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Law Incorporation [45]
3 years ago
13

At an inflation rate of 7 percent, the purchasing power of $3 would be cut in half in 10.25 years. how long to the nearest year

would it take the purchasing power of $9 to be cut to one-fourth if the inflation rate were only 6.5 percent
Business
1 answer:
lyudmila [28]3 years ago
7 0
The applicable formula is;
A = P(1-r)^n

Where;
A = Final purchasing power
P = Current purchasing power
r = inflation
n = Number of years when P changes to A

Confirming the first claim:
A = 1/2P (to be confirmed)
P = $3
r = 7% = 0.07
n = 10.25 years

Using the formula;
A = 3(1-0.07)^10.25 = 3(0.475) ≈ 3(0.5) = $1.5
And therefore, A = 1/2P after 10.25 years.

Now, give;
P = $9
A = 1/4P = $9/4 = $2.25
r = 6.5% = 0.065
n = ? (nearest year).

Substituting;
2.25 = 9(1-0.065)^n
2.25/9 = (1-0.065)^n
0.25 = (1-0.065)^n
ln (0.25)= n ln(1-0.065)
-1.3863 = -0.0672n
n = (-1.3863)/(-0.0672) = 20.63 years

To nearest year;
n = 21 years

Therefore, it would take approximately 21 years fro purchasing power to reduce by 4. That is, from $9 to $2.25.
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Answer:

a. a deficit, financed by borrowing in the capital markets, will increase the interest rate and reduce investment in the private sector.

Explanation:

Crowding out effect is when government borrowing from the capital markets leads to an increase in interest rate. this makes it more expensive for private sector to borrow and this reduces investment by private sector

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The real interest rate is equal to the:_________
ahrayia [7]

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D. nominal interest rate minus the inflation rate.

Explanation:

The real interest rate has been adjusted for inflation.

If nominal interest rate is 6% and inflation is 2%, then the real interest rate would be 4%.

I hope my answer helps you

4 0
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What is it called when banks record which account gives up money and which account receives money when a customer writes a check
swat32

Answer:

Check Clearing

Explanation:

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3 years ago
Calvin works in the accounting department for a textbook publishing firm preparing budgets and reporting production costs. What
Anarel [89]

Answer:

The answer is "managerial accountant".

Explanation:

The economic circumstances collect and earned value collection of data, evaluating and presenting financial information for the organization or the management team of the company. These statistics will then be used to make sensible financial decisions that really can benefit the overall growth of the organization.

Managers were employing company and organizational accounts to monitor internal financial processes, revenue, spending, and budget, submit reports, determine past trends and forecast future needs, and aid economic decisions.

5 0
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Which of the following is true? Overhead costs are often affected by many issues and are frequently too complex to be explained
11111nata11111 [884]

Answer:

Overhead costs are often affected by many issues and are frequently too complex to be explained by any one factor.

Explanation:

An overhead cost is not directly defined, to be that of material, or labor, or any other unit, overhead include, many factors, electricity usage, machine hours usage, water usage, or the capacity utilization of machinery, and various other factors. Since its computation and allocation is not clear many a times, a single overhead like that of electricity, has many factors, ideal usage of electricity, or machine hours used in production or simply the total cost of overheads for that month or building or etc: and its utilization. In short, to conclude we can state that overhead costs are complex in nature.

All other options are false.

Final Answer

Overhead costs are often affected by many issues and are frequently too complex to be explained by any one factor.

8 0
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