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2 years ago

Deflation is generally considered by economists to be a positive economic situation because it creates strong job growth.

Business

1 answer:

Drupady [299]2 years ago

3 0

Answer:

The correct answer is False.

Explanation:

The disadvantages of deflation are basically the reduction of economic activity, the increase in unemployment, the increase in economic uncertainty, the increase in real interest rates due to falling prices, falling demand.

The danger of this situation comes from how difficult it is to get out of it, since a vicious circle is created by which when demand falls, companies are reduced their profits by having to reduce prices to get sales, as a result , they have to reduce costs, which means they have to cut jobs. In turn, if there are people who run out of work, demand will continue to decrease as they will stop buying as well.

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On July 1, 20X1, Mirage Company issued $250 million of bonds with an 8% coupon interest rate. The bonds mature in 10 years and p

hoa [83]

Answer: See explanation

Explanation:

a. At what price were the bonds issued?

The bonds were issued at $250 million since the issue price will have thesame value as the face value in this case.

b. On July 1, 2019, the market interest rate for bonds of this risk class is 6%. What is the fair value of the bonds on this date?

The fair value of the bond on this date will be:

= {$250,000,000 × 4% × [(1-1.03)^-16]0.03} + {$250,000,000 × (1/1.03)^-16}

= $281402755

c. Suppose that 50% of the bonds were repurchased for cash on July 1, 2019, at the market price. What journal entry would the company make to record this partial retirement?

The journal entry will be:

July 1 ,2019

Debit Bond payable $250,000,000/2 = $125,000,000

Debit loss on bond redemption = $140,701,378 - $125,000,000 = $15,701,378

Credit Cash $281402755 × 50% = $140,701,378

(To record bond payable redemption)

7 0

2 years ago

Stear Corp. decides to deposit $1,000 in its bank account. This cash was paid from the cash register of the company. What will b

Liula [17]

Answer:

Cash Account (debit) 1,000

Cash in Bank Account (Credit) 1,000

Explanation:

Given

$Amount = \$1,000$

Required

Write a journal entry

In this case:

The company deposits $1000.

This means that, $1000 will be debited from the company's cash account.

So, the entry for that will be:

Cash Account (debit) 1,000

In the same vein, $1000 will be credited into the company's bank account.

So, the entry for that will be:

Cash in Bank Account (Credit) 1,000

5 0

2 years ago

Read 2 more answers

Describe how changes in expected inflation impact an economy in the wake of a temporary negative supply shock

Fed [463]

Negative shocks reduce production and increase unemployment. Positive shocks increase production and reduce unemployment.

Unexpected change moving SRAS. A positive supply shock increases SRAS, whereas a negative supply shock decreases SRAS. A combination of slowing overall economic output (declining) and rising price levels (inflation). Stagnation occurs when SRAS decreases.

A negative supply shock leads to an increase in the natural rate of interest. If real interest rates are not adjusted, there will be excess demand in the labor market. t = 0 unless the real interest rate is adjusted. Then we move into an economy where the market is imperfect.

A supply shock is an unexpected event in which the supply of a product or commodity changes, causing a sudden change in price. A positive supply shock increases output and decreases prices, while a negative supply shock decreases output and increases prices.

Learn more about supply at

brainly.com/question/25843620

#SPJ4

8 0

11 months ago

Suppose the following information (in millions of dollars) is available for Limited Brands for a recent year:

luda_lava [24]

Answer:

Earnings per share (EPS) = $0.71 per share

Explanation:

The earnings per share is a metric used by investors in deciding their investment decisions and it is also used as a metric to calculate the corporate value. The earnings per share simply tells the net income earned per each of the common share outstanding. The formula for earnings per share is,

Earnings per share (EPS) = (Net Income - Preferred dividends) / Weighted-average common shares outstanding

Earnings per share (EPS) = (213 - 0) / 300

Earnings per share (EPS) = $0.71 per share

3 0

3 years ago

You are appointed secretary of the treasury of a recently independent country called Rugaria. The currency of Rugaria is the lav

Mila [183]

Answer:

A) The accumulated debt will be = lav 1 million

B) The size of the budget be after 10years = lav 10.63million

Explanation:

The government will spend 10 million lav and tax collection will be 9 million lav in the new nation budget situation.

accumulated debt is the deficit in the budget.

Budget deficit = Government Spending - Taxes

= lav 10,000,000 - lav 9,000,000

= lav 1,000,000

Government plans to borrow 1,000,000 by issuing 10yrs bond with 5% interest. The 5% Interest will be part of government spending each year.

Interest amount to be paid ===> (5/100)*1,000,000 = 0.05 milion lav

Future Value = PV* $( 1 + interest )^{years}$

= $1 (1 + 0.05)^{10}$

= 1.63 million

∵ after 10yrs, 1 million bonds will become 1.63 million and interest is collected in form of taxes. additional tax:

Additional Tax = 1.63 - 1.00

= 0.63 million (paid to tax holder).

Calculate the total budget size:

Total Budget Size = 10 + 0.63

= 10.63 million

4 0

3 years ago