One of the methods of computing Future Values for multiple cashflows is to compound the accumulated balance forward <u>one year </u>at a time.
<h3>What are Future Values?</h3>
This refers to the value of an investment or current asset at a preselected future date subject to a rate of growth.
This metric is used by investors to determine which investments are worth considering now.
Another method for calculation FV is to first compute the future value of each cash flow (expected revenue) then sum them all up.
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Answer:
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Answer:A
Explanation:
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Answer:
For the Economist A the spending multiplier is = 8, the tax multiplier = 4, the increase in spending is = $4 billion, the tax cut is = $8 billion.
For the Economist B, the spending multiplier is =4, the tax multiplier = 2, the increase in spending is = $8 billion, the tax cut is = $16 billion.
Explanation:
Solution
Given that:
(1)The Economist A
The Spending multiplier = 8
In closing the output gap of $32 billion, required increase in spending = $32 billion / 8 = $4 billion
Thus,
The tax multiplier = 4
To close output gap of $32 billion, required decrease in tax = $32 billion / 4 = $8 billion
(2)The Economist B
Now,
The spending multiplier = 4
To close output gap of $32 billion, required increase in spending = $32 billion / 4 = $8 billion
So,
Tax multiplier = 2
To close output gap of $32 billion, required decrease in tax = $32 billion / 2 = $16 billion