Country M's firms are likely to use a <u>higher </u>degree of financial leverage than U.S. firms. The cost of capital will likely be <u>lower </u>than that of the U.S. firm.
<h3>What is financial leverage?</h3>
Financial leverage is known to be the use of borrowed money that is a debt to handle or finance the buying of assets with the view that the income or capital gain or profit from the new asset will be more than the cost of borrowing.
Note that Country M's firms are likely to use a <u>higher </u>degree of financial leverage than U.S. firms. The cost of capital will likely be <u>lower </u>than that of the U.S. firm.
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Answer:
The answer is no but E.
Explanation:
The answer is all of the above.
Net working capital is the difference between current asset and current liability.
Current assets are the type of assets that have a life-span of a year or less e.g inventory
Current liability is the obligation that must be repaid within a year. For example, accounts payable, notes payable, accruals etc.
Therefore, all of the above is the answer
The equilibrium interest rate is 5 percent, the equilibrium quantity of loanable funds is increased to $250 billion and the government has a budget $100 billion.
Explanation:
The government enters the market when it has a surplus. The tendency of government budget is to rise the real interest rate and decrease investment. The private supply of the loanable funds will increase to match the quantity of loanable funds based on the government demand.
when the Government surplus is for $100 billion a year, the equilibrium interest rate falls to 5 percent and the equilibrium quantity of loanable funds increases to $250 billion a year.
Thus, The SLF curve is the supply of loanable funds curve and the PSLF curve is the private supply of loanable funds curve. The equilibrium interest rate is increased to 5 percent, the equilibrium quantity of loanable funds is $ 250 billion and the government has a budget of $100 bilion.
Answer:
Competition is a driving force of free enterprise, resulting in greater efficiency and lower prices for the consumer. Countries embracing free market principles benefit from a higher standard of living.
Explanation:
:-)
Answer:
The answer is B.
Explanation:
Contractionary monetary policy is a policy adopted by Central banks when the economy is heating up i.e when the economy is moving faster than it can withstand. So this is used to slow down the economy.
There is always a higher inflation and money supply is high when the economy is heating up.
So to contract or slow down the economy, the central banks increase the interest rate, this increase in interest rate discourages borrowing from households, businesses and even commercial banks and when there is a low demand for borrowed fund, money supply (total quantity of money in circulation) decreases.