Not necessarily. Although the total amount of debt has predicted inflation and the business cycle better than M1 or M2, it may not be a better predictor in the future.
<h3><u>
What is inflation?</u></h3>
- Price increases, or inflation, can be thought of as the gradual loss of purchasing power.
- The average price increase of a selection of products and services over time can serve as a proxy for the rate at which buying power declines.
- A unit of currency effectively buys less as a result of the increase in pricing, which is sometimes stated as a percentage.
- Deflation, which happens when prices fall and buying power rises, can be compared to inflation.
- The objective of measuring inflation is to determine the overall effect of changes in price for a variety of goods and services.
Without some theoretical reason for believing that the total amount of debt will continue to predict well in the future, we may not want to define money as the total amount of debt.
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Answer:
a.
15%
b.
29.57
Explanation:
The price of a stock whose dividends are expected to grow at a constant rate forever can be calculated using the constant growth model of the dividend discount model approach. The DDM values the stock based on the preset value of the expected future dividends from the stock. The price of the stock today under this model is,
P0 = D1 / r - g
Where
P0 = Price of stock
D1 = Future Dividend
r = Expected rate of return
g = Growth rate
a.
As we have the price of the price of the stock, we need to calculate the expected rate of return by extracting the formula.
r = (D1 / P0) + g
As per given data
P0 = Price of stock = $34
D1 = Future Dividend = $3.40
g = Growth rate = 5% = 0.05
Placing Values in the formula
r = ( $3.4 / 34 ) + 0.05
r = 0.15 = 15%
b.
As per given data
D1 = Future Dividend = $3.40
g = Growth rate = 5% = 0.05
r = Expected rate of return = 16.5%
Placing Values in the formula
P0 = D1 / r - g
P0 = $3.40 / (16.5% - 5%)
P0 = $29.57
Consumers and business in the market economy seek to earn money so they can buy products so that they don't go out of business.
Answer:
option two is the correct answer
Explanation:
as a consulting firm i will advice the government officials to increase the price of tolls. Due to the increase in price of tolls, private transportation will be paying higher tolls fee and thereby increase farefee. on the other hand Government are the owner of tolls the money paid by public transportation will in turn go back to government. so government need not increase the fee for fare which will make it the best option for individual to patronize.
