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4 years ago

Which statement describes how borrowers will most likely benefit when the Fed reduces reserve requirements?

2 answers:

7 0

The options given to the above question are as follows:
A. Loan requirements will likely be relaxed.
B. Interest rates will likely decrease.
C. Housing prices will likely decrease.
D. Investment opportunities will likely improve.

The correct option is B.
Reserve requirement refers to the amount of cash that the Federal board of governors requires the commercial banks to hold in reserve against deposits made by their customers. The amount of money hold in reserve determine the amount of cash that will be available to the banks to carry out their financial transactions. If the Federal reduces the reserve requirement for the commercial banks, then the bank will have more money to lend to the borrowers and this will reduce the interest rates on the loans given out by the banks.

VikaD [51]4 years ago

3 0

Answer:

A. Loan requirements will likely be relaxed.

<u>B. Interest rates will likely decrease. </u>

C. Housing prices will likely decrease.

D. Investment opportunities will likely improve.

Explanation:

I just took the test

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In the context of the competitive environment of a business, the best measure of value is the:

VARVARA [1.3K]

Answer:

C. size of the gap between product benefits and price

Explanation:

I will use a scenario to explain this. Let's say that there is 2 machines. Machine A and Machine B.

- The cost of Machine A is $10,000. You can make around 2000 units of goods with it.

- The cost of Machine B is $50,000. You can make around 5000 unites of goods with it.

From the sample above, we can say that machine B is definitely better than machine A in terms of performance. BUT, machine A held more value compared to machine B.

To produce 1 units of goods, you need to sacrifice around $5 with machine A. If you use machine B, you need to sacrifice around $10 for a single good

3 0

3 years ago

Determine the profit-maximizingLOADING... prices when a firm faces two markets where the inverse demand curves are Market A: p

Gala2k [10]

Answer:

Market A: $P_{A} = 20.00$

Market B: $P_{B} = 20.00$

Explanation:

Market A: $P_{A} = 80 - 2Q_{A}$ ........................ (1)

Market B: $P_{B} = 60 - 1Q_{B}$ ........................ (2)

MC = m = 20 ............................................... (3) for both markets

For Market A:

Profit maximizing price can be obtained when $P_{A} = m$

Therefore, we have:

$80 - 2Q_{A} = 20$

$80 - 20 = 2Q_{A}$

$60 = 2Q_{A}$

$Q_{A} = \frac{60}{2}$

$Q_{A} = 30$

Substituting 50 for $Q_{A}$ in equation (1), we have:

$P_{A} = 80 - 2(30)$

$P_{A} = 80 - 60$

$P_{A} = 20.00$

For Market B:

Profit maximizing price can be obtained when $P_{B} = m$

Therefore, we have:

$60 - 1Q_{B} = 20$

$60 - 20 = 1Q_{B}$

$40 = 1Q_{B}$

$Q_{B} = 40$

Substituting 80 for $Q_{B}$ in equation (2), we have:

$P_{B} = 60 - 1(40)$

$P_{B} = 20.00$

8 0

4 years ago

4-55 A firm expects to install smog control equipment on the exhaust of a gasoline engine. The local smog control district has a

Kruka [31]

Answer:

the amount that should be paid is $11,292

Explanation:

The computation of the amount that should be paid is shown below:

Present worth is

= $10,000 + $75(P/A, 6%, 10) + $25(P/G, 6%, 10)

= $10,000 + $75 × 7.3601 + $25 × 29.6023

= $11,292

Hence, the amount that should be paid is $11,292

We simply applied the above calculation

8 0

3 years ago

Which of the following entries would be made to record the purchase of inventory on account, if a company uses the perpetual inv

jekas [21]

Answer:

C) a debit to Merchandise Inventory and a credit to Accounts Payable

Explanation:

The journal entry to record the purchase of inventory on account by using the perpetual inventory system is shown below:

Merchandise Inventory A/c Dr XXXXX

To Accounts Payable A/c XXXXX

(Being merchandise is purchase on credit)

Simply we debited the merchandise inventory account and credited the account payable account so that the correct posting can be done.

4 0

3 years ago

Ginny is considering an investment costing $55,000 that has cash flows of $35,000 in Year 2, $36,000 in Year 3, and −$5,000 in Y

denis-greek [22]

Answer:

Cumulative cash flows in year 0 = -$55,000

Cumulative cash flows in year 1 = -$55,000

Cumulative cash flows in year 2 = -$55,000 + $35,000 = -$20,000

Cumulative cash flows in year 3 = -$55,000 + 35,000 + $36,000 = $16,000

So, Payback period of three years =2+20000/36000 = 2.5555556 years

Now, as the payback period is less than three years, we should make the investment

However, I do not agree with the decision as payback method does not consider time value of money and ignores all cash flows beyond payback period and hence in this case it is ignoring cash flows in year 4 which is an outflow

NPV=-55000+0/1.08^1+35000/1.08^2+36000/1.08^3-5000/1.08^4=-90.3298767 As NPV is negative, let do not make the investment.

7 0

3 years ago