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Nata [24]
2 years ago
8

The wealth effect refers to the fact that

Business
1 answer:
Sloan [31]2 years ago
3 0

Answer:

a. when the price level falls, the real value of household wealth rises, and so will consumption.

Explanation:

A wealth gap is the difference between the richest and poorest citizens living in a geographical location based on the level of their assets and net worth i.e assets minus their debts. Also, these informations about the citizens when generated by the government are typically used for formulating economic policies, plan and financial budgets.

Wealth effect is a behavioral economics theory (psychological phenomenon) which states that an increase or decrease in the value of an asset such as bonds, stocks, property, etc., would result in an increase or decrease in consumer spending respectively.

This ultimately implies that, the wealth effect refers to the fact that when the price level falls, the real value of household wealth rises, and so will consumption. Thus, it is mainly focused on examining how a change (increase or decrease) in personal wealth of a household influences (affects) economic growth and by extension consumer spending over a specific period of time.

In conclusion, when there is an overall increase in the performance of an asset, consumer spending would rise and increase ultimately.

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Umm c

Explanation:

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Mogul Company ships merchandise to Ski Outfit in a consignment arrangement. The arrangement specifies that Ski Outfit will attem
Juliette [100K]

Answer:

$24,000

Explanation:

According to the consignment accounting, it States that any inventory sent on consignment by the consignor to the consignee, belongs to the consignor until the inventory is sold by the consignee.

Regarding the above, Mogu company sent inventory costing $100,000 and out of this, only $76,000 has been sold. The remaining inventory still belongs to the consignor and the amount of this inventory is;

$100,000 - $76,000 = $24,000

Therefore, Mogul would report $24,000 worth of inventories at year end.

7 0
2 years ago
Most businesses replace their computers every two to three years. Assume that a computer costs $2,000 and that it fully deprecia
sineoko [7]

Answer:

$2000=Z/(1+i)^1+Z/(1+i)^2+Z/(1+i)^3

Explanation:

let Z be the annual minimum cash flow

The internal rate of approach can be used here, in other words, the rate of return at which capital outlay of $2000 is equal present values of future cash flows

In year 1, present value of cash =X/discount factor

year 1 PV=Z/(1+i)^1

year 2 PV=Z/(1+i)^2

year 3=Z/(1+i)^3

Hence,

$2000=Z/(1+i)^1+Z/(1+i)^2+Z/(1+i)^3

Solving for Z above would give the minimum annual cash flow that must be generated for the computer to worth the purchase

Assuming i, interest rate on financing is 12%=0.12

Z can be computed thus:

$2000=Z(1/(1+0.12)^1+(1/(1+0.12)^2+(1+0.12)^3)

$2000=Z*3.09497902

Z=$2000/3.09497902

Z=$646.21

3 0
3 years ago
You want to construct a portfolio containing equal amounts of U.S. Treasury bills and two stocks. If the beta of the first stock
Tasya [4]

Answer:

the beta of the second stock is 1.77

Explanation:

The beta of the second stock is shown below;

Investment in each = (1 ÷ 3)

Now as we know that

Portfolio beta = Respective investments × Respective weights

1 = (1 ÷ 3 × 1.23) + (1 ÷ 3 × beta of the second stock) + (1 ÷ 3 × 0)

We assume the Beta of risk-free assets would be zero

1 = 0.41 + (1 ÷ 3 × beta of the second stock)

The beta of the second stock is

= (1 - 0.41) × 3

= 1.77

Hence, the beta of the second stock is 1.77

8 0
3 years ago
Whispering enters into a licensing agreement with Pang Pharmaceutical for a drug under development. Whispering will receive a pa
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Answer:

Transaction price of the arrangement for Blair Biotech is $10,000,000.

2) Journal Entries for Blair.

Date Accounts Debit$ Credit$

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Accounts Receivable $10,000,000

Explanation:

8 0
3 years ago
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