All categories

3 years ago

(a) Explain the quantity theory and(b) how does the theory explains the cause of inflation

1 answer:

n200080 [17]3 years ago

5 0

The quantity theory is a framework to understand price changes in relation to the supply of money in an economy.

It assumes an increase in money supply creates inflation and vice versa.

You might be interested in

At the beginning of the year, wilson steel, inc. purchased 10,000 shares of barnes metals, inc. for $34,000 in exchange for

Dafna11 [192]

Answer: Long-term investments

Wilson Steel paid $34,000 for a 3.2% stake in Barnes Metal.

Wilson Steel has invested in Barnes with the intention of selling this stock after two years. It has no other business interest in it. <u>Hence, we can consider this as a long-term investment. </u>

Long-term investments are a part of the assets of a company. Hence, in the balance sheet, long-term assets will show an increase of $34,000.

7 0

3 years ago

Peggy started work after graduation and started investing.

Andre45 [30]

Answer:

Explanation:

4 0

3 years ago

Read 2 more answers

On July 1, 2021, Clearwater Inc. purchased 9,300 shares of the outstanding common stock of Mountain Corporation at a cost of $21

il63 [147K]

Answer and Explanation:

1. The journal entry is given below:

Investment in Mountain $213,000

To Cash $213,000

(Being the original investment is recorded)

Here the investment is debited as it increased the assets and credited the cash as it decreased the assets

The goodwill is

Purchase price $213,000

Less : Fair value of assets purchased (30%of $660,000) $198,000

Goodwill Purchased (difference) $15,000

Cash (30% × $11,700) $3,510

To Investment in Mountain $3,510

(being cash is recorded)

Investment in Mountain (30% 17,700) $5,310

To Investment Revenue $5,310

(Being investment is recorded)

6 0

3 years ago

Martin's Inc. is expected to pay annual dividends of $2.50 a share for the next three years. After that, dividends are expected

blagie [28]

Answer:

The stock current intrinsic value is: $39,46

Explanation:

We solve using the gordon model for dividend growth to valuate the price of the stock:

$\frac{dividend_1}{return-growth} = Intrinsic \: Value$

d0 = 2.50

d1 = 2.50 x 1.03 = 2.575

$\frac{2.575}{0.09-0.03} = Intrinsic \: Value$

Value: 42,91666666666667‬

This value is three years therefore, we need to discount:

$\frac{Principal}{(1 + rate)^{time} } = PV$

Maturity $42.9167

time 3.00

rate 0.09000

$\frac{42.9166666666667}{(1 + 0.09)^{3} } = PV$

33.1395

We also have to calcualtethe present value of the first, second and third year dividends

discount rate 0.09

# Cashflow Discounted

1 2.5 2.29

2 2.5 2.1

3 2.5 1.93

PV 6.32

We ad this to the PV of the infinite future dividends growing at 3%

6.32 + 33.1395 = 39,4595‬

7 0

4 years ago

________ products are products whose demands are positively related and as such, they rise or fall together.

Free_Kalibri [48]

Answer:

The answer is Complementary!

Explanation:

Complementary products are products whose demands are positively related and as such, they rise or fall together.

3 0

3 years ago

(a) Explain the quantity theory and(b) how does the theory explains the cause of inflation​

(a) Explain the quantity theory and(b) how does the theory explains the cause of inflation