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joja [24]
2 years ago
7

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

d for goods and services by $52 billion. If these economists ignore the possibility of crowding out, they would estimate the marginal propensity to consume (MPC) to be . Now suppose the economists allow for crowding out. Their new estimate of the MPC would be than their initial one.
Business
1 answer:
Lilit [14]2 years ago
6 0

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

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Answer: False

Explanation: Each company has integrity constraints unique to its business and every databases in a business contain integrity constraints that help prevent chaotic and unwanted events from happening. Business critical integrity constraints enforce business rules that are vital towards organization's goals and success and more often require more insight and in-depth knowledge than relational integrity constraints which are rules that enforce the basic and fundamental information essential to any database.

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2 years ago
Zeta Corporation is a manufacturer of sports caps, which require soft fabric. The standards for each cap allow 2.00 yards of sof
Alex777 [14]

Answer:

Material Price Variance = $2,500 Unfavorable

Explanation:

Standard fabric for each cap = 2.00 yard

Standard price per yard = $2.00 per yard

Actual price per yard = $2.10

Actual Quantity = 25,000 yards

Materials price variance = (Standard price - Actual Price) \times Actual Quantity

= ($2.00 - $2.10) \times 25,000 = - $0.10 \times 25,000

= - $2,500

Since it is negative in value it is Unfavorable

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3 years ago
A farm worker was moving a bale of hay with a forklift. The edge of the machine hit a tall stack of feed, making the top feed sa
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Enviro Company issues 8%, 10-year bonds with a par value of $250,000 and semiannual interest payments. On the issue date, the an
vichka [17]

Answer: 1. $218750 ; 2. $231, 250 ; 3. $11562.50

Explanation:

1. The bonds with a par value of $250,000 and implied selling price of 87 ½.

Cash proceed = 250,000 × 87.5%

= $218,750

2. Since it's semiannual interest payments, the total amount of bond interest expense that will be recognized over the life of these bonds will be:

[20 × (250,000 × 8% × 6/12)]+ $250,000 - $218,750

= $200,000 + $250,000 - $218,750

= $231, 250

3. The amount of bond interest expense recorded on the first interest payment date will be:

= Total bond interest expense/number of payments

= $231,250/20

= $11562.50

5 0
3 years ago
High-Low Method
frozen [14]

Answer:

Requirement 1

<em>High Point = March</em>

<em>Low Point = January</em>

Requirement 2

<em>Variable rate for tanning $0.41 per tanning appointment </em>

<em>Fixed cost per month $1,457</em>

Requirement 3

<em>Total Cost = $1,457 + $0.41 × Activity Level</em>

Requirement 4

<em>Total predicted cost for September $ 2,482</em>

<em>Total fixed cost for September $1,457</em>

<em>Total predicted variable cost for September $1,025</em>

Explanation:

Requirement 1

High Point = March

Low Point = January

Requirement 2

<em>Variable Cost = Difference in Overhead Cost (High - Low)/ Difference in Activity (High - Low)</em>

                       = $2,810 - $1,744 / 3,300 - 700

                       = $1,066/ 2,600

                       = $0.41

<em>Fixed Cost Component = Total Overhead Cost - Variable Cost × Selected Activity.</em>

Lets Select, January 700 $1,744

Fixed Cost Component = Total Overhead Cost - Variable Cost × Selected Activity.

                                       =  $1,744 - $0.41 × 700

                                       =  $1,457

Requirement 3

Cost formula for tanning services

<em>Total Cost = Fixed Cost + Variable Cost</em>

thus,

Total Cost = $1,457 + $0.41 × Activity Level

Requirement 4

Total Cost = $1,457 + $0.41 × Activity Level

                 =  $1,457 + $0.41 × 2,500

                 = $ 2,482

6 0
2 years ago
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