Answer:
By increasing the amount of money in the economy, the central bank encourages private consumption. Increasing the money supply also decreases the interest rate, which encourages lending and investment. The increase in consumption and investment leads to a higher aggregate demand.
Explanation:
It is important for policymakers to make credible announcements. If private agents (consumers and firms) believe that policymakers are committed to growing the economy, the agents will anticipate future prices to be higher than they would be otherwise. The private agents will then adjust their long-term plans accordingly, such as by taking out loans to invest in their business. But if the agents believe that the central bank’s actions are short-term, they will not alter their actions and the effect of the expansionary policy will be minimized.
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Answer:
The correct answer is option (B).
Explanation:
According to the scenario, the given data are as follows:
Net income = $110,000
Dividends paid = $60,000
Common stock owns = 15%
So, we can calculate the income for particular investment by using following method:
Income to be recognized = Dividends paid × Common stock owned
by putting the value, we get
= $60,000 × 15%
= $60,000 × 0.15
= $9,000
Hence, the income to be recognized on this investment is $9,000.
Answer:
The correct answer is B
Explanation:
Economic profit is the difference among the revenue received from the sale of the output and the cost of all inputs used and opportunity cost.
Zero economic profit, it is the situation where the firm is earning the same if its resources were employed in the next alternative which is best.
When the entry barriers in the market are low, then the firm will have the tendency of having a zero economic profit in the period of long run, as the profit which is short run will attract the extra suppliers which will result in down in the market price of the product.