Answer: Economies of scale pertain to the long run only.
Explanation:
Economies of Scale is a long run phenomenon and is defined as the cost advantage that a firm experiences as a result of an increase in its output. The benefit arises as a result of the inverse relationship between quantity produced and per-unit fixed cost. The higher the quantity of output that are produced, the lower the per-unit fixed cost.
Economies of scale leads a fall in the average variable costs with an increase in the level of output. This is as a result of synergies and operational efficiencies which comes into place due to the increase in the scale of production. Economies of scale is a vital concept as it shows the competitive advantages big firms have over the small firms.
Interest is calculated as a <u>percentage of the principal</u>. With compound interest, the interest earned is <u>added back into the principle</u> so during the next period you start earning interest on the new, higher amount. Every time the interest compounds, it gets added into the principal and you earn more and more interest.
Example:
10% simple interest on $100:
(.1 * 100) +100 = 10 + 100 = $110
But if you do 10% interest compounding monthly for 3 months you have:
Month 1: (.1 * 100) +100 = 10 + 100 = $110
Month 2: (.1*110) +110 = $121
Month 3: (.1*121) + 121 = $133.10
Even with this simple example you can see how much more money is earned when your interest is compounded and added back into the principal.
Answer:
a. influences aggregate supply but fiscal policy influences aggregate demand.
Explanation:
Remember, when the term monetary policy is used it refers to policies that are focused on the interest rates as well as the inflation rate, which certainly affects the money supply specifically. However, the fiscal policy is usually channelled towards aggregate demand of the economy.
Thus, it is right to say that one important difference between monetary and fiscal policy is that monetary policy affects aggregate supply but fiscal policy influences aggregate demand.
That statement is True.
The purpose of calculating Gross Domestic Product is to measure the market value of all the goods and services that produced by a country within a specific time period.
Gross Domestic Product is calculated using this formula:
Consumption + Gross Investment + Government investment + (Exports - Imports)
