General Accounting Suppose a closed economy has an aggregate consumptionfunction given by C = 50 + 0.50Yd and generates $2100 outputand income in equilibrium. Suppose also that the governmentspends 400 and imposes a lump-sum tax of 50.What is the level of intended investment?

Step 1: Define Closed EconomyA closed economy is an economic model in which all economic activities,…

Answered: Suppose a closed economy has an…

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 19EB: Wallace Company is considering two projects. Their required rate of return is 10%. Which of the two...

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Assume a finite state economy with three assets whose payoff matrix is given by 30 20 50 D = 20 15 35 (a) Suppose that the asset prices are $28, $18, and $47, respectively. Is there an arbitrage opportunity in the market? (b) If the price of the third asset reduces to $46, is there an arbitrage oppor- tunity in the market?
The payoffs of an investment are dependent on the state of the economy. The economy can have two states, recession or growth, with equal probability. If the payoff in the event of growth is $140 and in the event of recession is $80, what is the expected payoff for the investment? a.$100 b.$130 c.$120 d.$110
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Consider the following payoff table that represents the profits earned for each alternative (A, B, and C) under the states of nature S1, S2, and S3. Using the Laplace criterion, what would be the highest expected payoff? S1 S2 S3 A $100 145 120 B $75 125 110 C $95 85 60
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Am.11.
A project is economically feasible if: O a Its future worth is less than zero O b. Its annual worth is greater than 0 O .ts internal rate of return is equal to its external rate of return O d. Its external rate of return is less than the minimum attractive rate of return O e. Its external rate of return is greater than 0
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Answer the following question (Q#4) Consider a poor country with an under-developed economy which could invest trillions into its current capital stock – either moving “up” its current productivity “curve” (PC) or shifting to a new and higher productivity (PC) curve. Which approach is likely best for increasing the country’s living standards (Real GDP Per Person) through time? (a) A continuous build-up of the current capital stock with established technology will achieve more – capital “deepening” with more capital for each worker. (b) R&D that supports “cutting edge” invention and innovation will propel labor (Q#8) Until recently, the economy in China has grown steadily due to the deliberate emphasis on low skill – low wage factory labor methods. However, China’s economic standard of living is still comparatively low. To achieve a U.S. or German standard of living what should be done? a) China should…
You are considering Project A, with the following information (Assume all statistics given are correct): Economy Probability of Rates of Return ____ Condition State Occurring Project A Market T-Bill Bad 0.2 3.0% 0.0% 4.82% Average 0.4 10.0% 8.0% 4.82% Good 0.4 15.0% 12.0% 4.82% Expected return 10.6% 8.0% 4.82% Standard deviation 5.72% 4.38% 0% Correlation Coefficient between…

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Suppose a closed economy has an aggregate consumption function given by C = 50 + 0.50Yd and generates $2100 output and income in equilibrium. Suppose also that the government spends 400 and imposes a lump-sum tax of 50. What is the level of intended investment?