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drek231 [11]
3 years ago
5

Mary expects the inflation rate to be 5%, and she is willing to pay a real interest rate of 3%. Joe expects the inflation rate t

o be 5%, and he is willing to lend money if he receives a real interest rate of 3%. If the actual inflation rate is 6% and the loan contract specifies a nominal interest rate of 8%, then:
a)Joe is glad he lent out funds even though his real interest rate has fallen.
b)Joe is sorry he lent out funds since his real interest rate is now 9%.
c)Mary is glad she borrowed the funds because her real interest rate has fallen.
d)Mary is sorry she borrowed funds since her real interest rate is now 9%.
Business
1 answer:
dezoksy [38]3 years ago
8 0

Answer:

c)Mary is glad she borrowed the funds because her real interest rate has fallen.

Explanation:

Real interest rate = nominal interest rate - inflation rate

=8% - 6% = 2%

Mary is willing to pay a real interest rate of 3% but she pays 2%. Her consumer surplus is 1%

Joe is willing to accept 3% but receives 2% in the end. Therefore, he doesn't earn a producer surplus.

I hope my answer helps you

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has excess cash of​ $15,000 at the end of the harvesting season. will need this cash in four months for normal operations. Requi
kolezko [41]

Answer:

1)

Some of the major reasons why Garden Haven might to choose to either  invest in debt or equity securities are as follows;

  • They want to generate earnings. It is better to earn money from excess cash than keep it idle.
  • They invest in debt or securities because they provide liquidity. Investments in debt or securities can be sold through exchange the day decision is taken to see and convert it cash .
  • To meet cyclical cash needs.
  • They may have policies as regard to quantum of cash that can be kept .

2)

In terms of classification, Garden Haven's investment falls in short term investments.

Investments made for a period less than a year are classified as short term investments. Investments made for longer than one year are classified as long term investments. Since Garden Haven is making this investment for four months, this is be classified as short term investment.

8 0
3 years ago
Alcohol is most effective when used as a __________ solution. 25% 60% 70% 95% 100%
Marta_Voda [28]
Alcohol is most effective when used as a 70% solution.
8 0
3 years ago
Determine if the people in the example have benefited (i.e., are winners) or have been harmed (i.e., are losers) by unexpected i
nevsk [136]

Answer:

Winners

  • 3rd National, a bank that loaned many people money for home purchases.

Losers

  • Karen, a retired school teacher that relies upon her fixed pension to pay for her expenses.
  • Herb, who keeps his savings in an old coffee can.
  • Joy, who has borrowed $40,000 to pay her college education.
  • The US federal government which had almost $15 trillion in debt in 2011.

Explanation:

When unexpected inflation occurs, the usual plan to by Monetary Institutions of a country is raising the interest rates.

By doing that, they want to stop it or slowly decelerate it.

So that it becomes more expensive to take a loan, the idea is to reduce consumption.

In Economics, it's a bad scenario after all. Few winners. Many losers.

So, let's examine them

Winners

  • 3rd National, a bank that loaned many people money for home purchases.

At first, The 3rd National is going to be winning since the value of the debt will rise, depending on the type of contract and an increase in the interest rate will demand corrections on the monthly payments. But on the other hand, the number of default clients and overdue installments will raise for sure.

Losers

  • Karen, a retired school teacher that relies upon her fixed pension to pay for her expenses.

Inflation reduces the real buying value of her checks. And her pension can't grow otherwise this will feed the inflation too.

  • Herb, who keeps his savings in an old coffee can.

Since his money is not invested then He's not having any earning that might give him some compensation. So his money is even more devalued.

  • Joy, who has borrowed $40,000 to pay her college education.

Depending on the contract Joy might be sleepless. Either her monthly payments will become more expensive or She may experience difficulties because of the weekly growing prices.

  • The US federal government had almost $15 trillion in debt in 2011.

Certainly, the president and his secretary will have to address the fact that due to inflation and the chosen medicine make the nation's debt up to the sky. They must renegotiate the payment deadlines.

7 0
3 years ago
Compare and contrast the penalties in a civil and criminal trial.
Vladimir79 [104]

Answer: Compare and contrast the penalties in a civil and criminal trial. In a criminal trial, a defendant can be sentenced to jail time, can be fined, and can be forced to undergo some treatment or remedy. In a civil trial, a defendant can be assessed damages and can be coerced to follow through on an agreement.

Explanation: HOPE IT HELPS :)

6 0
3 years ago
Read 2 more answers
Beta Corporation acquired 100 percent of the voting shares of Yang Inc. by issuing 10,000 new shares of $10 par value common sto
poizon [28]

Answer:

The question is not complete.

Here is the complete question:

Beta Corporation acquired 100 percent of the voting shares of Yang Inc. by issuing 10,000 new shares of $10 par value common stock with a $40 market value.

Required:

1) Which company is the parent and which is the subsidiary?

2) Define a subsidiary corporation.

3) Define a parent corporation.

4) Which entity prepares consolidated worksheet?

5) Why are elimination entries used?

Here are the answers:

1. Beta Corporation is the parent while Yang Inc. is the subsidiary.

2.A subsidiary  corporation is an investee company in which another entity has a controlling interest in. This controlling interest is majorly achieved when the entity has more than 50% f the total voting shares.

3. A parent corporation is the investment entity which has a controlling interest in another entity called subsidiary.

4. It is the parent corporation that prepares consolidated worksheet.

5. Elimination entries are used to avoid double recording of values of assets, liabilities and equity in the consolidated accounts.

Explanation:

Parent and subsidiary is a form of relationship that exists where one entity has a controlling investment in another.

6 0
3 years ago
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