Answer:
the options are missing, so I looked for them:
a. The buying of government bonds leads to lower interest rates, thereby reducing private investment.
b. The selling of government bonds leads to higher interest rates, thereby reducing private investment.
c. The selling of government bonds leads to lower interest rates, thereby reducing private investment.
d. The buying of government bonds leads to higher interest rates, thereby reducing private investment.
the answer is:
b. The selling of government bonds leads to higher interest rates, thereby reducing private investment.
Explanation:
The crowding out effect happens when the government increases its spending level in order to engage in an expansionary fiscal policy but someone needs to pay for this extra spending. In order for the government to finance their spending, they have to choose to either increase taxes or issue more debt. When they issue more debt, they end up decreasing private investment since money that could be used by private companies is used by the government instead.
Answer:
b. 5.27%
Explanation:
First, find the PV of the bond today. With a financial calculator, input the following and adjust the variables to semi-annual basis;
Face value; FV = 1000
Maturity of bond; N = 15*2 = 30
Semiannual coupon payment = (8.75%/2)*1000 = 43.75
Semi annual interest rate; I/Y = 3.25%
then compute Price; CPT PV= 1,213.547
Next, with the PV , compute the yield to call (I/Y) given 6 years;
Maturity of bond; N = 6*2 = 12
Semiannual coupon payment = (8.75%/2)*1000 = 43.75
Price; PV= -1,213.547
Face value; FV = 1,050
then compute Semiannual interest rate; CPT I/Y = 2.636%
Convert the semiannual rate to annual yield to call = 2.636*2 = 5.27%
Answer:
Because this market is a monopolistically competitive market, you can tell that it is in long-run equilibrium by the fact that P = ATC, P>ATC, MR =MC, or MR>MC at the optimal quantity. Furthermore, the quantity the firm produces in long-run equilibrium is the efficient scale. True False
This indicates that there is a markup on marginal cost in the market for shirts. True False
Explanation:
In the long run, monopolistically-competitive entities produce at a level where marginal cost and marginal revenue are equal. This makes it impossible for individual companies to sell their products at prices above the average cost. This situation means that monopolistically-competitive companies will always earn zero economic profit in the long run.
Answer:
The journal entry which is to be recorded for the first installment payment on the note is shown below:
Explanation:
The journal entry is as on December 31, 2015
Interest Expense A/c.................Dr $4,500
Notes Payable A/c.......................Dr $20,881
Cash A/c..............................Cr $25,381
Working Note:
Interest expense = Borrowed amount × 5%
= $90,000 × 5%
= $4,500
Note Payable = Cash - Interest expense
= $25,381 - $4,500
= $20,881
The four primary functions of managers are planning, organizing, leading, and controlling. By using the four functions, managers work to increase the efficiency and effectiveness of their employees, processes, projects, and organizations as a whole.
