Answer:
See below.
Explanation:
For a, first we calculate the credit multiplier of the economy,
Credit multiplier = 1 / reserve ratio
Credit multiplier = 1 / 0.25 = 4
This means that any change in money supply will be 4 times as much in the economy, hence to induce a change of $120 billion, the Fed will decrease the money supply by 120/4 = $30 billion. This will increase the interest rates just enough to stabilize aggregate demand.
For b, we again start by calculating the credit multiplier.
Credit multiplier = 1/0.10 = 10
Since the Fed want to stimulate investment, it needs to use an expansionary monetary policy.
The Fed thus increases the money supply by 150/10 = $15 billion.
This will have the total effect of 150 billion on the whole thus achieving the Fed's objectives.
Hope that helps.
Answer:
Firm A will buy all of the firm B's pollution permits. Each one will cost between $100 and $200.
Explanation:
The firm B will gain from the trade of pollution permits. Firm A will need higher pollution permits since it emits 100 tons of chemicals into air and the cost for eliminating each ton is $200. This cost is higher than the cost to Firm B which is $100 only. Firm A will buy all the pollution permits from Firm B and there will advantage for the Firm B to gain from the trade.
Answer:
substitution and income effects will counteract each other totally
Explanation:
A labor supply curve is an economic analysis tool that shows the number or workers that are available to work or that can work at various wage rates.
The labor supply curve can either be bending backwards or sloping downwards or upward curving but it shows the relationship between labour and wage rates.
A labor supply curve can be affected by factors such as population, changes in social behaviour, opportunities in other markets, among other things.
From the above question, it is seen that a change in wage rate for Anthony from $25 to $29 does not affect his work hours positively of negatively. His work hours is the same despite the increase in hourly wage.
The effect of the Anthony sticking to 40 hours of work despite an increase in wage, which could have served as some motivation for him to put in more hours is his labor curve remains same. An increase in wage has done noting to affect the number of hours he works and as such his income vs work rate counters each other.
Cheers.
Answer:
The company’s systemic risk level (beta coefficient) is 2.44%
Explanation:
According to Capm Expected Return of Stock = Risk Free Rate + Beta*(Market Return - Risk Free Rate)
Beta = (Expected Return of Stock - Risk freed Rate)/(Market return -Risk free Rate)
= (12.5% - 1.5%)/(6% - 1.5%)
=2.44
%
Therefore, The company’s systemic risk level (beta coefficient) is 2.44%
Systematic risk is the risk which affects all the stocks of the economy. It cannot be diversified away. Example interest rate and inflation in the economy. Beta represents systematic risk of the company.
Answer:
Explanation:
The accounting equation is shown below:
Total assets = Total liabilities + Shareholder's equity
In the given transaction, the office equipment was purchased for $3,000 and it is paid immediately which means the balance of office equipment is increased and the cash balance is decreased.
It gives a positive impact on office equipment under fixed assets and a negative impact on the cash balance under the current assets.
