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Why is depreciation included in calculating net national income? Why there has to be capital consumption in calculating income generation
RHA fund invested in 1,000 units of 7 percent, 15-year, RM1,000 bond issued by CMX Bhd. The bond was issued on 1/11/2018 at par. The firm bought the bonds on 1/11/2021 when the bond was selling at 2% discount. The firm intends to sell back all the bond when the interest rate is expected to be at 5% on 1/11/2026. Throughout the period of holding the bond, the firm reinvest all the coupons received in an investment alternative that pays 8 percent interest for the 1st 3 years and 9 percent interest for the remaining years. You are required to assist RHA fund to determine:
i) their total yield from this bond investment
ii) total capital gain from this investment
In the Mundell-Flemming Model, under the floating exchange rate regime, if money supply increase, what will happen to output and exchange rate? Briefly explain.
On April 18, 20-, an accounting clerk discovered that an invoice for $250 was debited to the wrong expense account. The invoice was for advertising, but had been debited to the Rent Expense account. Prepare correcting entry below.
a. Suppose that the government wants to raise investment but keep output constant. In the
IS–LM model, what mix of monetary and fiscal policy will achieve this goal?
b. In the early 1980s, the U.S. government cut taxes and ran a budget deficit while the Fed
pursued a tight monetary policy. What effect should this policy mix have?
Use the IS–LM diagram to describe the short run and long-run effects of the following changes
on national income, the interest rate, the price level, consumption, investment and real money
balances
a) An increase in taxes
Use the IS–LM diagram to describe the short run and long-run effects of the following changes
on national income, the interest rate, the price level, consumption, investment and real money
balances
a. An increase in government purchases
Use the IS–LM diagram to describe the short run and long-run effects of the following changes
on national income, the interest rate, the price level, consumption, investment and real money
balances
a. An increase in the money supply
In the Keynesian cross model, assume that the consumption function is given by
C = 120+ 0.8 (Y - T). Planned investment is 200, government purchases and taxes are both 400.
a) What is the equilibrium level of income?
b) If government purchases increase to 420, what is the new equilibrium income? What is the
multiplier for government purchases?
c) What level of government purchases is needed to achieve an income of 2,400? (Taxes remain
at 400.)
d) What level of taxes is needed to achieve an income of 2,400? (Government purchases remain
at 400.)
In the Keynesian cross model, assume that the consumption function is given by
C = 120+ 0.8 (Y - T). Planned investment is 200, government purchases and taxes are both 400.
a. Graph planned expenditure as a function of income.
