The aggregate demand curve slopes downward because it reflects a direct relationship between the price level and the amount of real output demanded. This statement is false.
<h3>What is a demand curve?</h3>
It should be noted that a demand curve simply means the graph that illustrates the quantity bought at a price.
In this case, the curve slopes downward because output reduces as price increases. This shows an inverse relationship.
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Answer:
The risk free rate is 3.325%
Explanation:
The required rate of return or cost of equity of a stock can be calculated using the CAPM. The CAPM estimates the required rate of return of a stock based on three factors- risk free rate, stock's beta and the market risk premium. The equation of required rate of return under CAPM is,
r = rRF + Beta * (rM - rRF)
Where,
- rRF is the risk free rate
- rM is the return on market
- (rM - rRF) gives us the risk premium of market
We already have the values for r, Beta and rM. Plugging in these values in the formula, we calculate the rRF to be,
Let rRF be x.
0.1185 = x + 1.24 * (0.102 - x)
0.1185 = x + 0.12648 - 1.24x
1.24x - x = 0.12648 - 0.1185
0.24x = 0.00798
x = 0.00798/0.24
x = 0.03325 or 3.325%
Answer:
d. the monetary base decreases, loans decrease, and the money supply decreases.
Explanation:
In the case when the federal reserve reduce the reserve of the bank via open market operation so it would be resulted in decrease in the monetary base, reduction in the loan and the reduction in the money supply. Overall, all three things would be decrease
Therefore as per the given situation, the option d is correct
And the same would be relevant
Answer:
(a)
January 1 Cash 20000 Dr
Bonds Payable 20000 Cr
(b)
June 30 Interest expense 850 Dr
Cash 850 Dr
Explanation:
a.
The bonds are issued at par value thus full cash equal to the par value of these bonds will be received on the issuance date.
b.
The ineterst is paid at 8.5% annually. The annual interest oayment equals 20000 * 0.085 = 1700
As this is paid semiannually in equal installments, the semi annual payment for interest on June 30 will be 1700 / 2 = $850
