The system of linear inequalities that represents the given scenario is:
The federal reserve can manipulate the economy using the fiscal policy. The tools that it uses are interest rates and money supply.
In times of recession the federal reserve generally lowers the interest rates which stimulates the economy by allowing firms to borrow money at a cheaper price. Also, the consumers are encouraged to spend more. This leads to increase in production output and hence increase in employment rates.
To control the inflation, feds increases the interest rates, which decreases consumer spending and allow them to save more. Higher interest rates mean higher price of borrowing and therefore, inflation level decreases.
Answer:
Market rate of return = 12.45%
Explanation:
Below is the calculation of market rate of return.
D = Just pad dividend x (1 + growth rate)
D = 2 x (1 + 0.038)
D = 2.076
Now use the below formula to find the market rate of return.
Market rate of return = (D/current selling price) + Growth rate
Market rate of return = (2.076 / 24) + 0.038
Market rate of return = 12.45%
Answer:
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