Suppose the economy is currently in equilibrium at output level Q2, but full-employment output is at level Q1. If the government
1 answer:
Answer: P1
Explanation:
In the long-run and even without government intervention, the economy will eventually converge on its long run equilibrium level which is the full employment output level of Q1.
This means that eventually, the aggregate demand in this scenario will go down to AD1 or AS would change such that the long run price will go to P1 as this is the full employment output price level.
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Answer: Option (c) is correct.
Explanation:
Given that,
Price elasticity of demand = 0.5
Percentage increase in price = 8%
Price elasticity of demand =
0.5 =
Percentage change in quantity demanded = 0.5 × 8
= 4%
Therefore, if the price rises by 8% then as a result quantity demanded decreases by 4%.
Answer:
Multiplying the annual deposit and the number of years before calculating the problem.
Explanation:
An annuity can be defined as a sequence of payment that is typically made at equal intervals i.e at specific period of time.
Basically, annuity can be calculated using the compound interest formula. It is given by the mathematical expression;
Where;
A is the future value.
P is the principal or starting amount.
r is annual interest rate.
n is the number of times the interest is compounded in a year.
t is the number of years for the compound interest.
Additionally, the time period between each payment is called payment period.
The term of an annuity refers to the time from the beginning of the first payment made by an individual to the end of the last payment period.
A common error made when solving a future value of an annuity problem is multiplying the annual deposit and the number of years before calculating the problem.