What are the tools of macroeconomic policy?

Answers

Answer 1

Answer:

° Fiscal policy

° Monetary policy

° Exchange rate policy

Explanation:

Macro economics policy are tools used by a country's government through their central bank to influence the supply of money, control interest rate in their economy which will lead to economy stability and growth. The tools are explained below. An increase in government spending will make funds available to the household and firms hence increases the volume of money supply in the economy, while a decrease in government spending will also reduce the availability of money to household and firms.

° Fiscal policy . This refers to the use of tax and government expenditure to regulate the supply of money an economy. For instance, government through its central bank uses tax cut to increase the flow of money in an economy. Also, if the government feels that the supply of money in circulation is too much, which could result in inflation, government can increase taxes to be paid by individuals, firms and businesses which in turn will reduce the availability of money.

° Monetary policy. Monetary policy refers to various tools used by the government to control the flow of money in an economy, which includes open market operation, special reserves, interest rate adjustment. For instance, the government through CBN could buy or sell government issued securities which will ultimately affect the supply of money in an economy. Also, there is usually a minimum amount of reserves which must be held by commercial banks, which ultimately affects the supply of money. An increase in reserve ratio reduces the ability of banks to lend money to their customers while and a reduction in the reserve ratio increases their ability to lend to the public hence increases money supply.

° Exchange rate policy. The value of a country's currency in relation to other country's currency is referred to as exchange rate. Exchange rate policy is used to control inflation, preserve the value of domestic currency and also to maintain a favorable external balance of payments of a country.

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Workers and management agree on a contract that gives a 5% wage increase for each of the next three years. Everyone expected 3% inflation but inflation turned out to be 5% per year. Then at the end of three years... a. real wages will be higher than was expected. b. real wages will have fallen c. nominal and real wages will have changed by the same percentage. d. real wages will be lower than was expected.
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________ are industrial products that aid in the buyer's production or operations, including installations and accessory equipment.A) Unsought products
B) Convenience products
C) Capital items
D) Specialty items
E) Repair items

Answers

Answer:

C) Capital items

Explanation:

Capital items are the goods that should have physical existence also it is to be used at the time of manufacturing the product and services. It involves various items like - building, equipment, tools, etc

These are not categorized into a finished goods but are used for making the finished goods

Therefore in the given situation, the option C is the most appropriate and hence the same is to be considered

Final answer:

Capital items are industrial products that aid in the buyer's production or operations, including installations and accessory equipment.

Explanation:

The correct answer is C) Capital items. Capital items are industrial products that are used in the production or operations of a buyer's business. These can include installations and accessory equipment that aid in the overall functioning of the business.

For example, if a manufacturing company needs machinery to produce its products, that machinery would be considered a capital item. It is a long-term investment that is essential for the company's operations.

Other examples of capital items include vehicles, computer systems, and specialized tools or equipment.

Learn more about Capital items here:

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For an all-equity firm: (a) as earnings before interest and taxes (EBIT) increase, the earnings per share (EPS) increases by the same percentage. (b) as EBIT increases, the EPS increases by a larger percentage. (c) as EBIT increases, the EPS decreases at the same rate. (d) as EBIT increases, the EPS decreases by a larger percentage. (e) as EBIT increases, the EPS might either increase or decrease

Answers

Answer:

(a) as earnings before interest and taxes (EBIT) increase, the earnings per share (EPS) increases by the same percentage.

Explanation:

Since the firm has no debt and no preferred stocks, EBIT is just EBT (earnings before taxes). So any change in EBIT (or EBT) will change earnings per share in the same proportion.

For example:

EBIT = $200

outstanding shares = 100

taxes = 25%

EPS = ($200 x 75%) / 100 = $1.50 per share

if EBIT increases by 50% to $300

EPS = ($300 x 75%) / 100 = $2.25 per share

EBIT increased by 50% and EPS also increased by 50%

The risk premium for exposure to aluminum commodity prices is 4%, and the firm has a beta relative to aluminum commodity prices of .6. The risk premium for exposureto GDP changes is 6%, and the firm has a beta relative to GDP of 1.2. If the risk-free rate is 4%, what is the expected return on this stock?

A.
14.4 percent

B.
10.0 percent

C.
13.6 percent

D.
11.5 percent Please show work

Answers

Answer:

C. 13.6 percent

Explanation:

In this question, we apply the Capital Asset Pricing Model (CAPM) formula which is shown below

Expected rate of return = Risk-free rate of return + Beta × risk-free rate of return + Beta × market risk premium

= 4% + 0.6 × 4% + 1.2 × 6%

= 4% + 2.4% + 7.2%

= 13.6%

The (Market rate of return - Risk-free rate of return) is also known as market risk premium

The Kilp Sisters Trust is required to distribute $60,000 annually equally to its two income beneficiaries, Clare and Renee. If trust income is not sufficient to pay these amounts, the trustee can invade corpus to the extent necessary. During the current year, the trust generates only taxable interest income and records DNI of $160,000; the trustee distributes $30,000 to Clare and $150,000 to Renee. a. How much of the $150,000 distributed to Renee is included in her gross income? $.
b. How much of the $30,000 distributed to Clare is included in her gross income? $ is included in her gross income.
c. The distributions which are composed of trust accounting income that is required to be distributed currently come under .

Answers

Answer:

Results for Renee are as follows:

After the first tier distributions ($60000/2 = $30000 to each income beneficiaries) are accounted for, $100000 DNI remains to be assigned to the beneficiaries on the second tier ($160000 DNI - $60000 DNI used for first tier distribution).

Amount received DNI received = Gross income,

portfolio income

First tier $30,000.00 $30,000.00

Second tier $1,20,000.00 $ 1,00,000.00

Total $1,50,000.00 $ 1,30,000.00

Results for Clare are as follows:

Amount received DNI received = Gross income,

portfolio income

First tier $30,000.00 $ 30,000.00

Second tier $ - $ -

Total $30,000.00 $ 30,000.00

The distributions which are composed of trust accounting income that is required to be distributed currently come under First Tier Distribution.

Ethelbert is a young software company owned by two entrepreneurs. It currently needs to raise $1,254,400 to support its expansion plans. A venture capitalist is prepared to provide the cash in return for a 40% holding in the company. Under the plans for the investment, the VC will hold 19,600 shares in the company and the two entrepreneurs will have combined holdings of 29,400 shares.a. What is the total after-the-money valuation of the firm?
b. What value is the venture capitalist placing on each share?

Answers

Answer:

a. $3,136,000

b. $64 per share

Explanation:

The computation is shown below

a. The total after the money valuation is

= $1,254,400 ÷ 40%

= $3,136,000

b. The value that venture capitalist place on each share is

= $3,136,000 ÷ (19,600 ÷ 40%)

= $3,136,000 ÷ 49,000 shares

= $64 per share

Hence, the same should be considered

A firm pays a $11.80 dividend at the end of year one (D1), has a stock price of $145, and a constant growth rate (g) of 4 percent. Compute the required rate of return (Ke). (Do not round intermediate calculations. Input your answer as a percent rounded to 2 decimal places.)