If an economy is in short-run equilibrium that is below potential, the forces that will bring the economy to long-run equilibrium are new price level, nominal salaries, prices, and perceptions decrease.
Real GDP equilibrium and the short-run price level are determined by the junction of the economy's aggregate supply and demand curves. Its long-run equilibrium is determined by where aggregate demand and aggregate supply intersect.
The concept of the long run states that all markets are in equilibrium, all prices have fully adjusted, and all quantities are in equilibrium. The short-run, in contrast, is characterised by some limitations and a partial state of market equilibrium.
When enough time has passed and no factors have been fixed, the overall supply shifts from the short to the long term. Then, the new short-run and long-run equilibrium states are contrasted with that condition of equilibrium.
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Answer:
8.67%
Explanation:
The computation of cost of equity is shown below:-
Before capitalization the value of equity = Interest and taxes × (1 - tax rate) ÷ Cost of capital
= $1,500 × (1 - 0.35) ÷ 0.08
= $1,500 × 0.65 ÷ 0.08
= $12,188
Value of firm with debt = The value of equity before capitalization + (Bonds outstanding × tax rate)
= $12,188 + ($3,500 × 0.35)
= $13,413
After recapitalization debt equity ratio = Cost of capital + ((Cost of capital - Coupon percentage) × Tax rate × (1 - tax rate)
= 0.08 + ((0.08 - 0.05) × (0.35) × (0.65))
= 0.08 + ((0.03) × (0.35) × (0.65))
= 8.67%
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Answer: b. The company will be flooded with applications from individuals who are barely qualified.
Explanation:
By putting job advertisements on popular websites which are full of people looking for jobs, the company will attract people who are underqualified but apply anyway on the off chance that they are called for an interview. The company will incur costs sifting through the applications to find suitable candidates.
This will be a waste of the company's resources as those resources could have been directed at getting prospective employees that would be a better fit with the company and have the relevant qualifications. This could have been done by going to a recruiting agency for instance.
