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3 years ago

The gdp deflator can be used to calculate the inflation rate. True or False

Business

1 answer:

muminat3 years ago

3 0

Answer:

The answer is: TRUE

Explanation:

The inflation rate can be calculated using both the consumer price index (CPI) and the GDP deflator rate. But the CPI is used more frequently since it shows how the prices for consumer goods and services change.

The GDP deflator = (nominal GDP / real GDP) x 100

you can calculate inflation rate between years 1 and 2 using the following formula:

= [(GDP deflator year 2 - GDP deflator year 1) / GDP deflator year 1] x 100

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Determine if the people in the example have benefited (i.e., are winners) or have been harmed (i.e., are losers) by unexpected i

nevsk [136]

Answer:

Winners

3rd National, a bank that loaned many people money for home purchases.

Losers

Karen, a retired school teacher that relies upon her fixed pension to pay for her expenses.

Herb, who keeps his savings in an old coffee can.

Joy, who has borrowed $40,000 to pay her college education.

The US federal government which had almost $15 trillion in debt in 2011.

Explanation:

When unexpected inflation occurs, the usual plan to by Monetary Institutions of a country is raising the interest rates.

By doing that, they want to stop it or slowly decelerate it.

So that it becomes more expensive to take a loan, the idea is to reduce consumption.

In Economics, it's a bad scenario after all. Few winners. Many losers.

So, let's examine them

Winners

3rd National, a bank that loaned many people money for home purchases.

At first, The 3rd National is going to be winning since the value of the debt will rise, depending on the type of contract and an increase in the interest rate will demand corrections on the monthly payments. But on the other hand, the number of default clients and overdue installments will raise for sure.

Losers

Karen, a retired school teacher that relies upon her fixed pension to pay for her expenses.

Inflation reduces the real buying value of her checks. And her pension can't grow otherwise this will feed the inflation too.

Herb, who keeps his savings in an old coffee can.

Since his money is not invested then He's not having any earning that might give him some compensation. So his money is even more devalued.

Joy, who has borrowed $40,000 to pay her college education.

Depending on the contract Joy might be sleepless. Either her monthly payments will become more expensive or She may experience difficulties because of the weekly growing prices.

The US federal government had almost $15 trillion in debt in 2011.

Certainly, the president and his secretary will have to address the fact that due to inflation and the chosen medicine make the nation's debt up to the sky. They must renegotiate the payment deadlines.

7 0

3 years ago

If you look at stock prices over any year, you will find a high and low stock price for the year. Instead of a single benchmark

I am Lyosha [343]

Answer:

High target price 38.8821

Low target price 29.6153

Explanation:

Calculation to determine your high and low target stock price over the next year

First step is to calculate the seperate yearly PE ratio for High and low price using this formula

PE ratio = Market price / EPS

EPS = B

Low = C

High = D

Let plug in the formula

Year 1

PE(High) C/B = $ 27.43/1.35

PE(High) C/B = 20.3185

PE(Low) D/B = 19.86/1.35

PE(Low) D/B = $14.7111

Year 2

PE(High) C/B = $ 26.32/1.58

PE(High) C/B = 16.6582

PE(Low) D/B = 20.18/1.58

PE(Low) D/B = 12.7722

Year 3

PE(High) C/B = $ 30.42/1.51

PE(High) C/B = 20.1457

PE(Low) D/B = 25.65/1.51

PE(Low) D/B = 16.9868

Year 4

PE(High) C/B = $ 37.01/1.85

PE(High) C/B = 20.0054

PE(Low) D/B = 26.41/1.85

PE(Low) D/B = 14.2757

Second step is to calculate the seperate Average PE for high and low price

Average PE

HIGH(20.3185+16.6582+20.1457+20.0054 / 4)

HIGH = 77.1278/4

HIGH=19.28195

LOW=($14.7111+12.7722+16.9868+14.2757/4)

LOW=58.7458/4

LOW=14.6865

(a) Now let calculate the high target stock price over the next year

Using this formula

High target price = Average PE(high) x EPS for next year

Let plug in the formula

High target price = 19.28195 x[(1+.09)×1.85]

High target price = 19.28195 x(1.09*1.85)

High target price = 19.28195*2.0165

High target price=38.8821

Therefore the high target stock price over the next year is 38.8821

(b) Calculation for the low target stock price over the next year

Using this formula

Low target price = Average PE(low) x EPS for next year

Let plug in the formula

Low target price = 14.6865 x [(1+.09)×1.85]

Low target price = 14.6865x(1.09*1.85)

Low target price = 14.6865×2.0165

Low target price = 29.6153

Therefore the low target stock price over the next year is 29.6153

5 0

3 years ago

Suppose a crime wave hits West Philadelphia, so that the marginal product and average product of police officers are now 60 arre

Stells [14]

Answer:

The ideal allocation of 500 police officers should be in West Philadelphia.

Explanation:

We must first describe what the word "allocation" means. Allocation refers to a place that, due to some circumstance, needs to be considered as a place for the allocation of resources. These resources can be money, materials, raw materials, labor, among others.

In the question above, we can see that a wave of crime broke out in Philadelphia, making this region a place that is in need of a specific resource, police. In this case, the ideal allocation of 500 police officers is in West Philadelphia, where the number of crimes is very large and there is a need for professionals like the police.

8 0

4 years ago

Read 2 more answers

An insurance settlement offer includes annual payments of $36,000, $42,000, and $50,000 over the next three years, respectively,

padilas [110]

It’s C bc u add up all the money

4 0

2 years ago

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Advertising is NOT a good way to find harmful information about a product because a. it is not endorsed by the government. b. th

leonid [27]

C. Only favorable information is likely to appear

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3 years ago