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3 years ago

Which of the following statements are consistent with how inflation affects the three functions of money? Check all that apply.

Business

1 answer:

Anna [14]3 years ago

6 0

Answer:

B,C, D, E

Explanation:

B. Rising prices (inflation) makes comparism of financial data less reliable. This is one of the major drawbacks of historic financial information because such information does not take into account the impact of inflation.

C. Money loses its attributes as a store of value in inflationary period. This is because the nominal value of money increase through an increase in Consumer Price Index (CPI) while the real value of money drops as the unit amount of purchasing power decrease from increase in prices.

D. The demand for money increases in inflationary period as more money chases few goods. This reduces purchasing power of individuals and leads to rise in prices.

E. This has the potential of reducing purchasing power as money loses its value in periods of inflation.

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2 years ago

All of the following are types of operating costs except

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Answer:

B. Equity Capital

Explanation:

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3 years ago

You are an economic advisor to the president. You observe a decrease in gross investment. Assume the economy was operating at th

melomori [17]

Answer:

a. Increase in Net Exports, Increase in AD, real GDP will stay same

b. Excess Demand

c. Appropriate Contractionary Fiscal Policy : decrease tax & or increase government expenditure

d. Actions smooth business cycle by brining actual real GDP towards full employment

Explanation:

Aggregate Demand is the total value of goods & services all the sectors of an economy are planning to buy during a given period of time

Aggregate Demand [AD] = Consumption [C] + Investment [I] + Government Expenditure [G] + Net Exports [NX = Exports (X) - Imports (M)]

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Decrease in Investment leads to fall in Aggregate Demand. It creates Deficit Demand & decreases real GDP. It can be corrected through demand expansionary fiscal policy of decreasing taxes & increasing govt. expenditure.

Increase in exports leads to increase in net exports & in turn increase in aggregate demand. This causes Excess demand problem & real GDP will remain same (economy already at full equilibrium, GDP cant be increased more). Appropriate Fiscal Policy [Contractionary Fiscal Policy] includes decreasing taxes & or increasing govt. purchase.

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3 years ago

You want to invest in a hot dog stand near the ballpark. The hot dog stand will have $60,000 in fixed cost. Each hot dog costs y

aleksley [76]

Answer:

Break-even quantity is 20,000 hot dog

and,

to make profit of $30,000 , the number of hot dog sold should be 30,000

Explanation:

Given:

Fixed cost = $60,000

Cost of each hot dog = $3.5

Selling cost = $6.5

Now,

let the quantity at breakeven be 'x'

At breakeven point,

Total cost = Total revenue

Thus,

$60,000 + $3.5x = $6.5x

$6.5x - $3.5x = $60,000

$3x = $60,000

x = 20,000

To earn profit of $30,000

Now,

Profit = Revenue - Cost

Let the quantity for $30,000 profit be 'y'

Thus,

$30,000 = $6.5y - ($60,000 + $3.5y)

$30,000 = $6.5y - $3.5y - $60,000

$90,000 = $3y

y = 30,000

Hence,

Break-even quantity is 20,000 hot dog

and,

to make profit of $30,000 , the number of hot dog sold should be 30,000

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3 years ago

The Fed buys $20,000 of government securities. The desired reserve ratio is 5 percent and the currency drain is zero. What will

JulsSmile [24]

Answer:

The answer is $400,000

Explanation:

Quantity theory of money states that the quantity of money is directly proportional total spending in an economy.

Change in quantity of money = new deposits (which can also be new security) ÷ reserve requirements

The new security is $20,000

reserve requirements is 5 percent

Change in quantity of money is:

$20,000 / 0.05

=$400,000

3 0

3 years ago