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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.

Learn more about the real and nominal GDP here:-

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Two investment advisers are comparing performance. One averaged a 19% return and the other a 16% return. However, the beta for t

finlep [7]

Answer: Adviser B is the superior stock selector.

Explanation:

For the comparision between the two investment advisers, the Jenson's Alpha will be utilized.

Jenson's Alpha:

= Portfolio Actual Return - CAPM(Benchmark Portfolio Return)

T Bill Rate(Risk free rate) = 6%

Market return(E(Em) = 14%

Beta of Investment Adviser A = 1.5

Beta of Investment Adviser B = 1

For Adviser A:

CAPM = Risk free return + Beta ( E(Rm) - Risk free return)

CAPM(Benchmark Portfolio) = 6 + 1.5 (14-6)

= 6 + 12

= 18%

Actual Return = 19%

Jenson's Alpha = 19% - 18% = 1%

For Adviser B:

CAPM = Risk free return + Beta ( E(Rm) - Risk free return)

CAPM(Benchmark Portfolio) = 6 + 1(14-6) = 6 + 1(8) = 14%

Actual Return = 16%

Jenson's Alpha = 16% - 14% = 2%

Adviser B is a better selector because he has a larger alpha of 2% compared to Adviser A who has 1%.

T Bill Rate(Risk free rate) = 3%

Market return(E(Rm) = 15%

Beta of Investment Adviser A = 1.5

Beta of Investment Adviser B = 1

For Adviser A:

CAPM = Risk free return + Beta ( E(Rm) - Risk free return)

CAPM(Benchmark Portfolio) = 3 + 1.5 (15-3)

= 3 + 18

= 21%

Actual Return = 19%

Jenson's Alpha = 19% - 21% = -2%

For Adviser B:

CAPM = Risk free return + Beta ( E(Rm) - Risk free return)

CAPM(Benchmark Portfolio) = 3 + 1(15-3) = 3 + 1(12) = 15%

Actual Return = 16%

Jenson's Alpha = 16% - 15% = 1%

Given the changes, Adviser B is still the better selector because he has a larger alpha of 1% compared to Adviser A who has -2%.

7 0

2 years ago

At July 31, Cullumber Company has this bank information: cash balance per bank $7,310, outstanding checks $715, deposits in tran

Luba_88 [7]

Answer:

$7,900

Explanation:

In Bank reconciliation statement the balances of Bank statement and the Balance from cash register is adjusted to calculated the adjusted cash balance for reporting at the end of the period. This is due to some outstanding deposits and Payment and other experiences which makes a difference between the bank statement balance and cash register balance.

Cash balance per bank = $7,310

Outstanding checks are those check which has been issued but not been presented in the bank yet. Deposit in transit is the amount of deposit which is pending in the clearing process.

Adjusted Balance = Cash Balance per bank - Outstanding Checks + Deposit in transit = $7,310 - $715 + $1,305 = $7,900

Bank charges are already adjusted in the cash balance per bank.

5 0

2 years ago

In which of the following scenarios will you be entitled to pay the least amount of money out-of-pocket for a medical expense? A

Oliga [24]

<span> B.You have health insurance with a $500 deductible.
hope this helps.</span>

7 0

3 years ago

A birthday party at the skating rink costs $ 60 to reserve a party area and $ 2. 50 per guest for skating and skate rental. How

frez [133]

Costs are the expenses incurred by a company or an individual in<u> order to</u> produce goods and deliver services or buy products.

<h3>The computation:</h3>

$\text{The cost} = 60 + (2.50$ × $15)$

$\text{The cost} = 97.5 \text{ dollars}$

Therefore, the birthday party will cost $97.5 if 15 guests are<u> invited.</u>

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For more information regarding the sums, refer below:

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3 0

2 years ago

Read 2 more answers

According to the midpoint method, the price elasticity of demand between points A and B is approximately (0, 0.6, 1.67, 22.5) .

kvv77 [185]

Because the demand between points A and B is inelastic, a $25-per-bike increase in price will lead to an increase, in total revenue per day.

in order for a price decrease to cause a decrease in total revenue, demand must be inelastic.

<h3>What is the price elasticity of demand? </h3>

Price elasticity of demand measures the responsiveness of quantity demanded to changes in price of the good.

When the coefficient of elasticity is less than one, it means that demand is inelastic. When demand is inelastic, it means that the quantity demanded is not sensitive to changes in price.

Price elasticity of demand = midpoint change in quantity demanded / midpoint change in price

Midpoint change in quantity demanded = change in quantity demanded / average of both demands

change in quantity demanded = 40 - 35 = 5
Average of both demands = (40 + 35) / 2 = 37.50
Midpoint change in quantity demanded = 5 / 37.50 = 0.133

Midpoint change in price = change in price / average of both price

Change in price = 100 - 125 = -25
Average of both prices = (100 + 125) / 2 = 112.50
Midpoint change in price = -25 / 112,50 = -0,222

Midpoint elasticity of demand = 0.133 / -0,222 = 0.6

To learn more about price elasticity of demand, please check: brainly.com/question/18850846

7 0

2 years ago