Answer:
economic (or business) cycles are less severe.
Explanation:
If the wages follow the general price level, it means that they will follow the inflation rate. When the economy is strong and inflation might rise, then the wages should increase accordingly. When the economy is starting to enter a recession then the inflation rate will reduce, so wages will not increase as much (if any increase at all).
This type of economic policy favors expansion cycles since private consumption is the main component of the GDP and also helps when the economy enters a recession because the wages will follow inflation rate which will help make the recession less severe and hopefully shorter.
One basic concept for this to work is that inflation is always a positive number, countries rarely (if ever) go through deflation processes.
For a given period of time, as the discount rate increases, the present value factor decreases.
<h3>What is discounted present value?</h3><h3>Discount Rate for Finding Present Value</h3>
The discount rate is the investment rate of return that is applied to the present value calculation.
In other words, the discount rate would be the forgone rate of return if an investor chose to accept an amount in the future versus the same amount today.
<h3>Why present value is important?</h3>
Present value is important because it allows investors to compare values over time.
PV can help investors assess future financial benefits of current assets or liabilities.
Used in areas like financial modeling, stock valuation, and bond pricing, based on its future returns, investors can calculate present value.
Learn more about present value here:
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Answer:
c. the dollar buys fewer euros. It will take more dollars to buy a good that costs 50 euros.
Explanation:
When a currency depreciates, it will decrease their value in relathinship wth the other currency.
This means the dollar will buy less euros.
This makes statment A and D FALSE.
If the dollar is worth less then, the amount of dollar required for a given amount (50) will be higher,
it takes more dollars to buy 50 euros of goods.
Option C is the only statment which express both situation.
