Answer:
The correct answer is option C.
Explanation:
The production possibility curve shows the maximum possible bundle of two goods that can be produced using all the available resources and state of technology.
Since the resources are scarce, when we produce more of one good, we need to sacrifice more and more of the other good.
If all the resources in the economy are fully employed then it is not possible to increase the production of one good without decreasing the production of the other.
The economy can thus produce either on the production possibility curve or below it but not above it.
Answer:
Option B is the correct answer
Explanation:
Option B is correct because the yield on a 5-year bond must exceed that on a 2-year Treasury bond for the following reasons.
Firstly, after two years, the expected rate of inflation will be constant after two years.
Secondly, there is also a maturity risk premium that increases with increase in the maturity of the board.
These are the two reasons why the yield on a 5 year treasury bond must exceed on a 2 year treasury bond
Answer:
The answer is: David should make pizza and John should make pasta.
Explanation:
John is more efficient at producing both pizza and pasta, but considering he can only make one at a time we calculate David´s productivity compared to John´s.
David is 80% as productive as John in making pizza, and only 75% as productive in making pasta.
David should be in charge of making pizza because his productivity is closest to John´s.
Answer:
D. Both A and B
Explanation:
Recognition Lags in fiscal policy refers to the time lag a country has in clearly visiting the problems faced, when the policy is formed.
As for example the country government might not be able to recognise the problem of unemployment up to a certain identified amount. with automatic stabilisers the authorities can collect automatic data for this issue, and expected time lag will decrease and become minimal.
Implementation lag occurs when the authorities see the adversity of a problem in economy and implements a fiscal policy but it is not implemented in an effective manner, and the results are thus lagged.
Accordingly, automatic stabilisers will improve such time lag by providing the main areas of the country where the adversity of a problem is maximum.
Answer:
8.15%
Explanation:
The computation of the WACC is shown below:
= Weightage of debt × cost of debt × ( 1- tax rate) + (Weightage of preferred stock) × (cost of preferred stock) + (Weightage of common stock) × (cost of common stock)
= (0.35 × 6.50%) × ( 1 - 40%) + (0.10 × 6%) + (0.55 × 11.25%)
= 1.365% + 0.6% + 6.1875%
= 8.15%
We simply multiplied the weighted of each capital structure with its cost so that the weighted cost of capital could come
