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dangina [55]
3 years ago
5

According to the quantity theory of​ money, what must the growth rate of the money supply be given the following​ information? T

he growth rate of real GDP is 1.0​%. The growth rate of nominal GDP is 5.2​%. The nominal interest rate is 5.4​%. The real interest rate is 1.2​%. The money supply​ (M2) is ​$11 comma 438 ​(in billions) According to the quantity theory of​ money, the growth rate of the money supply must be nothing​%. ​ (Round your answer to the nearest tenth.​)

Business
2 answers:
soldi70 [24.7K]3 years ago
8 0

Answer: 5.2%

Explanation:

Given the following ;

Growth rate of real GDP = 1.0%

Growth rate of nominal GDP = 5.2%

Nominal interest rate = 5.4%

Real interest rate = 1.2%

Money supply (M2) = $11,438 billion

According to the quantity theory of money;

M + V = P + Y

Where,

M = growth rate of money supply

V = growth rate of velocity

P = inflation rate

Y = growth rate of real output or GDP

Where inflation rate is the difference between nominal interest rate and real interest rate

Inflation rate(P) = 5.4% - 1.2% = 4.2%

Growth rate of velocity is assumed to be constant according to the quantity theory of money. Therefore change in growth velocity of money = 0.

Then growth rate in money supply is the sum of inflation growth rate and the growth rate of real gross domestic product.

Now we have,

M = P + Y

M = 4.2% + 1.0% = 5.2%

tester [92]3 years ago
6 0

Answer:

Growth rate of money supply is 7.6%.

Explanation:

detailed steps are given below.

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Levelor Company's flexible budget shows $10,750 of overhead at 75% of capacity, which was the operating level achieved during Ma
zhannawk [14.2K]

Answer:

The controllable variance for the month was $1,709 unfavorable

Explanation:

Controllable variance: The controllable variance show a difference between actual overhead expenses incurred and budgeting operating level based on direct labor hour.

In mathematically,

Controllable variance = Actual overhead expenses - budgeting operating level based on direct labor hour

where,

Actual overhead expenses = $11,227

And, budgeted operating level based on direct labor hour

= budgeted operating level  × direct labor per hour

= 6,160 × $2.10

= $12,936

Now, put these values on the above formula:

So,

Controllable variance = $11,227 - $12,936 = $1,709 unfavorable

Hence, the controllable variance for the month was $1,709 unfavorable

6 0
3 years ago
Select the true statement about default risk. It is the risk that the bond's price will fall below its par value. Bondholders ha
Novosadov [1.4K]

Answer:

Bondholders have a degree of legal protection against default risk, but it is not comprehensive.

Explanation:

A bond can be defined as a debt or fixed investment security, in which a bondholder (investor or creditor) loans an amount of money to the bond issuer (government or corporations) for a specific period of time. The bond issuer are expected to return the principal (face value) at maturity with an agreed upon interest (coupon), which are paid at fixed intervals.

The par value of a bond is its face value and it comprises of its total dollar amount as well as its maturity value. Also, the par value of a bond gives the basis on which periodic interest is paid. Thus, a bond is issued at par value when the market rate of interest is the same as the contract rate of interest. This simply means that, a bond would be issued at par (face) value when the bond's stated rated is significantly equal to the effective or market interest rate on the specific date it was issued.

In Economics, bonds could either be issued at discount or premium. A bond that is being issued at a discount has its stated rate lower than the market interest rate, on the specific date of issuance while a bond that is issued at a premium, has its stated rate higher than the market interest rate on the specific date of issuance.

Default risk in bonds refer to the risk that a bond issuer (borrower) is unable to pay the principal or interest agreed upon in the contract with the bondholder (lender) in a timely manner.

Hence, the true statement about default risk is that bondholders have a degree of legal protection against default risk, but it is not comprehensive.

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3 years ago
The commission structure on a stock purchase is $45 plus $0.04 per share. If you purchase five round lots of a stock selling for
Vedmedyk [2.9K]

The commission for purchasing five round lots of a stock selling for $130 is $65.

<h3>What is round lots of a stock?</h3>

A specified quantity of securities to be traded on an exchange is known as a round lot. In the stock market, a round lot is defined as 100 shares or a bigger number that may be divided in half equally.

1 round lots = 100 shares

5 round lots = 500 shares

The commission structure on a stock purchase is $45 plus $0.04 per share.

For 500 shares, the commission is

= 45 + 0.04×500

= 65

Therefore, the commission for purchasing 500 shares of stock selling for $130 is $65.

To know more about commission, here

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7 0
1 year ago
If the marginal propensity to consume is equal to 0.85, then a $500 increase in disposable income leads to a:
AlekseyPX

The question is incomplete. The complete question is stated below.

If the marginal propensity to consume is equal to 0.85, then a $500 increase in disposable income leads to a:

a. $400 increase in consumption spending

b. $75 increase in consumption spending

c. $425 increase in personal saving

d. $75 increase in personal saving

Answer:

If a $500 increase causes an increase of $425 in consumer spending, the rest of $75 is the increase in personal saving. Thus, option D is the correct answer.

Explanation:

The marginal propensity to consume or MPC is the percentage of the additional income that will be used for consumption spending. It is a concept that is used to calculate how much of an increase in income will be used in consumption and saving. The formula to calculate MPC is,

MPC = Change in consumer spending / Change in income

0.85 = Change in consumer spending / 500

500 * 0.85 = Change in consumer spending

Change in consumer spending = $425

If a $500 increase causes an increase of $425 in consumer spending, the rest of $75 is the increase in personal saving.

8 0
3 years ago
It is said that in a perfectly competitive market, raising the price of a firm's product from the prevailing market price of $17
stich3 [128]

Answer:

could likely result in a notable loss of sales to competitors

Explanation:

In the case of the perfect competitive market wheen the price of the firm is increased from $179 to $199 as compared to the prevailing market price so this means that there should be the loss with respect to the sales for the competitors or rivalrs as this would result the firm to lose its overall shares to its rivalry

Therefore the above statement should be considered true

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2 years ago
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