India has had recent economic success due to foreign companies, international aid and agricultural success. It was not due to foreign investors as you cannot invest in a country.<span />
Answer:
The government will need to reduce spending by $60 billion
Explanation:
Expansionary gap is defined as a situation where the total output of an economy exceeds its potential output. That is the economy is performing above its long term potential as measured by GDP.
When this occurs the government will need to reduce spending to match output with economic needs.
Marginal propensity to consume is the proportion of an individual's income that is reserved for consumption.
In this case it is 4/5. This means individuals are willing to spend 4/5 of their income on consumption
The amount needed by the economy to meet consumption is:
Amount consumed= (4/5) * 300 billion
Amount consumed= $240 billion
Therefore
Excess cash= 300 billion - 240 billion = $60 billion
The government will need to reduce spending by $60 billion
Answer:
16.96%
Explanation:
In this question, we apply the Capital Asset Pricing Model (CAPM) formula which is shown below
Expected rate of return = Risk-free rate of return + Beta × (Market rate of return - Risk-free rate of return)
= 5.8% + 1.8 × (12% - 5.8%)
= 5.8% + 1.8 × 6.2%
= 5.8% + 11.16%
= 16.96%
The (Market rate of return - Risk-free rate of return) is also called market risk premium
Answer:
28.57%
Explanation:
The computation of the unemployment rate is shown below:
Unemployment rate = (Number of Unemployed workers) ÷ (Total labor force) × 100
where,
Total labor force would be = Unemployed + employed
= 40 million + 100 million
= 140 million
So, the unemployment rate would be
= 40 million ÷ 140 million
= 28.57%
It should always be expresses in a percentage form.
