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pantera1 [17]
3 years ago
10

Consider the following model of a very simple economy. Household saving and investment behavior depend in part on wealth (accumu

lated savings and inheritance). In the late 1990's many were concerned with very large increase in stock value (a form of wealth) and it's possible effect on saving and investment.
The following consumption function incorporate wealth (W) as a determinant of consumption. We have the following information on consumption (C) and investment (I):

C=45+0.60Y+0.05W
I=100
W=800

We are ignoring the fact that saving adds to the stock of wealth.

Calculate the value of equilibrium Y,C, and savings (S). (Enter you responses as Integers. )
Business
1 answer:
Mekhanik [1.2K]3 years ago
6 0

Answer:

Equilibrium Y = 462.5 , Equilibrium C = 362.5 , Equilibrium S = 100

Explanation:

  • At equilibrium : Aggregate Demand = Aggregate Supply

[ AD = C + I ] = [ AS = C + S = Y ]

45 + 0.6Y + 0.05 W + 100 = Y → 45 + 0.6Y + 0.05 (800) + 100 = Y

45 + 40 + 100 + 0.6Y = Y → Y ; 185 + 0.6Y = Y

Y - 0.6Y = 185

0.4Y = 185

Y = 185 / 0.4 = 462.5  

  • Consumption C = 45 + 0.6Y + 0.05W

Putting Y value : C = 45 + 0.6 (462.5) + 0.05 (800) → C = 45 + 277.5 + 40

C = 362.5

  • Income Y is either consumed (C) or saved (S). So, Y = C + S

Hence , S = Y - C → 462.5 - 362.5 = 100

Alternatively : As  C + I = C + S

Hence, I = S

Equilibrium Savings = Given Investment = 100

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Automobiles are often leased, and there are several terms unique to auto leases. Suppose you are considering leasing a car. The
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Answer:

a. 6.36%

b. $378.02

Explanation:

a. The computation of Annual percentage rate is shown below:-

Annual percentage rate = Lease factor × 2,400

= 0.00265 × 2,400

= 6.36%

b. For computation of monthly lease payment first we need to find out the depreciation charge, finance charge and tax which is shown below:-

Depreciation charge = (Base cost + Other cost - Down payment - Residual value) ÷ Number of lease payment

= ($27,600 + $1,050 - $3,000 - $17,000) ÷ 36

= $8,650 ÷ 36

= $240.27

Finance charge = (Base cost + Other cost - Down payment - Residual value) × Lease factor

= ($27,600 + $1,050 - $3,000 - $17,000) × 0.00265

= $42,650 × 0.00265

= $113.0225

now,

Tax = (Depreciation charge + Finance charge) × Tax rate

= ($240.27 + $113.0225) × 7%

= $353.2925 × 7%

= $24.73

Monthly Lease payment = Depreciation charge + Finance charge + Tax

= $240.27 + $113.0225 + $24.73

= $378.02

3 0
2 years ago
Under the temporal method, income statement items that relate to newly recognized assets and liabilities generally are remeasure
ad-work [718]

Answer: historical exchange rate

Explanation:

The temporal method is also referred to as the historical method. Under this method, the currency of a foreign subsidiary is being converted into the currency of the parent company.

It should be noted that under the temporal method, the income statement items which relate to newly recognized assets and liabilities generally are remeasured using the historical exchange rate.

6 0
3 years ago
On November 23, Elder Lift Corporation, a wholesaler of hydraulic lifts, acquired land in ex- change for 12,500 shares of $25 pa
Georgia [21]

Answer:

Journal Entry to be recorded

DR.    Land                                           $475,000

                 Cr.     Common stock                          $312,500

                 Cr.     Add-in-capital common stock  $162,500

Explanation:

Number of Shares = 12,500 shares

Share Market price = $38

Share Par Value = $25

Total value of property to be recorded= 12,500 x $38 = $475,000

Common stock value at par = 12,500 x $25 = $312,500

Add-in-Capital common stock value = $475,000 - $312,500 = $162,500

Property will be recorded as the total value of exchange which is $475,000. On other other hand the common stock value will be recorded in two parts common stock at par value and add-in-capital common stock over par value.

7 0
3 years ago
What effect will each of the following have on the demand for small automobiles such as the Mini-Cooper and Fiat 500?
icang [17]

Answer:

a. Demand will increase.

b. Demand will increase.

c. Demand will increase.  

d. Demand will decline.

e. Demand will increase.

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c. Inferior goods have a negative income effect. SO, when income declines the demand for small autos will increase and vice versa.  

d. If consumers expect the price of small autos to fall in the near future, they will hold their money to buy autos when their price fall. This will cause the current demand to fall.  

e. When the price of gasoline drops it will become cheaper to use autos. This will lead to an increase in demand for autos.

8 0
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Answer: I Don't Know sorry

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