Answer: The change will be $400 billion.
Explanation: The marginal propensity to consume (MPC) is used to explain that increase in consumption is as a result of increase in income.
To calculate how much the equilibrium real GDP will change:
STEP1: CALCULATE THE MULTIPLIERS
multipliers = 1 ÷ (1 - MPC)
Where MPC = 0.
Therefore;
Multipliers = 1 ÷ (1 - 0.5) = 1 ÷ 0.5
Multipliers = 2
STEP 2: CALCULATE HOW MUCH THE EQUILIBRIUM REAL GDP WILL CHANGE;
Multipliers × change in consumption spending
2 × $200 billion = $400 billion
Equilibrium real GDP will change with $400 billion
Answer:
Deposited amount will decrease by 1% and $2,000
Explanation:
Inflation rate will effect the value of money due to decrease in purchasing power of the currency holder.
We will use following formula to calculate the impact
Nominal rate = Real interest rate + Inflation rate
5% = Real interest rate + 6%
Real interest rate = 5% - 6% = -1%
The deposited amount will be decreased by 1%.
Deposit value = $200,000 x ( 1 - 1% ) = $198,000
Decrease in value = $200,000 - $198,000 = $2,000
Answer:
b. the equity method.
Explanation:
The equity method is used when the investor company will own approximately 20% to 50% of the common stock of the investee company. This method is used because the investor company will have significant influence over the actions taken by the investee company. The investee company will generally be considered an affiliate company, but not a subsidiary.
Answer:
The answer to this question is D When real GDP falls, the rate of unemployment generally rises.
Explanation:
Gross domestic product (GDP) is the total value of everything produced in a country, whether by its citizen or foreigners.
Real GDP is a measurement of economic output that accounts for the effects of inflation or deflation. It provides a more realistic assessment of growth.
Therefore when real GDP falls, the rate of unemployment rises and this brings inflation
Answer:
1. 0.06
2. 0.38
3. 0.52
4. 0.06
Explanation:
1) Both decline = P1(D) × P2(D)
= 0.2 × 0.3
= 0.06
(stock 1 declines and stock 2 declines)
2) Exactly one rises:
= P1(R) × [P2(U) + P2(D)] + P2(R) × [P1(U) + P1(D)]
= 0.2 × [0.4+ 0.3] + 0.3 × [0.6 + 0.2]
= 0.14 + 0.24
= 0.38
(stock 1 rises and {stock 2 declines or remains unchanged})
or (stock 2 rises and {stock 1 declines or remains unchanged})
3) Exactly one unchanged:
= P1(U) × [P2(R) + P2(D)] + P2(U) × [P1(R) + P1(D)]
= 0.6 × [0.3 + 0.3] + 0.4 × [0.2 + 0.2]
= 0.36 + 0.16
= 0.52
4) Both rise = P1(R) × P2(R)
= 0.2 × 0.3
= 0.06
