Answer:
decrease, upward
Explanation:
When Italian interest rates increase, their demand in Italy would increase, hence a downward pressure on the supply of the same would be required. as the demand of the currency in italy increases, its value also increases. hence there is an upward pressure on the value of the pound against the u.s. dollar.
When Megan purchased the Pepsi beverages and snacks to bring to her family's holiday celebration this represented the purchase of consumer goods. Consumer goods are anything from Pepsi products, to automobiles and refrigerators.
Answer:
it is an easiest type of business to set up because it requires small capital to start but has many disadvantages such as bearing all the risks alone.etc
Answer: reduced by $80 billion
Explanation:
An expansionary gap is when the actual output is more than the potential output. From the question, we are told that an economy is operating with output $400 billion above its natural level, and fiscal policymakers want to close this expansionary gap and that the central bank agrees to adjust the money supply to hold the interest rate constant, so there is no crowding out.
We are also given the marginal propensity to consume is 4/5, and told that the price level is completely fixed in the short run.
To close the expansionary gap, the government would need to reduce its spending. To solve this, we have to calculate the multiplier. This will be:
Multiplier = 1/(1 - MPC)
= 1/(1 - 4/5)
= 1/1-0.8
= 1/0.2
= 5
Therefore, the government expenditure or spending will be reduced by:
= $400 billion/5
=$80 billion
Answer:
moral hazard
Explanation:
Banks reduce the risk of moral hazard when they monitor and supervise how their clients are using the loans and credits made to them.
Some types of credits do not require any type of monitoring or control, e.g. a credit card which a client can use basically however he/she wants to. But other types of credit that are taken for purchasing assets, e.g. a mortgage, must be used by the bank's client to specifically carryout the intended activity.
In economics, moral hazard refers to the tendency that an economic party can engage in unusually risky activities because the capital (money) that they are investing is not theirs and the negative effects of a potential loss will be suffered most by other parties.
