Answer:
The correct decision is to purchase the component as it can save $18,000 of the company by buying.
Explanation:
The cost of making 100 units:
Cost of making = Direct materials + Direct labor + Variable overhead + Fixed overhead
= $129,000 + $34,000 + $48,000 + $30,000
= $241,000
The cost of buying 100 units:
Cost of buying = Purchase price + Unavoidable fixed cost
= $215,000 + $8,000
= $223,000
The correct decision is to purchase the component as it can save $18,000 of the company by buying.
The monetary transmission mechanism in the IS-LM model is a process whereby an increase in the money supply increases the demand for goods and services by lowering the interest rate so that investment spending increases.
<h3>What happens to IS-LM model when money supply increases?</h3>
- With an increase in the money supply (actual money balances), the LM curve moves to the right (left) (decreases).
- Additionally, it moves left (right) as the need for money rises (decreases).
<h3>What happens to the IS-LM model when government spending increases?</h3>
- The LM curve is not directly impacted by fiscal policy.
- It is believed that borrowing will be used to pay for any increases in government spending or tax cuts.
- The LM curve remains unchanged because there is no change in the money supply.
<h3>How does the monetary transmission mechanism work?</h3>
- Through interest rate channels, the classic monetary transmission mechanism affects interest rates, borrowing costs, levels of physical investment, and aggregate demand.
- Additionally, the credit view, a source of friction in the credit markets, can have an impact on overall demand.
<h3>How does monetary policy affect demand?</h3>
- Monetary policy can be used to affect aggregate demand.
- The aggregate-demand curve will eventually move to the right as the money supply rises.
- The aggregate-demand curve will eventually move to the left as the money supply declines.
Learn more about monetary transmission mechanism here:
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Truth in lending "trigger terms"MUST disclose amount or % of down payment and terms of repayment and APR spelled out
The formula is
I=prt
I interest paid?
P principle 800
R interest rate 0.04
T time 3years
I=800×0.04×3=96
Answer: E) A and C
Explanation:
A Call option is an option to buy a security at a certain price in future. The option is only exercised if the market price of the security is higher than the option price of the security. When this happens the Call is said to be <em>in the money. </em>On expiration day, the price of Google is $425 which is higher than the option price of $410 so the Call is in the money. Option A is correct.
The option premium is the amount paid for the option contract and so is an expense. Payoff is calculated as;
= Market Value - (Option Price + Option premium)
= 425 - ( 410 + 5)
= $10
Option C is correct as well.
