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olga55 [171]
3 years ago
11

The economy begins in equilibrium at point E, representing the real interest rate r1 at which saving S1 equals desired investmen

t I1. What will be the new equilibrium combination of real interest rate, saving, and investment if the government cuts spending, holding other factors constant?
Business
1 answer:
ICE Princess25 [194]3 years ago
6 0

Answer:

The new equilibrium combination will be at increases I1 to I2, S1 to S2, and r1 to r2.

Explanation:

Saving or national saving of an economy is amount  of national income or gross domestic product (GPD) that is not spent by the government. Using a simple example of a closed economy, i.e. an economy with no foreign trade in terms and imports, this statement can be mathematically as follows:

Y = C + I + G .......................................... (1)

Where,

Y denotes national income (GDP), C denotes consumption, I denotes Investment, and G denotes government spending.

To get investment, equation (1) can be rewritten by making I the subject of the formula as follows:

I = Y - C - G ......................................... (2)

In economics, saving (S) is always equal to investment (I). Therefore, equation (2) can be rewritten by equating it with I as follows:

I = Y - C - G = S

I = S

Both I and S can be written as initial saving (S1) and initial Investment (I1), and we therefore have

I1 = S1 ................................................................. (3)

Equation (3) is an equilibrium E which implies that Investment (I1) is equal to saving (S1) at the initial real interest rate (r1). Real interest here denotes the price for saving and investment.

Since saving of an economy is amount  of national income or GDP that is not spent by the government, a cuts in the government spending will cause saving to rise, i..e. to S2. Since saving and Investment is always equal to investment, Investment will also rise, i.e. to S2. Increase in I1 to I2 and also in S1 to S2, will cause the real interest rate to rise to r2 at E2 which is the new equilibrium combination of real interest rate, saving, and investment

Therefore, the new equilibrium combination of real interest rate, saving, and investment if the government cuts spending, holding other factors constant, will be at increases in I1 to I2, S1 to S2, and r1 to r2.

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Petra, Inc. has collected the following data.​ (There are no beginning​ inventories.): Units produced 580 units Units sold 580 u
Debora [2.8K]

Answer:

Operating income is $28,197.2

Explanation:

In order to calculate operating income, first we have to calculate total product cost per unit which is calculated as shown below:

Direct material per unit = $30

Direct labor = $35

Variable manufacturing overhead per unit = $10

Fixed manufacturing overhead per unit = 23,000 ÷ 580 = $39.66 per unit

Product cost per unit = 30 + 35 + 10 + 39.66 = $114.66

Now compute operating income as shown below:

Total sales = Per unit sales price × Units sold

                  = $230 × 580

                  = $133,400

Cost of goods sold = Units produced × product cost per unit

                                = 580 × 114.66

                                = $66,502.8

Gross profit = Sales - COGS

                    = 113,400 - 66,502.8

                    = $46,897.2

Fixed selling and administrative cost = $10,000

Variable selling and administrative cost = 15 × 580 = $8,700

Total selling and administrative cost = 10,000 + 8,700 = $18,700

Operating income = Gross profit - total selling and administrative cost

                               = $46,897.2 - 18,700

                               = $28,197.20

7 0
3 years ago
8. The TS Company has budgeted sales for the year as follows: Quarter 1 Quarter 2 Quarter 3 Quarter 4 Sales in units 10,000 12,0
Finger [1]

Answer:

Results are below.

Explanation:

<u>First, we need to determine the production budget using the following formula:</u>

Production= sales + desired ending inventory - beginning inventory

Quarter 1:

Production= 10,000 + (0.25*12,000) - 2,500

Production= 10,500

Quarter 2:

Production= 12,000 + (0.25*14,000) - 3,000

Production= 12,500

Quarter 3:

Production= 14,000 + (0.25*16,000) - 3,500

Production= 14,500

Quarter 4:

Production= 16,000 - 4,000

Production= 12,000

<u>Now, the direct material purchase budget:</u>

Purchases= production + desired ending inventory - beginning inventory

Quarter 1:

Purchase= 10,500*4 + (12,500*0.1) - 4,200

Purchase= 39,050 pounds

Quarter 2:

Purchase= 12,500*4 + (14,500*0.1) - 1,250

Purchase= 50,200 pounds

Quarter 3:

Purchase= 14,500*4 + (12,000*0.1) - 1,450

Purchase= 57,750 pounds

Quarter 4:

Purchase= 12,000*4 - 1,200

Purchase= 46,800 pounds

3 0
2 years ago
Macroeconomics is best defined as the study of
just olya [345]

Answer:

1. the overall operation of the national and global economy.

2. The B she received on the exam.

3. the slope of the graph is negative.

4. the slope of the graph is positive.

5. graphically illustrates the concept of scarcity.

6. increasing opportunity cost.

Explanation:

1. Macroeconomics is best defined as the study of the overall operation of the national and global economy.

Macroeconomics can be defined as the study of behaviors, performance and factors that affect the entire economy. Hence, it focuses on aggregate phenomena such as price level, economic growth, Gross Domestic Product (GDP), inflation, unemployment and national income levels with respect to the central bank, demand or supply shocks, government policies, aggregate spending and savings.

2. The opportunity cost of going to the beach is the "B" grade she received on the exam.

In Economics, opportunity cost also known as the alternative forgone, can be defined as the value, profit or benefits given up by an individual or organization in order to choose or acquire something deemed significant at the time.

Thus, the value of the opportunities lost (scoring an "A" grade) by going to the beach is the opportunity cost of her choice.

3. When two variables have an inverse relationship, then the slope of the graph is negative.

An inverse relationship can be defined as a relationship between two variables, in which an increase in the value of one variable leads to a decrease in the value of the other variable i.e as the value of one variable becomes large, the value of the other variable becomes small.

4. When two variables have a direct relationship, then the slope of the graph is positive.

A positive relationship or correlation can be defined as the relationship between two variables in which there exist a direct relationship between them i.e as one variable increases, the other increases and vice-versa.

5. The production possibilities curve graphically illustrates the concept of scarcity.

The production possibilities curve (PPC) is also known as the production possibilities frontier (PPF) and its a curve which illustrates the maximum (best) combinations of two products that can be produce in an economy if they both depend on these factors;

1. Technology is fixed.

2. Resources are fixed.

6. A production possibilities curve that is concave or bowed out from the origin represents increasing opportunity cost.

The production possibilities curve (PPC) is depicted graphically as an arc, by representing one good on the y-axis and the other on the x-axis.

7 0
2 years ago
On January 1, 2017, Sheridan Company established a stock appreciation rights plan for its executives. It entitled them to receiv
Elza [17]

Answer:

$1,140,000

Explanation:

AS AT December 2018, the market price ended at 30 USD Which is 10 USD above pre established price on the 114,000 SARs

thus compensation for the year ended 2018 will be 10 x 114,000

7 0
3 years ago
Lisa’s pizza is trying to compete with the larger domino’s pizza down the street for customers. She feels she can deliver a bett
jolli1 [7]

Lisa's Pizza is trying to compete with the larger Domino's Pizza down the street for customers. Lisa here is trying to practice operations management.

More about operations management:

Operations management is a branch of management that focuses on planning, organising, and redesigning the production process for goods or services as well as business operations.

The management of business procedures to achieve the best level of productivity within an organisation is known as operations management (OM). In order to increase an organization's profit, it is concerned with transforming resources like labour and materials into products and services as effectively as feasible.

Teams in charge of operations management strive to produce the maximum net operational profit by balancing costs and revenues.

Learn more about Operations management here:

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#SPJ4

8 0
1 year ago
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