Using monetary policy, more specifically short-term interest rates, if the economy is facing a recessionary gap, we will decrease the interest rate and increase the aggregate demand.
What is Monetary policy?
The central bank's macroeconomic policy is known as monetary policy. It is a demand-side economic strategy used by a nation's government to achieve macroeconomic goals including inflation, consumption, growth, and liquidity. It involves managing the money supply and interest rate.
The decisions made by central banks to affect the cost and accessibility of money in an economy are known as monetary policy. Interest rate changes and adjustments to bank reserve requirements are examples of monetary policy strategies. The Federal Reserve frequently employs the discount rate, open market operations, and reserve requirements as its three primary monetary policy tools.
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Answer:
13.10%
Explanation:
Required return = Risk-free rate + (Beta * Market risk premium) ...... (1)
Where;
Required return = ?
Risk-free rate = 4%, or 0.04
Beta = 1.3
Market risk premium = 7%, or 0.07
Substitute the values into equation (1), we have:
Required return = 0.04 + (1.3 * 0.07) = 0.1310, or 13.10%
Therefore, the required return on Hughes Corporation stock is 13.10%.
Answer:
D. Inventory levels are determined as the trade-off between losing the margin on additional sales and the costs of excess inventory.
Explanation:
Option B is wrong because net working capital = current assets - current liabilities, and inventory is a current asset.
Options A and C may or may not be true depending on the company's costs. Holding costs include storage costs, insurance, damaged goods or even spoilage. Depending on the industry, e.g. dairy products, they might be larger than financing costs. But for other industries, e.g. microchips, holding costs are probably much lower than financing costs (a lot of small but expensive goods).
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