Because the assumption does not require for the growth to be at the same constant every year, instead it states that the best estimate of growth for any future year is the expected growth rate from the previous year. It is just very unreasonable to assume that the growth rate will be constant every year. Companies just cannot maintain the same rate earning every year; sure they can for a few years in a row but not forever. If they do there could be a suspicion of fraud. 2.
When companies can produce more due to demand they are able to hire more workers, which can lower the unemployment rate. Lowering the unemployment rate will provide more income tax revenue to the government and fewer citizens taking unemployment benefits. Conversely, when exports decrease consumers pay less money for products causing domestic profits to decline and companies are unable to maintain or increase their workforce causing the unemployment rate to
265). An increase in the real investment or in components of consumption will cause a rise in the real GDP and a decrease in real spending will cause a decrease in the real GDP. To calculate the multiplier one takes 1 and divides it by 1 minus the marginal propensity to consume, which is equal to one divided by the marginal propensity to save. Therefore, the “smaller the marginal propensity to save, the larger the multiplier” and the “larger the marginal propensity to consume, the larger the multiplier” (Miller, 2012, pg. 266).
If the marginal revenue is greater than marginal cost this would be when a profit maximizing firm would need to increase production until marginal revenue is equal to marginal cost. However, if the opposite situation exist were the firm finds that the marginal revenue
et powerECO204: Homework Assignment 3 1. True, False, Uncertain a. A firm that enjoys economic rents earns higher economic profits than other firms without the economic rents. b. Relative to the perfectly competitive equilibrium, the equilibrium outcome for a market dominated by a monopsonist will be higher prices and lower levels of good demanded.
As nonprofit organizations grow their administrative expenses also grow. Keeping this expense low can become increasingly difficult in competitive employment markets. BBBSA has an internal achievement goal of 10% growth each year which requires new sources of funding, more volunteers, more collaborative efforts and more staff. The reality of lofty growth goals is that reduced funding opportunities can make for an environment that forces organizations to diversifying funding sources rather than suggesting diversification. From 2007 to 2008 BBBSA made notable modifications to its market investments by cutting such chance opportunities in half from $2,426,812 to $1,045,470 while keeping fundraising and administrative expenses relatively unchanged to help survive downturns in economic
During the intermeeting period the financial markets were able to stay the same. In a statement from the FOMC “Growth in household spending picked up late last year, but remains constrained by high unemployment, modest income growth, lower housing wealth, and tight credit. Business spending on equipment and software is rising, while investment in nonresidential structures is still weak. Employers remain reluctant to add to payrolls” (Board of Governors Federal Reserve System, 2011).” In November, the committee decides to continue increasing its holdings of securities to promote a stronger pace of economic recovery. They also made this decision to help ensure that inflation is a consistent level with its mandate.
Unemployment will increase, prices will go down and output will be reduced. Over a longer period of time, lower resource costs will cause a shift to the right in aggregate supply. The economy will move to producing a level of output consistent with full employment (as was the case before the decrease in aggregate demand), but at a lower price level. 18. Contrast the pros and cons of protectionist policies.
How does inflation affect money's ability to store value? (3-6 sentences. 2.0 points) inflation can decrease the value of money over time. Inflation is when the value of money goes down, so that you can't get as much for your money as you could in the past. If inflation is increasing, which means the value of money is going down, it may make more sense to invest the money in investments that are likely to increase in value.
Small businesses actually rely on low-income families to spend money on goods to increase business sales. Raising the minimum wage “would allow people to afford basic necessities and decrease the pressure on taxpayers” (Sklar). There are those who believe increasing the minimum wage “will only speed up the pink slips and prolong [low-income workers] unemployment” (Norwood). Since the latest increase in the minimum wage in 2009, unemployment has yet to have dramatically increase nor decrease significantly. This type of result would only occur if the minimum wage was increased by a tremendous amount.