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Hoochie [10]
3 years ago
11

In January, the interest rate is 5 percent and firms borrow $50 billion per month for investment projects. In February, the fede

ral government doubles its monthly borrowing from $25 billion to $50 billion. That drives the interest rate up to 7 percent. As a result, firms cut back their borrowing to only $30 billion per month.
Which of the following is true?

a. There is no crowding-out effect because the government's increase in borrowing exceeds rm's decrease in borrowing.
b. There is a crowding-out effect of $20 billion.
c. There is no crowding-out effect because both: government and firms are still borrowing a lot.
d. There is a crowding-out effect of $25 billion.
Business
1 answer:
dem82 [27]3 years ago
5 0

Answer:

B, There is a crowding-out effect at $20,000,000

Explanation:

Crowding ot effect is an economic theory that shows that the more the public sector of an economy spends through borrowing, the lesser or non-existent is the ability of the private sector to borrow or spend. This is because there is a lot of deficit and this drives the interest rates higher. This goes on to affect the personal consumption of goods and services as well.

In the above question, because the government has increased its borrowing from $25 billion to $50 billion, firms wuld have to cut their own borrowing levels because it would require more than the usual amount to offset the loans the firms are used to taking seeing that interest rates have moved form 5% to 7%.

Cheers. I hope this is of help.

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Find the present value of the following stream of cash flows assuming that the firms opportuiny costs is 9 percent. 1-5 years 10
Yanka [14]

Answer:

   ∑( Cash flow × PVF) = 79,347

Explanation:

Given:

Opportunity cost = 9%

Cash flow for 1-5 years = 10,000

Cash flow for 6-10 years = 16,000

Now,

Present value factor (PVF) = \frac{\textup{1}}{\textup{(1 + 0.09)^n}}

here, n is the year

For year 1 to  5

Year             Cash flow             PVF             Cash flow × PVF

1                     10000             0.9174             9174

2                     10000             0.8417             8417

3                      10000             0.7722             7722

4                      10000             0.7084             7084

5                      10000             0.6499             6499

for years 6 to 10

Year             Cash flow             PVF             Cash flow × PVF

6                      16000              0.5963             9540.8

7                      16000              0.547             8752

8                      16000              0.5019             8030.4

9                      16000             0.4604             7366.4

10                      16000             0.4224             6758.4

========================================================

                                          ∑( Cash flow × PVF) = 79,347

========================================================

taking the PVF to 5 decimal places will make 79,347 ≈ 79,348

8 0
3 years ago
A bottling plant fills 2,400 bottles every two hours. The lead time is 40 minutes and a container accommodates 120 bottles. The
Ludmilka [50]

Answer:

= 7.77

≅ 8 kanban cards

Explanation:

 K = \frac{DL(1 + S)}{C}

K = Number of kanban card sets

D = Average number of units demanded over some time period

L = Lead time to replenish an order

S = Safety stock expressed as a percentage of demand

C = Container size

where,

D = If the average number of units demanded is 2400 and the time period is 2 hours, then that's 1200 in an hour, 1200 in 60 minutes, 20 in one minute.  

L = 40

S = 0.1

C = 120

K = 20 * 40 (1 + 0.1) / 120

K = 7.77

approximately

≅ 8 kanban cards

4 0
3 years ago
A. Construct an amortization schedule for the $300,000 loan with a 2.2% interest rate compounded monthly. The loan will be paid
Gala2k [10]

Answer:

since there is not enough room here, I prepared two amortization schedules on an excel spreadsheet and I attached them

Explanation:

in order to determine the monthly payment, we can use the formula to calculate present value of an annuity:

PV = annuity payment x annuity factor

annuity payment = PV / annuity factor

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I used an annuity calculator to determine the annuity factor

annuity payment = $300,000 / 153.1964438 = $1,958.27

we use the same formulas for the second question:

PV = annuity payment x annuity factor

annuity payment = PV / annuity factor

  • PV = $300,000
  • annuity factor for 2.7% / 12 = 0.225% and 360 periods = 246.54977

I used an annuity calculator to determine the annuity factor

annuity payment = $300,000 / 246.54977 = $1,216.79

Download pdf
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Answer:

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To improve its standard of living, a nation’s economy must reach economic equity. It is important that everyone has the capability to access basic services and amenities in a country. Such access is an indicator or a person’s ability to earn wealth. 

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