Answer: Option (a) is correct.
Explanation:
Correct option: Aggregate demand shifts right.
Aggregate demand = consumption + government spending + Investment + Net Exports
Other things remains constant, if there is an increase in the government spending, as a result aggregate demand curve shifts rightwards. This will lead to increase the price level and level of output.
Answer:
The Net Present Value is - $20324
Explanation:
We can use our financial calculator to work out the NPV using the cashflows from the different periods and using the discount rate given. Which is 18%.
We have 11 periods. Starting off with CF 0. ( CF = cashflow ) We will work in Thousands to make it easier to read and compute. $ ' 000
CF 0 Machine Investment (750) Working Capital Investment (25) Total=(775)
CF 1 160 inflow
CF 2 160 inflow
CF 3 160 inflow
CF 4 160 inflow
CF 5 160 inflow
CF 6 160 inflow
CF 7 160 inflow
CF 8 160 inflow
CF 9 160 inflow
CF 10 160 inflow
CF 11 160 inflow. 35 salvage value from machine. Working capital 25. Total Cashlow = 220
We now use our financial calculator and input these amounts into the calculator.
We start of by entering the data and hitting ENT and do so for every Cash flow. At the end we press 2nd function CFI on our calculator. We then enter the discount rate of 18%. and press down button to get to NPV and then press COMP.
We get an answer of -20,32400407
We now need to put the amount into thousands. Thus = -20324,004
rounded to the nearest dollar we get - $ 20324
Stress :( (hope this helps)
Answer:
the marginal propensity to consume is 0.75
Explanation:
The computation of the marginal propensity to consume is shown below:
MPC = Change in consumption ÷Change in disposable income
where,
The Change in consumption is 1500
ANd, the Change in disposable income is 2000
So,
MPC is
= $1,500 ÷ $2,000
= 0.75
hence, the marginal propensity to consume is 0.75
