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tester [92]
2 years ago
15

What is the appropriate fiscal policy when an economy goes into recession?

Business
1 answer:
notsponge [240]2 years ago
7 0
The appropriate fiscal policy for when an economy goes into recession would be the expansionary fiscal policy.
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Analyzing macroeconomic events with the IS curve (II):
horsena [70]

Answer and explanation:

a)  

This investment tax credit will lead to a surge in the investment demand, because of the benefits that the firms receive from the investment tax credit. More and more firms will undertake investments leading to an increase causing the IS curve to shift to the right.  

<em>This implies that the output and GDP will increase in the short run.  </em>

(check image file 1 attached)

b)  

The increase in the demand for US goods will lead to an increase in the capital inflow for the country, the exports will increase, and the IS curve will shift to the right.  

<em>This implies that the output and GDP will increase in the short run</em>

(check the attached image file 2)

c)  

US consumers' infatuation with goods and services from New Zealand is going to increase the imports of the country. While it may also reduce the domestic consumption spending. This, however, will affect the country by shifting its IS curve to the left.  

<em>This implies that the output and GDP will decrease in the short ran.  </em>

(check image file 3)

d)  

Though the prices of the houses will fall sharply, increasing the affordability of the houses but the confidence of the people in real estate will be shaken. This would lead to a fall in the housing investment. This fall in investment will shift the IS curve to the left.  

<em>This implies that the output and GDP will decrease in the short run.</em>

check image file 4

4 0
3 years ago
You are evaluating a growing perpetuity investment from a large financial services firm. The investment promises an initial paym
vovikov84 [41]

Answer:

PV= $450,909.1

Explanation:

Giving the following information:

Cash flow (Cf)= $24,800

Growth rate (g)= 3.5%

Discount rate (i)= 9%

<u />

<u>To calculate the present value, we need to use the following formula:</u>

PV= Cf / (i - g)

PV= 24,800 / (0.09 - 0.035)

PV= 24,800 / 0.055

PV= $450,909.1

6 0
3 years ago
Aquilera, Inc., has sales of $19.6 million, total assets of $14.6 million, and total debt of $5.4 million. The profit margin is
Gnom [1K]

Answer:

a. $1,764,000.00

b. 12.08%

c. 19.17%

Explanation:

a. What is the company's net income?

Profit margin = Net income ÷ Sales

Therefore, we have:

9% = Net income ÷ $19,600,000

Net income = $19,600,000 × 9% = $1,764,000.00  

Therefore, the net income of Aquilera, Inc. is $1,764,000.00

b. What is the company's Return on Assets (ROA)?

ROA = Net income ÷ Total Assets

ROA = $1,764,000 ÷ $14,600,000 =  0.120821917808219 = 12.08%

Therefore, the ROA of Aquilera, Inc. is 12.08%

c. What is the company's Return on Equity (ROE)?

Total Assets = Total Debt + Total Equity

Therefore,

Total Equity = Total Assets - Total Debt

Total Equity = $14,600,000 - $5,400,000 = $9,200,000

ROE = Net income ÷ Total Equity

ROE = $1,764,000 ÷ $9,200,000 = 0.191739130434783 = 19.17%

Therefore, the ROE of Aquilera, Inc. is 19.17%

5 0
3 years ago
Which explains a way banks channel money from savers to borrowers? (study island)
Andrew [12]
Banks lend money from saving accounts to people who need loans 
5 0
3 years ago
a. Create the most efficient way to move products from producer to consumer b. Create a network of suppliers, intermediaries and
schepotkina [342]

Answer:

a. producers-wholesalers-retailers-consume

b.

Explanation:

it is easy to cut cost of transport, storage ,etc

8 0
2 years ago
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