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inn [45]
3 years ago
13

2) Economic Growth: Use the PPF from above to illustrate the effects of saving and investment upon national GDP. Use a PPF to sh

ow what happens when the society decides to spend most of its income on donuts (consumer goods). Show what happens when the society decides to spend most of its income on machine tools
Business
1 answer:
Inessa [10]3 years ago
6 0

Answer and Explanation:

Economic Growth can be defined as an increment in production capacity of an economy using all its available resources. The PPF illustrates the largest possible quantity of goods and services a nation can produce base on its available resources. An outward shift in the economy’s production possibility frontier (PPF) depicts  a raise in productive capacity of an economy.  An outward shift implies that an economy has capacity to  increase its production outputs. This can be as a result of   the economy employing new technology, allowing specialization, increasing its labour force, using new production approaches etc. Likewise, an inward shifting PPF implies an economy has witness a loss or exhaustion of some of its scarce resources and it will culminate into reduction in an economy’s productive potential.

Effects of saving and investment upon national GDP

level of savings direct related to the level of investment, investment feeds on available finance from saving. If more people save, the banks will be able  to lend more to firms to support their investments.

low savings and investment implies a PPF inward shift. low savings  in economy implies that the economy is opting for short-term consumption over long-term investment, and this will lead to future undue pressure on available infrastructures ad resources.

spending  on consumer goods vs capital goods effect on the economy

In the short run, the economy must prefer using available resources to produce capital rather than consumer goods. Standards of living will be affected, as private consumption will have access to fewer resources. However, in the longer run, the raised production of capital goods will boost  the production of more consumer goods ad therefore standards of living will experience more increase than they would have witness if the economy had spent most of its income on consumer goods.

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A. Money taken from your gross pay that you have no control over
zloy xaker [14]
1. Gross income - h. Total income before any deductions are taken

2. Net income - f. Take–home pay

3. Voluntary salary deduction - j. Money you have given

4. Involuntary salary deduction - a. Money taken from your gross pay that you have no control over

5. Fixed expenses - e. Expenditures that are constant from one time period to another

6. Discretionary spending  - b. Expenditures that are under your control

7. Fixed income - i. Income that does not vary from one time period to another

8. Principal - d. The initial amount of money that was invested or borrowed

9. Salaried employee - g. Someone who receives a regular salary for employment

10. Insolvent - c. Unable to discharge liabilities or repay debts
4 0
3 years ago
A firm has adopted a policy whereby it will not seek any additional external financing. Given this, what is the maximum growth r
VashaNatasha [74]

Answer:

The maximum growth rate to my calculations is 8.32%, since it is closer to option E), I´d choose E) 8.37%

Explanation:

Hi, in order to find the growth rate given all the info of the problem, we need to use the following formula.

g=b*R

Where:

g = growth rate

b=retention ratio

R = return on equity

Since R = Earnings / Equity, and our dividend payout ratio (equals to 1 - b)our fromula changes to:

g=(1-Payout)*\frac{NetIncome}{Equity}

So, everything should look like this:

g=(1-0.25)*\frac{32,600}{294,000} =0.0832

So, the growth rate is equal to 8.32% but this option is not available, therefore we´ll go for the closest one, that is E) 8.37%.

Best of luck.

7 0
3 years ago
You own a portfolio that has $2,650 invested in Stock A and $4,450 invested in Stock B. If the expected returns on these stocks
barxatty [35]

Answer:

9.88%

Explanation:

Calculation for the expected return on the portfolio

First step is to find Total portfolio vale using this formula

Total portfolio vale=(Stock A portfolio + Stock B portfolio)

Let plug in the formula

Total portfolio vale= (2,650+4,450)

Total portfolio vale= 7,100

Second step is to calculate for the Expected portfolio return of Stock A by dividing Stock A portfolio by the Total portfolio vale then multiply it by the expected returns percentage

Expected portfolio return Stock A = 2,650 / 7,100

Expected portfolio return Stock A = 0.3732 *0.08

Expected portfolio return Stock A =0.02986

The third step is to calculate for the Expected portfolio return of Stock B by dividing Stock B portfolio by the Total portfolio vale then multiply it by the expected returns percentage

Expected portfolio return Stock B=$4,450/$7,100

Expected portfolio return Stock B=0.6268 *0.11 Expected portfolio return Stock B= 0.06895

The last step is add up the expected return on the portfolio for both Stock A and Stock B

Using this formula

Expected return on the portfolio=(Stock A Expected return on the portfolio + Stock B Expected return on the portfolio)

Let plug in the formula

Expected return on the portfolio=0.02986+0.06895

Expected return on the portfolio= 0.0988 *100 Expected return on the portfolio= 9.88%

Therefore the expected return on the portfolio will be 9.88%

6 0
3 years ago
Lindon Company is the exclusive distributor for an automotive product that sells for $40 per unit and has a CM ratio of 30%. The
allochka39001 [22]

Answer:

Variable Cost  -$448,000  

Explanation:

The contribution margin formula it's : Net Sales - Variable Costs: Contribution Margin

The contribution margin indicates how much money the company has to cover its expenses not included in the cost of the goods or the variable costs, it is the remaining amount that is used to pay the administrative and sales expenses.

In this case:

Sales : 16.000 x $40 (price) = $640,000

Contribution Margin 30% which means 30%*$640,000 = $192,000

The difference it's the Variable Costs = -$448.000  

6 0
3 years ago
If you are a director of a tea company, what will you do with functional management (POLC)? You are required to make a detail pl
stepan [7]

Answer:

Make someone else director

Explanation:

I would be too lazy to do that. ;)

3 0
3 years ago
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