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kirill [66]
3 years ago
7

Suppose that a person's nominal income rises by 5 percent and the price level rises from 125 to 130. The person's real income wi

ll
a) rise by about 4 percent.
b) rise by about 1 percent.
c) remain constant.
d) fall by about 1 percent.
Business
1 answer:
IrinaVladis [17]3 years ago
4 0

Answer:

b) rise by about 1 percent

Explanation:

Given that a person's nominal income rises by 5 percent and the price level rises from 125 to 130.

Percentage increase in price level = (130 - 125)/125

                                                         = 5/125

                                                          = 1/25 = 4%

Difference between rise in the person's nominal income and rise in price level

= 5% - 4%

= 1%

Hence the right option is b) rise by about 1 percent.

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A nation's long-run growth rate is equal to the sum of: Group of answer choices labor force growth and capital growth. growth in
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labor force growth and productivity growth.

Explanation:

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The real GDP's growth rate is determined by two factors: labor force growth and productivity growth. So it is determined by the growth in productivity, demographic growth and labor force participation.

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3 years ago
Why is cvp analysis more difficult when using absorption costing than when using variable costing?.
laiz [17]

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<h3>What is a CVP analysis?</h3>

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4 0
2 years ago
Percival Hygiene has $10 million invested in long-term corporate bonds. This bond portfolio's expected annual rate of return is
BartSMP [9]

Answer:

Explanation:

a)We find the portfolio weights first. For a two security portfolio

sP^2 = x_1^2s_1^2 + 2x_1x_2s_1s_2r_1_2 + x_2^2s_2^2

(0.10)^2 = 0 + 0 + x_2^2(0.16)^2

 x2 = 0.625 and x1 = 0.375

Then

rp = x1r1 + x2r2

rp = (0.375 ´ 0.06) + (0.625 ´ 0.14)

  = 0.11

 = 11.0%

Hence, he can improve the expected rate of return without any change in the risk of the portfolio.

b)

The expected return is:

rp = x1r1 + x2r2

rp = (0.5 *´ 0.09) + (0.5 ´* 0.14)

= 0.115 = 11.5%

sP^2 = x_1^2s_1^2 + 2x_1x_2s_1s_2r_1_2 + x_2^2s_2^2

sP2 = (0.5)^2(0.10)^2 + 2*(0.5)(0.5)(0.10)(0.16)(0.10) + (0.5)^2(0.16)^2

sP2 = 0.0097

sP = 0.985 = 9.85%

Hence, he can never perform better by investing equal amount in bond portfolio and index fund. The expected return increases to 11.5% and standard deviation decreases to 9.85%.

4 0
3 years ago
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