Answer:
Economists distinguish between autonomous and accommodating items used in BOP. The basic difference between the two is that whereas deficit or surplus in BOP occurs due to autonomous items, the accommodating items are taken to cover deficit (or surplus) in autonomous transactions
Answer:
The statement is true.
Explanation:
Investment expenditure refers to the expenses incurred on account of creating capital assets.
If a good is produced but is left unsold or not used in the production process, then, they result in increased inventory, which is considered as an investment by the firm.
For the purpose of GDP accounting, unsold goods in inventory are treated as purchased by the firm from itself. As such, they form a part of investment expenditure in the accounting period.
Answer:
$63.81
Explanation:
Current price is computed as follows:
= Expected dividend / (required rate of return - growth rate)
= $ 2 / (9% - 5%)
= $ 50
So, the price in 5 years will be as follows:
= Current price x (1 + growth rate)^5
= $ 50 x 1.05^5
= $50 x 1.2762
= $ 63.81
Answer:
b. $40,000
Explanation:
Step 1. Given information.
Loon Corporation distributes land with a basis of $350,000 and fair market value of $390,000 to Gerald in liquidation of his stock interest.
Step 2. Formulas needed to solve the exercise.
Gain to be recognized by Loon Corporation = Fair market value of the land - Basis
Step 3. Calculation.
Gain to be recognized by Loon Corporation = $390,000 - $350,000 = $40,000
Step 4. Solution.
The correct answer is 2nd. i.e $40,000