Answer:
Real GDP will decrease by $50 billion.
Explanation:
In order to calculate the net effect of a reduction in consumption of $10 billion, we need to identify the multiplier first.
Multiplier = 1 / marginal propensity to save
Marginal propensity = 1 - marginal propensity to consume = 1-0.8 = 0.2
Multiplier = 1 /0.2 = 5
The net change then of a reduction by 10 billion = 10 * 5 = $50 billion
Hope that helps.
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Explation:
Answer:
$671,300
Explanation:
The calculation of adjusted basis in the building is shown below:-
Adjusted basis = Original cost of the property + Cost of capital improvements - Depreciation claimed
= $750,000 + $50,000 - $128,700
= $800,000 - $128,700
= $671,300
Therefore for computing the adjusted basis we simply add original cost of the property with cost of capital improvements and deduct depreciation claimed.
Answer:
True
Explanation:
STRIPS are zero coupon bonds, and the advantage of them is that they allow an investor to know exactly how much money they will receive at a future date.
The investor purchases the STRIPS at a discount value, which we are not told here. E.g. assuming that the discount rate is 5% (similar to (4), the price of the STRIPS = $50,000 / (1 + 5%)⁶ = $37,311.
