Because taxes keep some of the original impact of the tax, unlike spending multipliers, the spending multiplier is always one bigger than the tax multiplier. Any changes in consumer spending that follow any real GDP expansion or contraction brought on by the application of fiscal policy are referred to as the multiplier impact.
Any shift in aggregate demand will typically be significantly increased with a high multiplier, making the economy more unstable. Contrarily, with a low multiplier, changes in aggregate demand will not be amplified by a large amount, leading to a tendency for the economy to be more stable.
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Answer:
4. how much debt should be assumed to fund a project.
Explanation:
The capital structure is a mix of the debt and equity
In equation form, it is
Capital structure = Debt + equity
These two items should be taken for financing the assets of the company
And, the other options that are mentioned are related to the techniques of the capital budgeting
Therefore, the correct option is 4.
Answer:
6.56%
Explanation:
Given:
The amount paid to the bank = $2,000
Let the interest rate paid be 'r'
By compound interest ,
After 1 year the paid amount will be $2000 × ( 1 + r )
Now,
the bank is paying $140 every year
thus,
2000 × ( 1 + r ) = 
or
2000r + 2000r² = 140
on solving the above quadratic equation, we get
r = 0.0656
or
r = 6.56%
Hence,
interest rate the bank advertising = 6.56%
Answer: U.S Treasury bonds
One of the main risks of investing is the risk of not getting back the amount invested. This risk is called default risk.
Income bonds, preferred stocks and subordinated debentures have default risk since there is no guarantee by the issuing companies that they will repay the principal, and interest or preferred dividends, as the case may be.
However, if an investor holds a U.S treasury bonds until maturity, the government gives a guarantee on the interest payment and principal amount. Hence the U.S treasury bonds are traditionally considered to have the least risk.
However, even U.S. treasury bonds are sensitive to inflation and interest rates.
