Based on the economic data given, and the fact that the government is running a deficit, the equilibrium GDP will be 336.67.
If government spending is cut to balance the budget, the new level of GDP will be 321.67.
The effect of balancing the budget will be a decrease in GDP and a slower recovery from the recesssion.
<h3>What is the equilibrium GDP?</h3>
This is given by the variable "Y" so we can find the equilibrium GDP by solving for it:
C = 50 + .7(Y – T)
Y = C + I + G - XN
C = Y - I - G + XN
Solving gives:
Y - I - G + XN = 50 + .7(Y – T)
Y - 40 - 35 + 10 = 50 + 0.7Y - 14
Y - 0.7Y = 50 + 40 + 35 - 10 - 14
0.3Y = 101
Y = 101/0.3
= 336.67
<h3>What is the new GDP if government spending is cut?</h3>
Government spending will have to be cut to a size that would make it equal to taxes so government spending becomes 20.
New GDP becomes:
= C + I + G - XN
= ( 50 + .7(Y – T)) + 40 + 20 - 10
= 271.67 + 40 + 20 - 10
= 321.67
Find out more on GDP at brainly.com/question/1384502.
Answer:
Budgeted Income Statement for the year
Sales (820 units × $ 2,130) $1,746,600
Less Cost of Sales (820 units × $ 1,500) ($1,230,000)
Gross Profit $516,000
Less Operating Expenses :
Selling and administrative expense
Variable (820 units × $ 75) ($61,500)
Fixed ($400,000)
Operating Profit $54,500
Less Non - Operating Expenses :
Interest ( $29,000)
Net Income / (Loss) $25,500
Explanation:
Income Statement shows the company`s performance from its operations.
Income / (Loss) = Sales - Expenses.
Consider the equation.
4(pr + 1) = 64
The value of x in terms of p is
The value of x when p is -5 is
In such a case Shawn's company cannot and should not give out a dividend.
Since the company has just raised money, is growing and profitable and it is becoming hard to keep up with demand, this is the best time for the company to reinvest its profits to:
1. Hire more people/Buy more product
2. Improve processes
3. Use the profits to invest in R&D
4. Use the profits to invest in marketing and promotion
5. Invest in providing better customer service
So no dividend should be given since it can hamper the growth of a young company. The money should be used to grow the company for now and in the future all shareholders can enjoy good dividends.
