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oksian1 [2.3K]
3 years ago
8

Suppose the marginal propensity to consume is 0.75 and the government spending multiplier is 4. If the government decreases its

purchases by $100 million, the aggregate demand curve will shift to the by $ million. If the government increases income taxes by $100 million, the aggregate demand curve will shift to the by $ million.
Business
1 answer:
kvasek [131]3 years ago
5 0

Answer:

Left by $400; Left by $300

Explanation:

Given that,

Marginal propensity to consume, MPC = 0.75

Government spending multiplier = 4

(a) If the government decreases its purchases by $100 million, then the magnitude of the shift in aggregate demand curve is calculated by multiplying the change in government spending to the government spending multiplier.

Aggregate demand curve shift left by

= Change in government spending × Government spending multiplier

= $100 × 4

= $400 million

(b) If the government increases income taxes by $100 million, then the magnitude of the shift in aggregate demand curve is calculated by multiplying the change in taxes to the tax multiplier.

Tax multiplier:

= MPC ÷ (1 - MPC)

= 0.75 ÷ (1 - 0.75)

= 0.75 ÷ 0.25

= 3

Aggregate demand curve shift left by

= Change in taxes × Tax multiplier

= $100 × 3

= $300 million

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Answer:

The amount allocated to goodwill at January 1, 2017, is: $16,000

Explanation:

We talk of goodwill when a company acquires another one and is the difference between the cost to purchase the business minus the fair market value of the tangible assets netted the liabilities.

In this case the fair value of the assets is:

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3 years ago
A $1000 bond with a coupon rate of 6.2% paid semiannually has eight years to maturity and a yield to maturity of 8.3%. If intere
ohaa [14]

Answer:

The price of the bond will be $879

Explanation:

Price of the bond is the present value of all cash flows of the bond. Price of the bond is calculated by following formula:

According to given data

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Number of periods = n = 2 x 8 years = 16 periods

Current Yield = r = 8.3% / 2  = 4.15% semiannually

Price of the Bond = $31 x [ ( 1 - ( 1 + 4.15% )^-16 ) / 4.15% ] + [ $1,000 / ( 1 + 4.15% )^16 ]

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Price of the Bond = $521.74 + $357.26   = $879

7 0
3 years ago
Which of the following is the raw material for forging? Select one: a. Sand b. Solid metal c. Plastic d. Molten metal
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Forging is the process of applying thermal and mechanical energy to steel billets or ingots to result into a changed shape of the material while in a solid state. The raw material is solid metal in this case.

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Producer surplus equals the Group of answer choices amount received by sellers minus the amount paid by buyers. value to buyers
kvv77 [185]

Answer:

Option D amount received by sellers minus the cost to sellers.

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All the remaining options discusses buyer influence which shows that these are totally incorrect and the only option that is correct is option D.

7 0
3 years ago
Your firm is planning to invest in a new electrostatic power generation system. Electrostat Inc is a firm that specializes in th
kozerog [31]

Answer:

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In order to calculate the estimate of your cost of capital for electrostatic power generators we would have to make the following calculation:

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Therefore, Beta = [Equity Beta x Weight of Equity] + [Debt Beta x Weight of Debt]

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= 0.761290 + 0.028387

= 0.789677

Step-2, Cost of capital

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= 3% + 4.75%

= 7.75%

Therefore, the cost of capital for electrostatic power generators is closest to  7.75%

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