Answer:
a. increases the real interest rate, which reduces private investment spending.
b. is not a major concern, because the Fed will likely lower the real interest rate when actual output is far below potential.
Explanation:
Increase in government spending means that the government would probably have to borrow money from the credit market. Because the government is so large, it will borrow in large amounts which would force rates to rise. At these higher rates, the private sector might find it too expensive to borrow money and so would be crowed out such that they reduce their investment spending.
When the economy is facing an output that is lower than potential, the Fed will engage in monetary policy aimed at reducing interest rates to improve investment spending. This therefore negates the effect of crowing out which means that it would no longer be a major concern.
1. Verbal
2. Nonverbal
3. Written
4. Visual
I’m not sure but hope this helped x:)
Answer: Option (B)
Explanation:
Given :
Contract = $3.8 million
Initial Payment = $1.1 million
Payment - Year One = $1.3 million
Payment - Year Two = $1.4 million
From the given information , we can evaluate the current value of the contract using present value:
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<em>Present Value = $3,480,817.37</em>
Answer:
$6,000
Explanation:
The computation of the interest expense is shown below:
= Total amount borrowed × interest rate × number of months ÷ total months in a year
= $300,000 × 8% × 3 months ÷ 12 months
= $6,000
The three months is calculated from October 1 to December 31
We have to apply the simple interest formula so that the accurate amount can come.