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solong [7]
2 years ago
5

Why the aggregate demand curve slopes downward

Business
1 answer:
Serggg [28]2 years ago
4 0

Answer:

1. As the price level rises, the cost of borrowing money will <u>rise</u>, causing the quantity of output demanded to <u>fall</u>.

This phenomenon is known as the <u>Interest rate</u> effect.

When price levels rise, people will have to spend more on goods and services and hence save less. As they save less there'll be less loanable funds in the economy which will force interest rates (cost of borrowing) up. As there are less loans to give out and higher rates, people will borrow less and as a result will not demand as much because they can't afford it.

2. Additionally, as the price level rises, the impact on the domestic interest rate will cause the real value of the dollar to <u>rise</u> in foreign exchange markets. The number of domestic products purchased by foreigners (exports) will therefore <u>fall</u>, and the number of foreign products purchased by domestic consumers and firms (imports) will <u>rise</u>. Net exports will therefore <u>fall</u>, causing the quantity of domestic output demanded to <u>fall</u>. This phenomenon is known as the <u>exchange rate</u> effect.

As interest rates rise in the Economy, it will make the country a more attractive place to invest for foreigners so they will demand more of the local currency. This will cause a rise in the value of the domestic currency. This will make the exports of the country more expensive so less people outside will buy it but it will also make foreign products seem cheaper so the local consumers will import more.

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Questions regarding financial vs. non-financial benefits of collaboration includeA. whether collaboration pays for itself.B. mak
Inessa05 [86]

Answer:

A) whether collaboration pays for itself.

Explanation:

Collaboration refers to a situation where two separate companies decide to leverage each other on an operational basis, in order for them to perform better together than they did separately.

The whole idea behind collaboration is to make more money by working together, therefore the collaboration should not only pay for itself but should also increase both companies' profits by boosting sales, engage in larger contracts, cut costs, etc.

If they are not going to win anything by working together, why should they do it?

8 0
3 years ago
Suspect Corp. issued a bond with a maturity of 30 years and a semiannual coupon rate of 6 percent 4 years ago. The bond currentl
kifflom [539]

Answer and Explanation:

The computation of each point is shown below:-

But before that we need to do the following calculations

First Issue of Bonds:

Face Value = $45,000,000

Market Value = 95% × $45,000,000

= $42,750,000

Annual Coupon Rate = 6%

Semiannual Coupon Rate = 3%

= 3% × $45,000,000

= $1,350,000

Time to Maturity = 26 years

Semiannual Period to Maturity = 52

Let semiannual YTM be i%

$42,750,000 = $1,350,000 × PVIFA(i%, 52) + $45,000,000 × PVIF(i%, 52)

N = 52

PV = -42750000

PMT = 1350000

FV = 45000000

I = 3.20%

Semiannual YTM = 3.20%

Annual YTM = 2 × 3.20%

Annual YTM = 6.40%

Before-tax Cost of Debt = 6.40%

After-tax Cost of Debt = 6.40% × (1 - 0.40)

= 3.84%

Second Issue of Bonds:

Face Value = $50,000,000

Market Value = 54% × $50,000,000

= $27,000,000

Time to Maturity = 15 years

Semiannual Period to Maturity = 30

Let semiannual YTM be i%

$27,000,000 = $50,000,000 × PVIF(i%, 30)

Using a financial calculator:

N = 30

PV = -27000000

PMT = 0

FV = 50000000

I = 2.075%

Semiannual YTM = 2.075%

Annual YTM = 2 × 2.075%

= 4.15%

Before-tax Cost of Debt = 4.15%

After-tax Cost of Debt = 4.15% × (1 - 0.40)

= 2.49%

a. The total book value of debt is

Total Book Value of Debt = $45,000,000 + $50,000,000

= $95,000,000

b. The total market value of debt is

Total Market Value of Debt = $42,750,000 + $27,000,000

= $69,750,000

c. The estimate of the aftertax cost of debt is

Weight of first Issue of Debt is

= $42,750,000 ÷ $69,750,000

= 0.6129

Weight of second issue of Debt

= $27,000,000 ÷ $69,750,000

= 0.3871

So,  

Estimated After-tax Cost of Debt is

= 0.6129 × 3.84% + 0.3871 × 2.49%

= 3.32%

6 0
3 years ago
Why people in New York it hard to get shelter with a child​
Gala2k [10]
I don’t know, probably because there is so much people in NY or maybe the shelter doesn’t allow children?
8 0
3 years ago
Most consumers wouldn’t drive very far to buy a pack of gum since it’s a lost-cost item that is often bought on impulse. Therefo
julia-pushkina [17]

Answer:

The correct answer to the following question is distributing the product intensively.

Explanation:

An item like gum which can be said to be lost cost item , should be distributed intensively , so that this product is always readily available to the consumers . For a product like this, people are not going put so much effort in to it ( like driving long way ), to buy this product which consumers often buy on the impulse. Consumers don't plan long ahead to buy a pack of gum , they just do it when they feel like they want to chew a gum , so its important that product like this should be intensively in the market.

4 0
3 years ago
DoorWay Computers, Inc., the trademark owner of "DoorWay," sought a court injunction to prevent Handyman Hardware, Inc. from usi
amid [387]

Answer:

False  

Explanation:

Because the injunction is the legal remedy that the special court's judge orders not the jury. The order enforce a party to do what must be done or refrains it from doing specific acts that harms the other party. So saying that Doorway sought the court injunction in which the jury decides the right course of action is incorrect because injunction is the warning of judge not of jury.

3 0
3 years ago
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