According to the Keynesian school of thoughts, the key factors that determine equilibrium output is aggregate demand. With the crashing of the housing market, there is a deep decline in household wealth because a significant fraction of household wealth is in the form of housing. Reduced wealth leads to reduced consumption, which lowers aggregate expenditure.
<h3>What is meant by household wealth?</h3>
Household wealth is the difference between the value of a household's assets and the value of its liabilities and is one of the key determinants of private consumption.
To learn more about Household wealth, refer
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Complete Question is,
a. A decline in household wealth leading to a decrease in consumption expenditure.
b. Expected future incomes increasing and an increase in home purchases.
c. Declining tax revenues with cause a decrease in government spending.
The value of bonds will sell at premium and decline in value until maturity.
<u>Explanation:</u>
Coupon = 
Number of periods =
= 40
Rate = 
Price = $1,170.21
Key to use in a financial calculator are: FV =1000, N = 40, PMT = 54.25,
= 4.5. CPT PV
As the bond approaches maturity, price of bond will approach its face value.
Thu, it is clear that bonds will see at premium and would decline in value until maturity.
Answer:
The answer is $1,500
Explanation:
Accounting equation can be stated as follows:
Equity = Asset - Liability
Asset = Equity + Liability
Liability = Asset - Equity.
What a firm is obligated to pay its creditors is known as a liability and its value in the question is $8,900
The assets owned by the company totalled $10,400
Now to find market value of the shareholders' equity, we use:
Equity = Asset - Liability
$10,400 - $8,900
= $1,500
Answer:
- The corporation survives even if managers are dismissed.
- Shareholders can sell their holdings without disrupting the business.
Explanation:
Large corporations are not as easy to dissolve as other types of companies because they have other resources that are able to keep them going if they lose some. One of those resources could be a manager. Should a manager be dismissed, the corporation will survive and simply replaced the dismissed manager.
Also with such corporations, the shareholders can simply sell their shares and the business's operation will not be disrupted as the shareholders do not have any direct say over the day to day running of the business.
