Answer:
Government spending would have to change by <u>$1.6 billion</u>
Explanation:
The marginal propensity to consume (MPC) refers to the proportion of an increase in aggregate income that is spent on consumption of commodities by a consumer.
Since from the question, we have:
MPC = Marginal propensity to consume = 0.75
The MPC can therefore be used to calculate the fiscal multiplier which measures the effect of government spending on real GDP as follows:
Fiscal multiplier = 1 / (1 - MPC) = 1 / (1 - 0.75) = 1 / 0.25 = 4.0
Therefore, we have:
Change in government spending = Fiscal multiplier * Amount of targeted increase real GDP = 4.0 * $400 million = $1.6 billion
Therefore, government spending would have to change by <u>$1.6 billion</u> to generate $400 million increase in real GDP.
Answer:
The answer is;
people trade goods directly with goods rather than through using money
Explanation:
In that a barter economy, people trade goods directly with goods rather than through using money.
Money is not used in a barter economy. Barter economy was experienced a very long time ago.
For example, Mr A. has yam at home but needs rice, he has to look for someone that wants yam in exchange for the rice he needs
Answer:
For the special order the company will not incur any additional fixed cost as the special order is within the normal range of production.
Sales ( 10000 * 5 ) 50000
(-) Direct materials ( 10000 * 1.75 ) 17500
(-) Direct labor ( 10000 * 2.50 ) 25000
(-) Variable overhead ( 10000 * 1.50 ) 15000
Income / (loss) (7500)
Required 1 :
Answer : Reject
Required 2 :
Answer : Decrease by 7500
Answer: Option (b) is correct.
Explanation:
Given that,
Revenues = $300,000
Merchandise it purchased = $75,000
Salaries paid = $14,000
Owners invested = $23,000
Borrowed on a five-year note = $23,000
Interest paid = $3,000
Paid for a two-year insurance policy = $6,800
Income tax rate = 9%
Gross Margin = Revenues - Cost of Goods Sold
= $300,000 - $75,000
= $225,000
Profit before tax = Gross Margin - Salaries - Insurance payment - Interest
= $225,000 - 14,000 - 3,400 - 3,000
= $204,600
Net Income = Profit before tax - Tax at 9%
= $204,600 - 18,414
= $186,186
Answer: 0.755
Explanation:
From the information given, the current per share value of the option if it expires in one year will be calculated as follows:
Firstly, we calculate the present value which will be:
= $28 / ( 1 + 0.05 )
= $28/1.05
= $26.667
The number of options needed will be:
= ( 34 - 28 )/ ( 4-0)
= 6/4
= 1.5
Therefore,
27.80 = (1.5 x Co) + [28 / (1+0.05)]
27.80 = 1.5Co + (28/1.05)
27.80 = 1.5Co + 26.667
1.5Co = 28.0 - 26.667
1.5Co = 1.1333
Co = 0.755
Therefore, the answer is 0.755
