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ra1l [238]
3 years ago
9

If the nominal exchange rate between the US dollar and the Canadian dollar is C $ 0.89 to the US dollar, how many dollars is req

uired to buy a $ 2.5 CAD product?Describe and explain the tools used by the central bank to reduce money supply.
Business
1 answer:
Olin [163]3 years ago
3 0

Answer:

1) 2.8 USD

2)There are several methods:

1) Modifying Reserve Requirements

2) Changing Short-Term Interest Rates

3) Conducting Open Market Operations

Explanation:

I) First of all, the nominal exchange rate describes how much foreign currency can be exchanged for a unit of domestic currency, but the real exchange rate indicates how much the goods and services in the domestic country can be exchanged for the goods and services in a foreign country.

If 1USD=0.89CAD, then 1 CAD=1/0.89=1.12USD

Then 2.5 CAD = 2.5*1.12= 2.8 USD so we will need 2.8 USD to get 2.5 CAD.

II) As we know, the movement of the money supply is the responsibility of the monetary policy activities by central banks. There are several methods:

1) Modifying Reserve Requirements: means that it is possible to influence by modifying the reserve requirements to increase or decrease the money supply. More deeply, this modification refers to the amount of funds banks have to keep against deposits in bank accounts. By lowering the reserve requirements, banks are able to loan more money, which grow the overall supply of money in the economy. Conversely, by increasing the banks' reserve requirements, it will be possible to decrease the size of the money supply.

2) Changing Short-Term Interest Rates: means that it is possible to change the interest rates in short terms to alter the money supply. It’s all about the changing the discount rates. By lowering the rates, it is possible increase the money supply and boost economic activity.  

3) Conducting Open Market Operations: means that it is possible to increase or decrease the money supply conducting open market operations, which affects the funds rate. So the authority who deals with the monetary policy buys and sells government securities in the open market. If the authority wants to increase the money supply, it will purchase government bonds as a result this supplies the securities dealers who sell the bonds with cash, increasing the overall money supply. However, if the authority wants to decrease the money supply, it will send bonds from its account, thus taking in cash and removing money from the economic system as a result, adjusting the funds rate is a heavily anticipated economic event.

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What term is used to describe spread-out or low-density development beyond the edge of services and employment
Zolol [24]

Answer:

Sprawl

Explanation:

Sprawl can be defined as the situation where an urban settlement expands into nearby country area at the edge of a city .

Factors that lead to sprawl are population and income growth, low cost of living , road network , unlimited use of auto, etc.

Urban sprawl is characterized by uncoordinated , haphazard,and poorly planned urban development. If not properly managed , these could lead to poor environmental conditions like air pollution ,ground level smog and car traffic.

4 0
3 years ago
Sony introduces a new compact music player to compete with Apple's iPod that carries a two-year warranty against manufacturer's
iris [78.8K]

Answer: $651,000

Explanation:

From the above question, Apple's iPod carries a two-year warranty against manufacturer's defects.

warranty costs are expected to be approximately 3% of sales.

Total sales are $30.7 million, and actual warranty expenditures are $270,000.

Total warranty cost = $30.7 million x 3% = $921,000

During the 1st year only $270,000 of warranty expenses was made.

Therefore the company will carry as liability at the end of the year a total of $921,000 - $270,000 = $651,000

3 0
3 years ago
The danger associated with the abuse of a vehicle is compared to the danger of _____
Dmitrij [34]
The danger associated with the abuse of a vehicle is compared to the danger of a loaded gun that could cause injury or worst death if being abused. Most tragic incidents in the streets/roads are due to vehicular accidents that cause many damages, including the loss life.

3 0
3 years ago
a1. Lobo Company purchased equipment for $40,000 with a useful life of five years and no expected salvage value. Prepare the adj
Pavel [41]

Answer:

a1. Dr Depreciation Expense $8,000

Cr Accumulated Depreciation $8,000

a2. $24,000

b2. December 31

Dr Wages Expenses $440

Cr Wages payable $440

Explanation:

a1. Preparation of the adjusting entry for the first year using the straight-line depreciation method.

Dr Depreciation Expense $8,000

Cr Accumulated Depreciation $8,000

($40,000/5 years)

a2. Computation of the book value at the end of the second year of the equipment's life.

First step is to calculate the First year Book value

First year Book value=$40,000/5 years

First year Book value=$8,000

Second step is to calculate the Second year Book value

Second year Book value=($40,000+$40,000)/5 years

Second year Book value=$80,000/5 years

Second year Book value=$16,000

Now let compute the book value at the end of the second year of the equipment's life.

Book value at the end of the second year=$8,000+$16,000

Book value at the end of the second year=$24,000

Therefore the Book value at the end of the second year will be $24,000

b1. Preparation of the adjusting entry on December 31

December 31

Dr Wages Expenses $440

Cr Wages payable $440

($2,200/5 years)

3 0
3 years ago
Consider a stock priced at $30 with a standard deviation of 0.3. The risk-free rate is 0.05. There are put and call options avai
Elza [17]

Answer:

-$11

Explanation:

Covered Call involves Buy stocks and Sell call options

Earning $2.89 by selling call. So, at  stock price of $27, the payoff from options is $2.89 per option

Options Profits = $2.89 * 100

Options Profits = $289

Profit of stock = ($27 - $30) * 100

Profit of stock = -$300

Investor Net Profit = Profit of stock + Options Profits

Investor Net Profit = -$300 + $289

Investor Net Profit = -$11

6 0
3 years ago
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