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2 years ago

The Fisher effect indicates that an increase in the expected inflation rate will cause the real rate of interest to:

1 answer:

6 0

The Fisher effect indicates that an increase in the expected inflation rate will cause the real rate of interest to: increase by the same amount.

<h3>What Is the Fisher Effect?</h3>

The Fisher Effect refers to the relationship between nominal interest rates, real interest rates, and inflation expectations. The relationship was first described by American economist Irving Fisher in 1930.

The relationship is described by the following equation:

(1+i) = (1+r) * (1+π)

Where:

i = Nominal Interest Rate.

r = Real Interest Rate.

π = Expected Inflation Rate.

The Fisher Effect is an important relationship in macroeconomics. It describes the causal relationship between the nominal interest rate and inflation. It states that an increase in nominal rates leads to a decrease in inflation. The key assumption is that the real interest rate remains constant or changes by a small amount.

Hence , we can conclude that the correct option is A.

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

The Fisher effect indicates that an increase in the expected inflation rate will cause the nominal rate of interest to:

A. increase by the same amount.

B. decrease by the same amount.

C. become unpredictable.

D. remain relatively constant.

Learn more about Fisher Effect on:

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Montana Furniture Mart sold $120,000 of furniture and accepted the customer's $120,000 10%, 1-year note receivable in exchange.

Goryan [66]

Answer:

$12,000

Explanation:

The reason is that the 10% of the amount $120,000 is $12,000 which is the rate of return which the Montana Furniture Mart has earned due to the sales of the furniture, so the amount that must be debited as interest income at the end of year would be:

Dr Interest Income $12000

Cr Cash or Bank Accout $12,000

5 0

4 years ago

An expansionary fiscal policyLOADING... involves an increase in government purchases or an increase in taxes:

Crazy boy [7]

Answer:

C - An expansionary fiscal policy involves the increase of government purchases and/or a decrease in taxes in order to increase aggregate demand

Explanation:

An expansionary fiscal policy is any policy undertaken by the government to increase money supply.

When government makes purchases, money supply increases.

When taxes are cut, disposable income increases which increases aggregate demand and money supply.

I hope my answer helps you.

3 0

3 years ago

Steeler Corporation is planning to sell 100,000 units for $2.00 per unit and will break even at this level of sales. Fixed expen

Doss [256]

The company's variable expenses per unit is 1.25

<h3>What is breakeven?</h3>

Breakeven is a point at which neither profit nor loss is made. It is used to determine the number of units or dollars of revenue needed to cover total costs.

Number of units to sell = 100,000

Price per unit = 2

Fixed expense = 75000

At break even point :

Revenue = total expenses

Total expenses

= fixed cost + variable cost

Let variable cost = x

Revenue

= units to sell * price per unit

Revenue

= 100,000 * 2

= 200,000

Hence,

Fixed cost + variable cost = Revenue

75000 + x = 200,000

x = 200, 000 - 75000

x = 125,000

Variable cost = 125,000

The variable expense per unit is thus :

Variable expense / number of units

= 125,000 / 100,000

= 1.25 per unit

Hence, the company's variable expenses per unit is 1.25

Learn more about break even here: brainly.com/question/9212451

7 0

2 years ago

At the end of an accounting period, it is important to ensure proper inventory _____ to determine the ownership of goods in tran

Rudik [331]

Answer:

Cutoff.

Explanation:

At the end of an accounting period, it is important to ensure proper inventory cutoff to determine the ownership of goods in transit.

In Financial accounting, the term cutoff refers to the process which ensures that business transactions and activities are recorded in the correct accounting period.

An inventory cutoff involves stopping or pausing shipments or receiving of supplies of goods, in order to enable proper accounting and count checks.

8 0

3 years ago

Andrew and Marina are married filing joint and have modified AGI of $77,500. Andrew made a contribution to a qualified retiremen

vova2212 [387]

Answer:

Explanation:

The credit rate for retirement savings depend upon several factors. General credit rates are 10%, 20% and 50%.

In case of a couple married and filing jointly the credit rate in case of modified AGI being more than $63,000 = $0.

The limit of $63,000 is revised to $64,000 in year 2019, and further revised to $65,000 in year 2020.

Here, in the given case the contribution credit rate = 0% as the AGI in case of joint filing is more than $65,000 as for year 2020.

Thus, retirement savings contribution credit = $2000 $\times$ 0% = $0.

4 0

4 years ago