Money supply = Currency in circulation + Checkable deposits.=600 + 900 = 1500 Billion
Current deposit ratio = Currency in Circulation/ Checkable deposits. = 600/900 = .667
Excessive reserve ratio = Excess Reserves/Checkable deposits.= 15/900 = .0167
Money multiplier = (1 + C)/(rr + ER + C)= (1 + .667)/ (.0278 + .0167 + .667) = 2.343
Answer: See explanation
Explanation:
The optimal reorder point in units is calculated as the average daily sales unit multiplied by the delivery lead time.
In the question, we're not provided with the annual demand as this is vital in order to know the average daily unit. Therefore, the question is incomplete
Answer and Explanation:
The computation is shown below:
a. Current price is
= D1 ÷ (Required return - Growth rate)
= ($1.20 × 1.04 ÷ (0.1 - 0.04)
= $20.8
b. Now the price in three year is
P3 = Current price × (1 + Growth Rate)^3
= $20.8 × (1.04)^3
= $23.40
c. For price in 10 year it is
P10 = Current price × (1 + Growth Rate)^10
= $20.80 × (1.04)^10
= $30.79
We simply applied the above formula
Because of the wealth effect, a rising aggregate price level "reduces" the purchasing power of wealth and therefore "reduces" the aggregate quantity of output demanded.
<h3>What is wealth effect?</h3>
According to the wealth effect, a behavioural economic hypothesis, customers will spend more money even if their income stays the same.
The effect of wealth effect on aggregate demand is-
- People will increase their consumption as their wealth rises. Thus, at lower price levels compared to higher price levels, the consumption component of aggregate demand will be stronger.
- A person's desire for inexpensive fast food is likely to decline as their income rises, but their desire for more costly steak may increase.
To know more about the aggregate demand and aggregate supply, here
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