An increase in spending of $25 billion increases real gdp from $600 billion to $700 billion. The marginal propensity to consume must be "4".
<h3>
What do you mean by Marginal Propensity to consume?</h3>
The marginal propensity to consume is refers to as the proportion of any change in income that is spent on consumption.
In economics, this term is used to refer to the measurement made in order to determine consumption when the rent is increased by one unit. This measurement is nothing more than a mathematical relationship to calculate how people invest in consumption or save the income that is increased.
Calculation:
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Answer:
Ford's weighted average cost of capital is 8.22 %
Explanation:
Weighted Average Cost of Capital (WACC) is the minimum return that the company expect from a project. It shows the risk of the company.
Calculation of WACC
WACC = Cost of equity + Cost of preferred stock + Cost of debt
Capital Source Market Values Weight Cost Total Cost
equity $ 7 billion 29.17% 13.6% 3.97 %
preferred stock $ 2 billion 8.33% 12% 1.00 %
debt $ 15 billion 62.50% 5.2 % 3.25%
Total $ 24 billion 8.22 %
Cost of equity = Risk free rate + Beta × Risk Premium
= 4% + 1.2 × 8%
= 13.6%
Cost of preferred stock = Dividend/Market Price
= $ 3/ $ 25 × 100
= 12%
Cost of debt = interest × (1- tax rate)
= 8% × (1-0.35)
= 5.2 %
A. Companies have the information they need to effectively satisfy wants and needs in the marketplace.
Basically, "hearing the voice of the consumer" means taking the information that they have about what people want and actually putting the preferences of the consumer first.
Answer: C. Ethel should maintain an appropriate savings balance to cover unforeseen circumstances and should consider investment in a balanced mutual fund, which carries lower risk, higher yields than CDs, and the potential for growth
Explanation:
Given Ethel situation and history, Ethel should maintain an appropriate savings balance to cover unforeseen circumstances.
As a result of her age and due to the fact that she possesses a limited investment experience, there may be too much risk for her if she focuses on large-cap securities
Therefore, she should should consider investment in a balanced mutual fund, which carries lower risk, higher yields than CDs, and the potential for growth.
Answer:
c
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