Answer:
The correct answer is option b.
Explanation:
An increase in government expenditure will have a smaller effect on the aggregate demand if the MPC is smaller. This happens because the consumers will save the major share of their income and not consume it if MPC is small.
This will not increase consumer spending as much as they should. And thus aggregate demand will increase by a small amount.
The change in aggregate demand will also be smaller if the investment is interest elastic. The government increases spending by borrowing from the loanable funds market.
This increases the demand for loanable funds. The interest rate, as a result, increases. This increase in interest rate makes borrowing costlier for private investors.
This further causes the investment expenditure to increase as much as it should. And thus aggregate demand will increase by a small amount as well.
Questions like how much a government should regulate certain forces in society becomes a slippery slope argument. In other words how far is too far? For example, cigarettes impacted society on a large enough scale that they were regulated.
Answer:
$22000 and $50000.
Explanation:
Given: Purchased value of equipment- $72000.
Residual value- $6000
Estimated useful life of equipment- $ 5 years.
Now, finding value of depreciation for 2011 using the sum of the years digits method.
Depreciation cost= 
⇒ Depreciation cost= 
∴ Depreciation cost= $66000.
Depreciation fraction for 1st year= 
Depreciation expense for 1st year= 
∴ Depreciation for 2011 is $22000.
Next, lets find out the book value at the end of first year.
Book value= 
Book value= 
∴ Book value at December 2011 is $50000.
Answer:
B) $50,000
Explanation:
Cost of Capital is the rate which is required by the capital investment by the shareholders or owners of the business. Residual Income is the portion of net income after paying the investors of the company. This income is reinvested or retained by the business.
Net operating Income after tax = $100,000
Average Invested Capital = $500,000
Cost of Capital = $500,000 x 10% = $50,000
Residual Income = Net Income - Cost of capital
Residual Income = $100,000 - $50,000
Residual Income = $50,000
Answer:
3%
Explanation:
Increase in money supply ($ billion) = Increase in reserves / Reserve ratio
Increase in money supply ($ billion) = 150 / 0.1
Increase in money supply ($ billion) = 1,500
Increase in price level = (Increase in money supply / 100) * 0.2
Increase in price level = (1,500/100) * 0.2
Increase in price level = 3%
