The nonaccelerating inflation rate of unemployment is the unemployment rate associated with low inflation and low unemployment.
The lowest level of unemployment that can exist in the economy before inflation begins to slowly increase is known as the non-accelerating inflation rate of unemployment (NAIRU).
Inflation is constant when it is at the NAIRU level; it rises when unemployment increases; it falls when unemployment declines.
The Federal Reserve has historically employed statistical models to place the NAIRU level between 5 and 6 percent unemployment despite the fact that there is no defined formula to calculate NAIRU.
The Federal Reserve's mission is to achieve maximum employment and price stability, and assessing the NAIRU level while looking into inflation and unemployment aids it in achieving these goals.
Hence, The nonaccelerating inflation rate of unemployment is the unemployment rate associated with low inflation and low unemployment.
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Companies with a high degree of operating leverage (DOL) tend to have a higher percentage of fixed costs, which remain largely constant regardless of production volume, whereas companies with a low degree of operating leverage tend to have cost structures with a higher proportion of variable costs that are closely related to production volume.
A cost-accounting method called operating leverage assesses how much a company or project can raise operating income by raising revenue. Businesses with high operating leverage generate revenues with low variable costs and large gross margins. Operating leverage is used to calculate a company's break-even point, which also helps identify the appropriate selling prices to pay all costs and turn a profit. Businesses with substantial operational leverage must pay a higher monthly amount of fixed costs regardless of whether they sell any units of product. The potential risk from forecasting risk, where a relatively modest inaccuracy in sales forecasting can be compounded into huge errors in cash flow predictions, increases with the level of operating leverage.
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First we calculate the return on equity(ROE) based on the Du-pont equation
ROE = Net profit margin * Total asset turnover * equity multiplier
Total asset turnover = 1/capital intensity =1/1.08
Equity multiplier = 1+ debt to equity = 1+ 0.54 = 1.54
net profit margin = 6.2% = 0.062
ROE = 0.062*1/1.08*1.54 = 0.0884 = 8.84%
Sustainable growth rate = ROE*(1- dividend payout)
Sustainable growth rate = 0.0884*(1-0.4)
Sustainable growth rate= 0.053 = 5.3%
Sustainable growth rate = 5.30%
Answer:
consumers would find it cheaper to buy gasoline
Explanation:
In the short run a tax cut or tax suspension as we have In this question is able to increase demand because it increases peoples disposable income. This tax cut of $0.4 would remove burden on gasoline consumers. By removing the tax on gasoline the price of gasoline would become lower and consumers would find it easier and cheaper to purchase