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2 years ago

How is it possible for nominal GDP to rise but real GDP to fall from one year to the next?

1 answer:

6 0

Yes, the given statement can be marked as true as it would indicate a larger rise in prices relative to a decrease in output.

<h3>Why would Nominal GDP increase but real GDP decrease?</h3>

When nominal GDP increases and it is higher than real GDP, then it shows that inflation is occurring but when real GDP is higher than nominal, then it means deflation is occurring.

In an economy with a high inflation, it will experience an increase in nominal GDP no matter if the real amount of goods and services produced decreases.

The GDP deflator measures the the overall change in prices in an economy, by using the ratio between real and nominal GDP.

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Company ABC reported the following: 1. Net Income: $110,000 2. Return on Sales (Net Income/Sales): 3.56% 3. Gross Profit Percent

Sergeeva-Olga [200]

Answer:

$2,266,123.60

Explanation:

As it is given

Return on sales = Net income ÷ Sales

3.56% = $110,000 ÷ Sales

So, the sales is $3,089,887.64

Now the Gross Profit percentage is

Gross Profit percentage = Gross profit ÷ Sales

26.66% = Gross profit ÷ $3,089,887.64

So, the gross profit

= $823,764.044

Now the cost of goods sold is

= Sales - gross profit

= $3,089,887.64 - $823,764.044

= $2,266,123.60

8 0

3 years ago

A firm currently has a debt-equity ratio of 1/2. The debt, which is virtually riskless, pays an interest rate of 6%. The expecte

Svetradugi [14.3K]

Answer:

Expected return on equity is 11.33%

Explanation:

Using Weighted Average Cost Capital without tax formula, overall rate of return is given by the formula:

WACC=(Ke*E/V)+(Kd*D/V)

Kd is the cost of debt at 6%

Ke is the cost of equity at 12%

D/E=1/2 which means debt is 1 and equity is 2

D/V=debt/debt+equity=1/1+2=1/3

E/V=equity/debt+equity=2/1+2=2/3

WACC=(12%*2/3)+(6%*1/3)

WACC=10%

If the firm reduces debt-equity ratio to 1/3,1 is for debt 3 is for equity

D/V=debt/debt+equity=1/1+3=1/4

E/V=equity/debt+equity=3/1+3=3/4

WACC=10%

10%=(Ke*3/4)+(6%*1/4)

10%=(Ke*3/4)+1.5%

10%-1.5%=Ke*3/4

8.5%=Ke*3/4

8.5%=3Ke/4

8.5%*4=3 Ke

34%=3 Ke

Ke=34%/3

Ke=11.33%

4 0

3 years ago

Propose a theory or model that could be used to support implementation of the strategic plan for this organization. Explain why

Mkey [24]

When a company fails to execute its strategic plan, the first reaction is often to rewrite the org chart or tweak incentives. Clarifying decision-making authority and improving the flow of information both at the management level and throughout the organization is much more effective. After that, the appropriate structure and motives are usually set.

Similar to the Galbraith and Nathanson model, this is a systems-based model in which strategy development is processed as inputs from four interconnected elements: organizational structure, management processes, human resources, and culture, and outcomes achieve strategic goals as

A strategic plan is a systematic process of envisioning a desired future and translating that vision into broadly defined goals or goals and a series of steps to achieve them.

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6 0

2 years ago

What is the main argument for agricultural prices supports

patriot [66]

Answer:

Key Points

Explanation:

The government may artificially increase prices through purchasing a portion of the consumer surplus or artificially increase quantity through offering subsidies to producers. This allows the government control over the established equilibrium in agriculture.

5 0

3 years ago

The government can use _____________ in the form of ____________________ to increase the level of aggregate demand in the econom

Naily [24]

The government can use <u>an expansionary fiscal policy </u> in the form of <u>an increase in government spending </u> to increase the level of aggregate demand in the economy.

<h3>How does Government Spending Affect the Economy ?</h3>

There is a high possibility that the rise in taxes will negate the impact of rising government spending which would leave Aggregate Demand (AD) unchanged. However, it is possible that increased spending and rise in tax could lead to an increase in GDP.

In a recession, consumers may reduce spending leading to an increase in private sector saving. Therefore a rise in taxes may not reduce spending as much as usual.

The increased government spending may create a multiplier effect. If the government spending causes the unemployed to gain jobs then they will have more income to spend leading to a further increase in aggregate demand. In these situations of spare capacity in the economy, the government spending may cause a bigger final increase in GDP than the initial injection.

However, if the economy is at full capacity, the increase in government spending would tend to crowd out the private sector leading to no net increase in Aggregate demand from switching from private sector spending to government sector spending.

<h3>Which type of policy does the governments adopt to increase the aggregate demand in the economy?</h3>

Expansionary fiscal policy increases the level of aggregate demand, either through increases in government spending or through reductions in taxes. Expansionary fiscal policy is most appropriate when an economy is in recession and producing below its potential GDP.

Therefore, we can conclude that the correct option is C.

Your question is incomplete, but most probably your full question was:

The government can use _____________ in the form of ____________________ to increase the level of aggregate demand in the economy.

A. a contractionary fiscal policy; a reduction in taxes

B. an expansionary fiscal policy; an increase in corporate taxes

C. an expansionary fiscal policy; an increase in government spending

D. a contractionary fiscal policy; an increase in taxes

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7 0

2 years ago