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3 years ago

The sticky-price theory helps explain what feature of the aggregate demand and aggregate supply model?

Business

1 answer:

zhuklara [117]3 years ago

7 0

Answer:

The stick price theory helps to explain the upward sloping shape of the aggregate supply curve.

Explanation:

The price tends to be sticky for a number of reasons.

Firms will need to incur menu costs if they constantly change prices
Frequent change in prices may annoy the customers
The wage rates remain the same even after change in price because the wages are based on contracts

The short-run aggregate supply curve is upward sloping because of the stickiness of price, there is a positive and direct relationship between output and price. Due to the high expected price level in the short run, the firms will expect the input prices to rise along with an increase in the product price.

To counter the increase in inputs price, the product price is kept high. The higher price provides motivation to produce more. That's why the short-run aggregate supply curve is upward sloping.

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3 years ago

In year 1, Firm A paid $50,000 cash to purchase a tangible business asset. In year 1 and year 2, it deducted $3,140 and $7,200 d

Tatiana [17]

Solution and Explanation:

a.Compute Firm A’s net cash flow attributable to the asset purchase in each year.Year 2011:

Cost of Asset = ($50,000)

Tax Savings (Annual Depreciation x Tax Rate) $(\$ 3,140 \times 35 \%)$ = $1,099

Net Cash Flow = ($48,901)

Year 2012:

Cost of Asset = N/A

Tax Savings (Annual Depreciation x Tax Rate) ( $\$ 7,200 \times 35 \%$ ) = $2,520

Net Cash Flow = $2,520

b. Compute Firm A’s adjusted basis in the asset at the end of each year.

INITIAL COST OF ASSET = $50000

DEPRECIATION YEAR 1 = (3140)

ADJUSTED BASIS AT END OF YEAR 1 = $46860

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ADJUSTED BASIS AT END OF YEAR 2 = $39660

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3 years ago

Gary has an 80% LTV loan on his new $318,000 townhome with an annual interest rate of 4.125%. What’s his interest payment the fi

Mumz [18]

Answer:

interest amount = $874.50

Explanation:

given data

LTV loan = 80%

amount = $318,000

interest rate = 4.125% = 0.04125

to find out

interest payment the first month

solution

first we get here loan amount that is

loan amount = 80% of $318,000

loan amount = $254,400

now we get here interest amount for 1st month that is

interest amount = loan amount × interest rate × time period

put here value

interest amount = $254,400 × 0.04125 × $\frac{1}{12}$

interest amount = $874.50

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3 years ago