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sergeinik [125]
3 years ago
15

Consider the portfolio choice theory of money demand. how do you think the demand for money will be affected during a hyperinfla

tion​ (i.e., monthly inflation rates in excess of​ 50%)?
Business
2 answers:
IrinaK [193]3 years ago
8 0

Answer:

Explanation:

During inflation, it is generally known that the demand for a good exceeds its supply, or the demand for a good remains the same, whereas its supply is smothered.

Inflation growing at an accelerated rate is known as hyperinflation.

According to the portfolio choice theory of money demand, the demand for money is affected by inflation risk. Higher fluctuations in the real return of money would arise due to the hyperinflationary environment, this thereby causes the demand for money to decrease.

Instead of holding onto money, people would start investing in other assets, whose real returns are not adversely affected by hyperinflation.

AleksAgata [21]3 years ago
6 0

Answer:

The demand for money decreases sharply.

Explanation:

The portfolio choice and Keynes's theory of demand for money both proposes that as the returns expected on money falls, its demand also falls. When there is an increase in interest rate, it leads to a decrease in the expectation placed on returns on money thus leading to a decrease in demand for money.

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Microsoft presently pays no dividend. You anticipate Microsoft will pay an annual dividend of $0.60 per share two years from tod
Scorpion4ik [409]

Answer:

The value of this stock today should be $6.22

Explanation:

The company will start paying dividends 2 years from today that is at t=2. The dividends received 2 years from today can be denoted as D2. The constant growth model of DDM will be used to calculate the price of this stock at t=2 as the growth rate in dividends is constant forever.

The price at t=2 will then be discounted back to its present value today to calculate the price of this stock today.

The price of this stock at t=2 will be,

P2 = D2 * (1+g) / (r - g)

P2 = 0.6 * (1+0.04)  /  (0.12 - 0.04)

P2 = $7.8

The value of this stock today should be,

P0 = 7.8 / (1+0.12)^2

P0 = $6.218 ROUNDED OFF TO $6.22

7 0
3 years ago
Read 2 more answers
An economy in which more effort is devoted to the production of services than to the production of goods is called the:
kirza4 [7]
The economy is the service economy
4 0
3 years ago
Your employer withholds money from each paycheck. what is this money used for?
sukhopar [10]
some of their employees' pay in order to cover payroll taxes and (((income tax))).Money may also be deducted, or subtracted, from a paycheck to pay for retirement or health benefits.
6 0
2 years ago
Credit offered in the form of ____________ is most common in department and clothing stores and other high-volume outlets, where
GuDViN [60]

Answer:

retail charge cards

Explanation:

A credit card can be defined as a small rectangular-shaped plastic card issued by a financial institution to its customers, which typically allows them to purchase goods and services on credit based on the agreement that the amount would be paid later with an agreed upon interest rate.

Hence, the use of credit cards by consumers broadens a small company's customer base.

This ultimately implies that, small businesses or companies who avail their customers the opportunity to pay using a credit card will increase the number of customers that would patronize them because they are typically buying the goods and services on credit.

Generally, there are three (3) main types of credit card and these includes;

I. Debit card.

II. Prepaid card.

III. Retail charge cards.

A retail charge card can be defined as a type of credit card commonly issued by retailers to their customers in order to avail the customers an ability to charge their goods and services to a specific amount that has been established prior to a purchase.

Hence, it is most common in merchant department, car rental firms, oil companies, clothing stores and other high-volume outlets, where customers are likely to make several purchases each month.

5 0
3 years ago
In activity-based costing, the activity rate for an activity cost pool is computed by dividing the total overhead cost in the ac
chubhunter [2.5K]

Answer:

the total activity for the activity cost pool.

Explanation:

In Accounting, costing is the measurement of the cost of production of goods and services by assessing the fixed costs and variable costs associated with each step of production.

Generally, an activity-based costing uses multiple cost pools such as manufacturing cost or customer services and multiple cost drivers such as direct labor hours worked, number of changes used in engineering department, etc.

Cost pool is simply the amount of money spent by a firm on a particular activity.

In activity-based costing, the activity rate for an activity cost pool is computed as;

Activity rate = total overhead cost/activity for the activity cost pool.

8 0
3 years ago
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