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Orlov [11]
3 years ago
9

Delilah purchased a wheelchair with an installment loan that has an APR of 18 percent. The wheelchair sells for $2,007. The stor

e financing requires a 20 percent down payment and 54 monthly payments. What is the finance charge
Business
1 answer:
alukav5142 [94]3 years ago
5 0

Answer:

$748.48

Explanation:

Cost of wheelchair = $2,007

Down payment = Cost of wheelchair*20% = $2,007*20% = $401.40

Amount of finance = Cost of wheelchair - Down payment = $2,007 - $401.40 = $1,605.60

Interest rate = 18% * 1/12 = 1.5%per month

Term = 54 month

Monthly payment = Amount of finance*I/[1-(1+I)^-n]

Monthly payment =  $1,605.60*1.5%/[1-(1+1.5%)^-54]

Monthly payment = $1,605.60*1.5%/[1 - 0.447541]

Monthly payment = $1,605.60*0.015/0.55246

Monthly payment = $43.59411

Total amount paying for loan over a period = Monthly payment * Term = $43.59411 * 54 = $2354.08

Amount of finance charge = Total amount paying for loan - Amount of loan

Amount of finance charge = $2354.08 - $1,605.60

Amount of finance charge = $748.48

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Answer:

İ discussed on explanation

Explanation:

The IS-LM model reflects the balance between interest rates and production volumes in commodity and money markets. The name of this model comes from the combination of 2 basic economic equilibrium: Investment in economy (I) should be equal to savings (C) and money demand (L) equals money supply (M). This model shows that commodity and money markets are balanced.  In the IS curve, investment (expressed as interest rate) is equal to accumulation (issued as production). The IS curve is low due to the fact that there is a balance between interest rates and production in the commodity market. As the production grows, more money is invested, and the interest rate is lower so that investment is equal. Since the interest rate and production in the money market are directly proportional, the LM curve is high. As production increases, demand for money grows and interest rates increase.

Impact of fiscal policy on the IS curve

The IS curve represents the level of income that balances the commodity and services market at a given interest rate. But the income level also depends on government spending and taxes. The IS curve is drawn for a stable fiscal policy. That is, public expenditures and taxes are stable. When the fiscal policy changes, the IS curve changes its place. As an increase in public spending, the IS curve shifts its position (to the right). A reduction in taxes also causes the IS curve to slip.

Impact of monetary policy on the LM curve

The LM curve defines the interest rate that balances the money market for the given income level. But as mentioned earlier, the rate of interest depends on the supply of the real money at the same time. If the real money balance changes, such as the Central Bank's money supply, the LM curve shifts The liquidity preference theory should be used to understand how changes in monetary policy move the LM curve. Assume that the Central Bank has reduced money demand from M1 to M2. This will lead to a drop in the real money balance supply. When the income level and indirect demand for money are stable, the decline in the money supply raises the interest rate that balances the market. Thus, the LM curve moves to the left. As a result, the increase in real money supply suggests that the LM curve shifts to the right and the decrease to the left.

Fiscal Policy

In economics and political science, fiscal policy is used to influence the economy through government revenues and expenditures. According to the Keines School of Economics, when the state changes the level (level) and costs of taxes, it affects student and economic activity. Fiscal policy is applied to stabilize the economy when changes in business cycles occur. When the two main instruments of fiscal policy change taxes and public expenditure, it affects the following macroeconomic indicators:

Total demand and level of economic activity;

Savings and investments;

Distribution of Income.

Fiscal policy differs from monetary policy by some characteristics. Thus, fiscal policy affects the economy through changes in government revenues and expenditures regulated by the legislative act. Monetary policy is implemented by the central bank by influencing money supply, interest rates and obligatory reserve requirements.

There are three main types of fiscal policy:

1) Neutral fiscal policy is usually applied when the economy reaches a balance. At the same time, public expenditures are fully funded by government revenues and have a neutral impact on the economy.

2) Expanding fiscal policy outpaces public spending. This policy is usually implemented in times of crisis.

3) If a fiscal policy is implemented, only a portion of government revenues will be expensed. The remaining part will be used to repay domestic or foreign debts.

Monetary Policy

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4) Neutral monetary policy. The central bank does not change interest rates. Thus, neither economic growth is encouraged nor inflation.

5) Strict monetary policy. At the same time inflation is reduced while keeping interest rates high.

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