Answer:
I would say the answer is B
Answer:
<em>In theory, both are riskless but in practicality they aren't completely risk free.</em>
Explanation:
<em>In investment theory</em>, the investment in government bonds is <em>riskless </em>, irrespective of the investment maturity period because they are backed by the government.
However, <em>in practicality</em> every investment involves risk whether it's a short term or long term. However, a short term investment like the one specified in <em>statement 2</em> involves lower time frame and thereby lower volatility, hence it implies <em>lower risk</em>. The investment specified in <em>statement 1</em> is of longer term and hence can involve higher volatility, hence it implies <em>higher risk.</em>
<em><u>Note</u></em><em>- All the governments are prone to risk practically</em> because they are also part of the global financial and economic system and hence, they have to manage their budget balances prudently. Every investment thereby involves <em>risk</em>, it's just the <em>financial backing</em> of the <em>government financial</em> <em>instruments</em> which makes them less risky as compared to the other financial instruments.
Answer:
See below for details.
Explanation:
To contract the money supply the the Fed can increase the discount rate. This shall increase the cost of borrowing and thus the demand for money should go down. Furthermore, people have more incentive to save as they are getting an increased return thus the overall money supply contracts.
The Fed can also sell short term US securities, this reduces the amount of excess reserves available to banks and restricts their ability to make loans thus contracting the money supply.
The Fed can also raise the reserve requirement which reduces the banks ability to lend loans and create money thus contracting the supply again.
To expand the money supply, The Fed can lower the reserve requirements, creating excess reserves for banks that can be loaned out and thus expand money supply.
The Fed can also buy short term securities for money thus increasing the supply of money in the economy.
Quantitative easing simply increases the money supply with additional currency issuing so this expands the supply.
Decreasing the discount ratios discourage people from saving and encourages borrowing thus creating an expanded supply for money via credit creation.
Hope that helps.
Answer:
$100,000,000
Explanation:
To calculate relevant break even cost point we ignore all the sunk funds and fixed costs that have already been paid.
This includes,
R&D funds of $1 billion
Tools of $0.5 billion
Factory of $1 million
None of these are the relevant or incremental costs and thus to calculate break even for this order, they will be avoided.
The Break even cost = 50,000 * 2000 = $100,000,000
We only account for the cost of producing each additional unit that is the Marginal Cost of $2,000/missile.
Hope that helps.
