According to the article, inflation in an economy is caused by an adverse supply shock or as a result of the expansionary fiscal policy or the expansionary monetary policy.

In an adverse supply shock, total quantity of basic goods will reduce drastically causing the aggregate demand to rise exponentially and therefore, push prices higher and then gradually lead to inflation.

Also, the continous and eventual implementation of the expansionary fiscal or monetary policy through continous tax cuts or by increasing government spending or reducting interest rates, lead into significant increase in the aggregate demand and as a result, prices rise eventually resulting in hyperinflation in the economy. This will also lead to increase in the real GDP of the economy.

Different tools in the monetary policy framework can be used to control inflation such as government securities,

the cash reserve ratio, interest rates. To reduce recession, government utilize automatic stabilizer in order to boost the economy.

8 0

2 years ago

The Balance Sheet of Greene, Inc. on January 1, 20X1 showed the following. Assets $30,000, Liabilities $20,000 and Stockholder's

scZoUnD [109]

Answer:

B. 51,000

Explanation:

The computation of the total assets at the end of the year is shown below:

= Opening balance of asset account + revenue collected - expenses incurred + additional assets purchased + additional cash invested in the business

= $30,000 + $30,000 - $34,000 + $15,000 + $10,000

= $51,000

Simply we deduct the expenses incurred and the rest of the items are to be added in the beginning balance of asset account so that the accurate amount can come.

6 0

2 years ago

8-2 PORTFOLIO BETA An individual has $35,000 invested in a stock with a beta of 0 8 and another $40,000 invested in a stock with

Katen [24]

Answer:

The correct answer is 1.12.

Explanation:

According to the scenario, the given data are as follows:

First investment = $35,000

Beta for first investment = 0.8

Second investment = $40,000

Beta for second investment = 1.4

Total portfolio value = $35,000 + $40,000 = $75,000

So, we can calculate her portfolio’s beta by using following formula:

Portfolio beta = Average beta (first stock) + Average beta (second stock)

where, Average beta (first stock) = 0.8 × $35,000 ÷ $75,000

= 0.37

And Average beta (second stock) = 1.4 × $40,000 ÷ $75,000

= 0.75

So, by putting the value, we get

Portfolio beta = 0.37 + 0.75

= 1.12

Hence, The portfolio beta for two investments is 1.12.

5 0

2 years ago