Answer: The recessionary gap will be equal to 1 trillion yen divided by 2.5 or 0.4 trillion yen
Explanation:
From the question, we are informed that GDP gap of 1 trillion yen and the marginal propensity to consume (MPC) is 0.60. Also, to close the GDP gap, the prime minister has decided to increase government spending. This means that there will be a recessionary gap because the actual GDP will be less than the potential GDP.
Fir the economy to be brought to its potential GDP, the spending of the government will give a stimulus to the economy. Since MPC is 0.6, the multiplier will be:
= 1/1-MPC
= 1/1 - 0.6
= 1/0.4
= 2.5
The government spending will then increase in order to close the recessionary gap as:
∆Y = ∆G × Multiplier
100 = ∆G × 2.5
∆G = 100/2.5
∆G = 40
Therefore, the recessionary gap will be equal to 1 trillion yen divided by 2.5 or 0.4 trillion yen.
Answer:
A. Set meters is the correct answer.
Explanation:
Answer: $45000
Explanation:
Firstly, the operating asset will be calculated which will be:
Operating asset = Sales / Turnover
= 900,000/3
Operating assets = $300,000
Then, the net operating income will be: Return on investment × Operating assets
Net operating income = 300,000 × 15%
= 300,000*0.15
= $45,000
Therefore, Legume Division's net operating income last year is $45000
