium on bonds payable 74,908
Cr Bonds payable 503,500
