The seven steps to achieving a sound financial reputation include:
1)
Analysis of cash flow –
Positive cash flow would mean having funds available for savings.
2)
Making a plan for retirement
goals and other special goals.
3)
Increase retirement savings
– This can be done by maximizing contributions in your retirement accounts or
catch-up with missed contributions.
4)
Reduce income tax. Consult
a tax professional to help you with your tax strategy.
5)
Keep pace with the current
inflation rate.
6)
Manage potential risks and
liabilities – Being covered with insurance can give you protection in times of
unexpected risks.
7)
Consult a financial advisor
to provide you with informed decisions.
Answer:
(i) $3,200
(ii) $7,100
(iii) $5,440
Explanation:
Cost of equipment = $35,500
Service life of equipment = 10-year
After 10-year equipment will be worth = $3,500
Equipment used for = 10,000 hours
Super Saver used the equipment for = 1,700 hours
1.
Depreciation expense:
= (Cost of equipment - Equipment worth after 10 years) ÷ Service life
= (35,500 - 3,500) ÷ 10
= $3,200
2.
Depreciation expense:
= Cost of equipment × Double-declining rate
= 35,500 × 20%
= $7,100
3.
Depreciation expense:
= (Cost of equipment - Equipment worth after 10 years) ÷ (Total hours × Hours taken by super saver)
= (35,500 - 3,500) ÷ (10,000 × 1,700)
= $5,440
Answer: Marginal propensity to consume = $0.60
Spending multiplier = $2.5
Explanation: The MPC can be calculated using following equation :-
= 0.60
Similarly, we can calculate spending multiplier as :-
= $2.5
Answer:
If GDP and consumption both rise by $6 billion in the second round of the process, what is the MPC in this economy?
What is the size of the multiplier?
If, instead, GDP and consumption both rose by $8 billion in the second round, what would have been the size of the multiplier?
Explanation:
Since the change in consumption is $6 billion, and the initial expansion in investment was $10 billion, the marginal propensity to consume (MPC) = expansion in consumption / initial expansion = $6 / $10 = 0.6
the economy's multiplier = 1 / (1 - MPC) = 1 / (1 - 0.6) = 1 / 0.4 = 2.5
If both the economy and the GPD had expanded by $8 billion, the MPC = $8 / $10 = 0.8, so the economy's multiplier = 1 / (1 - 0.8) = 1 / 0.2 = 5
Another way to determine the multiplier = 1 / MPS (marginal propensity to save), since MPS = 1 - MPC