d) The equilibrium interest rate increases to bring desired investment into equilibrium with the reduced quantity of national saving. e) The equilibrium quantity of investment is reduced via the increase in the interest rate by an amount equal to the increase in government spending. Question 5 (15 marks) a) capital is added. No, MPK does not diminish because it does not decline as more is also acceptable. b) L = 100: L = 110: L = 120: 0. .
Exports are the trade of goods and services between international economies. The macroeconomic performance of a country is measured by unemployment rate, which is targeted at 2.5%; inflation rate, which is targeted at 2.0% plus or minus 1% on the CPI; a satisfactory position on the balance of payments; and a stable economic growth rate, targeted at 2.5%. It is clear that an increase in exports would have an effect on an economies macroeconomic performance as it is a factor (balance of payment), but the extent to which can improve an economies macroeconomic performance is dependant on many other conditions. An increase in exports, may improve the economic performance of an economy, as it would reduce unemployment (the amount of people willing and able to work, but not in work). If exports were to increase this would result in an increase in AD, as the balance of payment is a factor.
Even though the acid-test ratio is less than 1 which rates in the lower third quartile in the industry of 1.6, 0.9 to 0.6, it indicates a concern with repaying current liabilities. This could be due to quick expansion of inventory with the intention of increasing sales. While this is currently considered a weakness and is concerning, a rise in the ratio should be seen by 2013 due to the increase of suggested sales. 3. I calculated an “inventory turnover ratio” which measures the number of times a company sells its inventory during a year.
Explain your answers. a. If a firm in the industry wishes to increase total sales revenue (ignoring cost considerations), will it raise or lower its selling price? Why? The selling price would only increase because the absolute value of -2.5 is 2.5 which are greater than 1 meaning it is elastic and an increase in price leads to a reduction in total revenue.
By looking at the trading, profit & loss forecast for the year, you can see that things look like they will go reasonably well over the year as it shows a net profit of £15808. You may need to consider the possibility of a rise in fuel prices or the possibility of a fuel shortage in the current climate. This could affect your business by raising the cost of sales. You should look at increasing your revenue figure in order to counteract this. Look at your pricing policy and make changes appropriately.
A 6% increase in Electricity costs. 1. A 2.5% increase in material cost When the material costs increases, the affect will occur on the master budget. The 2.5 % increase on the material cost means we will be paying more; as a result the profit will be less, unless we increase the selling price, reduction of employees (redundancy), to cover the change. Here below are show the calculation of the change: Material cost is 50355.15 2.5% of 50355.15 = 50355.15x 2.5 = 1258.87 100 The new material cost is = 50355.15 + 1258.87 =
Week 6: Individual - Money Train Multimedia Activity Week 6: Individual - Money Train Multimedia Activity XECO 212 March 25, 2012 Scenario 1 In 150 to 200 words, explain your reasoning for the way you are planning on using Reserve Requirements. Be sure to address the following: 1. How Reserve Requirements affect the economy 2. How your action will affect economic growth 3. Why it is important to increase economic growth 4.
The relationship between marginal revenue and total revenue is the change in total revenue with respect to the variable change in quantity. Marginal revenue = demand MR = d(TR)/dQ, where Q is quantity. For each additional unit of output sold total revenue increases but only by the amount equal to the marginal price of the output unit. • As we increase the number of units sold which generate a positive marginal revenue, the total revenue increases (The total revenue increases when marginal revenue is positive) • When marginal revenue is zero the total revenue does not change and the total revenue is maximum (When MR = 0, TR Δ = 0) B. Define marginal cost Marginal cost is the total cost to produce an additional unit of goods sold.
An increase in output (Y) leads to an increase in consumption (we model this simply as C = c0 + c1Y). An increase in output and a decrease in interest rates both act to increase investment (the simple model representation of this idea is I = b0 + b1Y - b2i). So a monetary expansion, which increases output and decreases interest rates, will increase both consumption and investment. b. How does a monetary expansion (in an economy will flexible exchange rates) affect net exports?
According to Price (£) vs. Demand of Californians graph, it shows the negative relationship between price and quantity demanded. The higher the price of the product, the lower the quantity demanded would be. Or the lower the price, the higher quantity of Californian would be demanded. b) Elasticity of demand is a measure of how much the demand for a product changes when the price changes with all other factors held constant. It varies among products because some products may be more essential to the consumer.