Is interest on loan an expense or a liability....Please help
1 answer:
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Answer:
Present value of the security = $1,888.89
Explanation:
The annual dividend of $170 represents a perpetual income stream. The present value of a perpetuity is calculated as follows:
where r =interest rate per annum that would be compounded for each year
Therefore, present value of the security = = $1,888.89
Answer: A - nominal wages are slow to adjust to changing economic conditions
Explanation:
In the short run, the costs of many of the factors used in the production process are fixed. For example labours wage is fixed for a number of years because of labour contracts. Also the raw materials used in the production process have long term agreements that fix their prices.
As a result of factors of production been fixed in the short run, when general price level rises and the cost of production remains constant, profit also rises.
Firms take advantage of this rise in price and increase production and the quantity of aggregate supply increases. This is why the short run aggregate supply curve is upward sloping.
