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OLga [1]
3 years ago
14

Answer the following questions about the (real) inflation tax, assuming that the price level starts at 100.

Business
1 answer:
Rus_ich [418]3 years ago
7 0

Answer:

a) $900 after 1 year

b) $810 after 2 years

Explanation:

This deals with the time value of money concept. This states that money is worth more today than the same amount is worth sometime in the future. The real purchasing power is the nominal purchasing power discounted back as per the prevailing inflation rate.

For a)

$1000 after one year will be worth 1000 * 0.9 = $900 or a reduction of $100 as 1000 today is worth only 900 after 1 year.

For b)

The inflation rate discounts real purchasing power year over year so after 2 years the real purchasing power will be as follows,

Real purchasing power = 900 * 0.90 = $810 which is discounted by 10% inflation for 2 years.

Hope that helps.

You might be interested in
Your boss wants you to blog primarily about your company news, its services, and various corporate events. What is your response
vazorg [7]

Answer:

2. "That’s not a good idea. We’re trying to attract new visitors with our posts. These people haven’t yet heard of our company. If we write about ourselves, they won’t find us organically."

Explanation:

As in the question, it is mentioned that the company want the people to know about the company, its services, news, etc

The company want to do the promotion by advertisements, social media so that more and more people could be connected with the company

By writing an interesting posting, the new visitors could be attracted which reflects a good sign for the company.  

If we write about ourselves so there would be no use as our primary purpose is to promote our company so that more and more person get to know about it

6 0
3 years ago
Analyze a local space that is open to the public. It can be a store or mall, a club, restaurant, or a school (like COC), perhaps
enyata [817]

Answer:

Local spaces open for public to help them with social activities. Parks, gyms, store, mall and clubs are some of local spaces which are open to everyone for gaining relaxation in their leisure time.

Explanation:

People are busy in weekdays and they need some place for relaxation on weekend. There are many places which provide with recreational activities for people to relax and spend their weekends with their family.

7 0
3 years ago
The board of directors of Capstone Inc. declared a $0.90 per share cash dividend on its $2 par common stock. On the date of decl
Bas_tet [7]

Answer:

A. Dividends 11,700 Dividends Payable 11,700

Explanation:

The journal entry to record the dividend declared is shown below:

Dividend A/c Dr $11,700

     To Dividend payable $11,700

(Being the dividend is declared)

The computation is shown below:

= (Number of shares issued - treasury stock) × cash dividend per share

= (20,000 shares - 7,000 shares) × $0.90

= 13,000 shares × $0.90

= $11,700

6 0
3 years ago
cientists have developed a bacteria that they believe will lower the freezing point of agricultural products. This innovation co
alex41 [277]

Answer:

equilibrium price would fall and equilibrium quantity would increase

Explanation:

The discovery would reduce the amount of crops now lost to frost damage and increase the supply of crops e.g. potato.

As a result of the increase in supply, there would be an excess of supply over demand equilibrium price would fall and quantity would increase

Please check the attached image for a graph showing increase in supply

5 0
3 years ago
Suppose the market wage for cashiers increases from $7 per hour to $9 per hour.As a result, Pat, who is a cashier, now works fiv
Anton [14]

Answer:

Income

Explanation:

Suppose the market wage for cashiers increases from $7 per hour to $9 per hour. As a result, Pat, who is a cashier, now works five more hours per week. On the other hand Chris, who is also a cashier, now works five fewer hours per week.Chris's behavior illustrates the <u>Income</u> effect of a wage increase.

As the income increases, few individual prefer to work fewer hours as now they are able to maintain target by working fewer than at previous wage rate. These people prefer leisure over higher income and want to settle down with limited income. These people  may have a backward bending individual labour supply curve – they may choose to work fewer hours when the wage rate rises.

8 0
3 years ago
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