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Debora [2.8K]
4 years ago
12

In a certain economy, when income is $500, consumer spending is $375. The value of the multiplier for this economy is 5. It foll

ows that, when income is $510, consumer spending is:________
a. $166.75
b. $175.00
c. $151.25
d. $170.20
Business
1 answer:
jeka57 [31]4 years ago
4 0

Answer:

The options are wrong, if consumer spending is $375 when income is $500, it has to be higher if income increases (it cannot be lower).

Consumer spending at $510 = $383

Explanation:

the economy's multiplier = 1 / MPS (marginal propensity to save)

5 = 1 / MPS

MPS = 1 / 5 = 0.2

MPC (marginal propensity to consume) = 1 - MPS = 1 - 0.2 = 0.8

consumer spending at $510 = consumer spending at $500 + [$510 - $500) x 0.8] = $375 + ($10 x 0.8) = $375 + $8 = $383

MPC measures how much consumer spending increases if total disposable income increases.

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Answer:

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6 0
3 years ago
In the global business environment, small businesses are becoming more entrepreneurial while larger organizations are "shying" a
anzhelika [568]

Answer:

a. True

Explanation:

Since small business has lesser processes and paper work as compare to the larger organizations where formal procedures are in placed

7 0
3 years ago
Explain why each of the following statements is a rationale for conducting active or passive policy: Economic circumstances can
Vladimir79 [104]

Answer:

The rationale for conducting active policy is the interest of Congress to alter the state of the economy through a deliberate change in established policies.

But in the case of Passive policy, the government permits the status quo.

Active policy relies on the government to enforce it while passive policy does not need the government's interference to work in stabilizing the economy.

Explanation:

The following statements applies passive policy because the economy is expected to stabilize on it's own without the deliberate act of congress influencing it:

  • Economic circumstances can change dramatically between the time that an economic downturn begins and the time when policy actions have an effect on the economy.
  • Fluctuations in economic output have been less severe since World War II.

The following statements is a rationale for conducting active policy since the government's intervention is required:

  • Economists are not very accurate forecasters.
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6 0
3 years ago
A Treasury bill with 119 days to maturity is quoted at 97.630. What are the bank discount yield, the bond equivalent yield, and
Dovator [93]

Answer:

discount yield=7.17%

bond equivalent yield=7.34%

effective annual yield =7.64%

Explanation:

Discount yield =discount /face value*360/t

where t is the number of days to maturity

discount =face value -issue price

discount=100-97.63

discount=2.37

discount yield =2.37/100*360/119

discount yield=7.17%

bond equivalent yield=(1+periodic yield)^360/t-1

periodic yield =discount/face value=2.37/100=2.37%

bond equivalent yield =(1+2.37%)^(360/119)-1

bond equivalent yield=7.34%

effective annual yield=(1+HPY)^365/t-1

Holding period yield (HPY)=discount/price=2.37/97.63

HPY=2.43%

effective annual yield=(1+2.43%)^(365/119)-1

effective annual yield =7.64%

6 0
3 years ago
For which two main purposes do companies use social media?
Andrei [34K]

Corporations use social media for various purposes, but from the available options, the two ways they are most commonly used is for (B) advertise their services and check the market and (D) keep up with the latest industry news.

Advertising their services can lead to increased sales for corporations since people nowadays use their social media a lot. Keeping up with the latest industry news would also be helpful for corporations in using the right approach for advertising as well as creating product diversification that are suitable for the market they are aiming for.

7 0
4 years ago
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