Answer:
The inflation rate increases because of increased spending.
Explanation:
In order to lower the unemployment rate, the government needs to increase production. Higher production needs more investment. The investment will increase if the cost of borrowing decreases. So the feds need to decrease the interest rate on borrowings.
This decrease in interest rate will cause the investment to increase, as a result the firms will produce more. To increase production, they will need more workers. In this way, the unemployment rate will decrease.
Answer:
11.68%
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)
= 4.4% + 1.3 × (10% - 4.4%)
= 4.4% + 1.3 × 5.6%
= 4.4% + 7.28%
= 11.68%
The (Market rate of return - Risk-free rate of return) is also called market risk premium
