Department a had sales of $100,000.00, Department B had sales of $500,000.00, and total...

10. Crowding out effect Suppose economists observe that an increase in government spending of $13 billion raises the total deman

Lilit [14]

Answer:

Explanation:

Effect of crowding out:

The crowding out phenomena describes the economic phenomena in which an increase in government public spending leads to reduced or perhaps may eliminate of private investment.

Multiplier:

The multiplier represents the ratio of income to investment change.

Given that:

$13 billion increase in government spending will lead to a $52 billion

The rise in demand for goods & service will be the value of multiplier which is

= 52/13

= 4

To determine the multiplier using the formula:

Multiplier = 1 /( 1- MPC)

4 = 1/(1 - MPC)

4 (1 - MPC) = 1

(1- MPC) = 1/4

-MPC = 0.25 - 1

MPC = 0.75

Marginal propensity to consume = 0.75

6 0

2 years ago

Over the course of 40 years, sal grew his company to six package shipping stores. with his retirement approaching and the increa

Stella [2.4K]

Based on the given scenario above, what Sal's reduction of effort represents DEFENSIVE STRATEGY. Defensive strategies are techniques that are utilized in order to combat an attack for possible competitors. In Sal's situation, since she is approaching retirement, her back up plan to decrease the possibility of having problems in the business is to reduce the number of locations.

8 0

2 years ago

Changes in net operating working capital should not be reflected in a capital budgeting cash flow analysis because capital budge

Ede4ka [16]

Answer:

The correct answer is False.

Explanation:

Net working capital, or "Working Capital" is simply the difference between current or current assets and current or short-term liabilities of a company.

Cash flow, on the other hand, is the net amount of cash and its equivalents that is transferred inside and outside the company and that may originate in operational, investment or financing activities.

Cash flow will have an operational origin, when there is a net decrease in working capital. In this situation there will be a net cash release that the company can use freely to honor debts, reinvest in operations, pay dividends, cover expenses or provide funds for future investments.

A negative cash flow, from the point of view of operations, implies that the company has increased its cash demands to finance sales on credit or inventory. That is, it has increased its investment in working capital. Situation that will require an analysis that allows a better way to manage capital.

6 0

2 years ago

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diamong [38]

Answer:

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Explanation:

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5 0

2 years ago

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MacDonald Products, Inc., of Clarkson, New York, has the option of (a) proceeding immediately with production of a new top-