$40 for the current year‚ what is the approximate present value of this stock‚ given at discount rate of 5% and a dividend growth rate of 3%? Answer: P = $40/(0.05 - 0.03) = $40/0.02 = $2‚000 Topic 2: Supply and Demand 1) Suppose that the demand for oranges increase. Explain the long -run effects of the guiding function of price in this scenario. Answer: In the long run‚ the higher price of oranges will signal more firms to enter the orange market‚ as it will seem more profitable
Premium Supply and demand
Introduction Aggregate demand is normally understood in the context of the total value of goods and services demanded by a given group of consumers at a given time period and at a given price (Brux 2007‚ p. 375). In other words‚ aggregate demand essentially refers to the value of goods and services consumers are willing to purchase at various price levels. In certain economic literature‚ the aggregate demand is often referred to as the ‘effective demand’ but it bears close similarity to the gross
Premium Economics Inflation Macroeconomics
is discrimination against them in other areas of the city. Rents paid are a very high percent of peoples’ incomes. (a) Would the demand for apartments in this area be relatively inelastic or relatively elastic? State why. (b) Would the supply of apartments in this area be relatively inelastic or relatively elastic? State why. 1 (c) Draw the demand and supply curves as you have described them‚ showing the initial equilibrium price and quantity. Label carefully. (d) Now assume the government creates
Premium Supply and demand
Chapter 7 The Circular Flow Model Revisited Factors of production: · Land – rent · Labor – wages · Capital – interest · Entrepreneurship – profit The important principle: In any given time period‚ the value of output produced by an economy is equal to the total income that is generated in producing the output‚ which is equal to the expenditures made to purchase that output Value of output produced = total income generated = expenditure made to purchase Leakages
Premium Economics Supply and demand Macroeconomics
Aggregate Demand and Supply Models Economic Critique Ken Drake‚ ECO 372 Macroeconomics September 10‚ 2012 Jason Foster Aggregate Demand and Supply Models Economic Critique In the United States the economy is currently in a recession‚ although signs are indicating that the economy is slowly recovering. In an effort to analyze the Unites States economy the unemployment rate‚ expectations‚ consumer income‚ and interest rates have been evaluated. The results of these evaluations are included
Premium Monetary policy Inflation Keynesian economics
AGGREGATE DEMAND - the total spending on goods and services in a period of time at a given price level C + I + G + (X – M) C = Consumption o The total spending by consumers on domestic goods and services ▪ Durable goods: used by consumers over a period of time (i.e. cars‚ computers‚ mobile phones) ▪ Non – durable goods: used up immediately or over a short time span (i.e. rice‚ toilet paper‚ newspapers) o Causes of change in consumption ▪ Changes in income –
Premium Economics Inflation Supply and demand
Explain the effects of an increase in aggregate demand. Aggregate demand is a term used by economists to denote the total spending on goods and services produced in an economy. Aggregate demand consists of four elements: consumer spending‚ investment expenditure‚ government spending and the net expenditure on imports and exports. From a Keynesian economist’s perspective‚ they would state that an increase in aggregate demand when the economy is at full employment will be purely inflationary. However
Premium Inflation Macroeconomics Keynesian economics
Aggregate Demand and Supply Models ECO/372 07/09/2013 Aggregate Demand and Supply Models As it stands currently the existing effect of the economic factors on aggregate demand and supply are: unemployment‚ consumer income‚ and interest rates. In this paper we identify the existing effect of the economic factors on aggregate demand and supply. The American people have little to no income when unemployed‚ this in turn causes a decrease in demand for the economy. This type
Free Monetary policy Inflation Recession
• The demand curve is flatter (more horizontal) the closer the substitutes for the product and the less diminishing marginal utility is at work for the buyers. • The dependent variable in demand analysis is the quantity (the number of units) sold. The independent variables are price‚ income of buyers‚ the price of substitutes‚ and the price of complements. • An increase in income shifts the demand curve to the right for normal good. It goes to the left for an inferior good. • An increase in the
Premium Supply and demand Consumer theory Price elasticity of demand
Aggregate Demand and Supply Models Aggregate Demand and Supply Models ECO/372 Aggregate Demand and Supply Models The following report will detail out the current state of the U.S. Economy. The report will discuss the following: * Current economic state in regards to unemployment‚ expectations‚ consumer income and interest rates * The existing effect of the economic factors on aggregate demand and supply * Fiscal policies that are currently being recommended by government leadership
Premium Supply and demand Costs Economics