An increase in aggregate demand when the economy is operating at high levels of output is likely to result in:____

Which of the following statement is false?

lara31 [8.8K]

Answer:

C) Coupon bonds always trade for a discount.

Explanation:

"A coupon bond, also referred to as a bearer bond or bond coupon, is a debt obligation with coupons attached that represent semiannual interest payments. With coupon bonds, there are no records of the purchaser kept by the issuer; the purchaser's name is also not printed on any kind of certificate. Bondholders receive these coupons during the period between the issuance of the bond and the maturity of the bond." Trade them for a discount is not a common characteristic of coupon bonds.

Reference: Chen, James. “Coupon Bond.” Investopedia, Investopedia, 18 Sept. 2019

5 0

3 years ago

Read 2 more answers

Frank is lending $1,000 to Sarah for two years. Frank and Sarah agree that Frank should earn a 2 percent real return per year. I

egoroff_w [7]

Answer:

a. 23%.

b. Frank should charge Sarah 2% more than the inflation rate.

Explanation:

a. Find the nominal rate of interest.

To find this value we must follow this equation:

$NI=RI+IR$

Where NI = Nominal Interest, RI= Real Interest, and IR= Inflation Rate.

a.1. Find the real interest rate.

The problem statement gives us this value: 2% real return per year, as agreed by Sarah and Frank.

a.2. Find the inflation rate.

Here we follow this equation:

$IR=(\frac{CPI_{F} -CPI_{B} }{CPI_{B} } )*100$

Where:

CPI(F) is the CPI of the final year, in this case, it would be 121 (the expected CPI for two years, which is the established loan time).

CPI (B) is the CPI of the base year, that is, the CPI in force at the time that Frank makes the loan, 100 in this case.

We replace these values:

$IR=(\frac{121-100}{100} )*100$

$IR=(\frac{21}{100} )*100$

$IR=0.21*100$

$IR=21%$

The inflation rate equals 21%.

a.3. Replace in the equation of the nominal rate of interest.

$NI=RI+IR$

$NI=0.02+0.21$

$NI=0.23$

So, the nominal rate of interest Frank should charge Sarah equals 23%.

b. Find out how much Frank should charge Sarah (regarding inflation and considering that it is unknown).

The inflation rate reduces the return expected by Frank. Therefore, the nominal interest rate charged must be higher than the inflation rate, in order to ensure a positive real returns. In this case, since it is not known exactly what that inflation rate is, Frank must charge 2% (expected return) above what the inflation rate can record.

Hence, the short answer is: Frank should charge Sarah 2% more than the inflation rate.

8 0

3 years ago

A retail operation has an average gross margin of 35%. If the average monthly sales for the store is $200,000.00, what is the co

GarryVolchara [31]

Answer:

COGS= $130,000

Explanation:

Giving the following information:

A retail operation has an average gross margin of 35%.

Sales= $200,000.00

<u>To calculate the cost of goods sold, we need to use the following formula:</u>

Gross margin= sales - COGS

COGS= sales - gross margin

COGS= 200,000 - (200,000*0.35)

COGS= $130,000

8 0

3 years ago

The income statement of Whitlock Company is presented here.

bazaltina [42]

Answer:

$1,146,800

Explanation:

Preparation for the operating activities section of the statement of cash flows for the year ended November 30, 2020

WHITLOCK COMPANY

Partial Statement of Cash FlowsFor the Year Ended November 30, 2020

Cash flows from operating activities

Net income $1,366,800

Adjustments to reconcile net income to net cash provided by operating activities..

Activities

Depreciation expense $70,000

Decrease in inventory $500,000

Decrease in accrued expenses payable ($100,000)

Increase in prepaid expenses ($150,000)

Increase in accounts receivable ($200,000)

Decrease in accounts payable($340,000)($220,000)

Net cash provided by operatingActivities $1,146,800

($1,366,800-$220,000)

Therefore the operating activities section of the statement of cash flows for the year ended November 30, 2020 is $1,146,800

3 0

3 years ago

Suppose that the public holds 50% of the money supply in currency and the reserve requirement is 20%. Banks hold no excess reser

Mice21 [21]

Answer:

the required reserves will increase by 1,200 dollars

Explanation:

the required reserve ratio is 20%

for each dollar the bank receive in deposit it can loan up to 80% and must keep 20%

the multiplier will be: 1 / 0.2 = 5

each dollar of deposit will increase the money supply by 5

and each dollar withdraw will decrease money supply by 5

Therefore, for this deposit of 6,000 dollars the bank will kept:

$6,000 x 20% = $1,200

7 0

3 years ago

An increase in aggregate demand when the economy is operating at high levels of output is likely to result in:_____.