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charle [14.2K]
3 years ago
15

Which is an example of an automatic stabilizer? As real GDP decreases, income tax revenues: 
A. Increase and transfer payments d

ecrease
B. Decrease and transfer payments increase
C. And transfer payments decrease
D. And transfer payments increase
Business
1 answer:
oee [108]3 years ago
5 0

Answer:

The correct answer is B. Decrease and transfer payments increase.

Explanation:

Automatic stabilizers soften cyclic fluctuations through their effect on aggregate demand. Indeed, when the economy is in a contractive or recessive phase, the negative or very reduced economic growth generates a decrease in fiscal revenues while higher unemployment increases public expenditures. Consequently, private sector disposable income decreases less than GDP does, thus limiting the contractual effect on aggregate demand, growth and employment. Therefore, the budget balance worsens in this phase by stimulating the economy and facilitating economic recovery. In the opposite sense, in times of expansion, automatic stabilizers generate higher public revenues and lower spending, which allows to increase the public surplus - or reduce the deficit - avoiding excessive expansion that could have negative effects on cycle volatility and price stability.

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Bottlebrush Company has income from operations of $73,745, invested assets of $245,000, and sales of $1,053,500. Use the DuPont
zaharov [31]

Answer:

a. Profit margin = Income from operations / Sales

Profit margin = $73,745/$1,053,500

Profit margin = 0.07

Profit margin = 7%

b. Investment turnover = Sales/Invested assets

Investment turnover = $1,053,500/$245,000

Investment turnover = 4.3 times

c. Rate of return on investment = Profit margin * Investment turnover

Rate of return on investment = 7% * 4.3

Rate of return on investment = 30.10%

3 0
3 years ago
You are cautiously bullish on the common stock of the Wildwood Corporation over the next several months. The current price of th
lys-0071 [83]

Answer:

650

Explanation:

A call option is an option to buy a product or asset at a stated price at a later date. The risk of call option is capped at premium for buying the option. Wildwood corporation will incur cost of 650 to establish the bull money spreads with calls.

8.5 +4.5 = 13

13 * $50.00 = $650

3 0
3 years ago
Assume that the average firm in your company's industry is expected to grow at a constant rate of 5% and that its dividend yield
Galina-37 [17]

Answer:

required return on the company's stock = 11%

Value of each share =$88.51

Explanation:

The constant growth model states that P_0=\frac{D_1}{k_e-g}. If ke is made subject of formular, k_e=\frac{D_1}{P_0}+g.

This implies that ke= dividend yield plus growth rate = 6%+5%=11%. Therefore the required return on the company's stock = 11%

Values of each share = \frac{D1}{(1+ke)^1}+\frac{D2}{(1+ke)^2}+\frac{D3}{(1+ke)^3}+\frac{P3}{(1+ke)^3}.

where D_1= D_0*(1+g)=3(1.5)

and P3= \frac{D4}{ke-g}

Value of each share = \frac{3(1.5)}{(1+0.11)^1}+\frac{3(1.5)(1.25)}{(1+0.11)^2}+\frac{3(1.5)(1.25)(1.05)}{(1+0.11)^3}+\frac{3(1.5)(1.25)(1.05)^2}{(0.11-0.05)(1+0.11)^3} = 88.51

8 0
4 years ago
Under PPO, which of the following in-network specialists would a referral be required?
NeX [460]

Answer:

Explanation:You do not need a referral to see a specialist. However, some specialists will only see patients who are referred to them by a primary care doctor. And, some PPOs require that you get a prior approval for certain expensive services, such as MRIs.

6 0
3 years ago
Explain the role of a good business plan in setting up your business. Why is it an important step
krok68 [10]

Answer:

A business plan is a very important and strategic tool for entrepreneurs. A good business plan not only helps entrepreneurs focus on the specific steps necessary for them to make business ideas succeed, but it also helps them to achieve short-term and long-term objectives.

Explanation:

It is important to help articulate a strategy for your business. It also provides insight on steps to be taken, resources required for achieving your business goals and a timeline of anticipated results. And help your business prosper and grow.

5 0
3 years ago
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