Which is an advantage of tax-deferred retirement savings?

Answers

Answer 1

Answer:

I am not in your course of whatever you are in, so I will give a couple of reasons, hopefully one of them meets your eye.

1. Lower your tax bill right now

2. Raise the potential for compounding

3. Save on taxes over the long term

4. Eliminate current taxes on investment gains

5. Support your savings discipline

Explanation:

Explanation for 1.

Tax deductions are powerful financial tools. Making the maximum contributions to your tax-deferred accounts effectively takes a chunk of money you would have paid to the government and lets you keep it now and pay it later. The higher your tax bracket, the more you will save. Even if your income is lower, you may still be able to realize a significant tax benefit by qualifying for the saver’s tax credit. Also, if you don’t have access to an employer-sponsored retirement plan like a 401(k), or you’ve already reached the max contribution limit, you could consider opening an Individual Retirement Account as you might be eligible to realize even more tax benefits.

Explanation for 2.

Compounding is a basic principle of investing. Say you invest money in an account that produces earnings. Any earnings you receive can produce earnings of their own, and the cycle continues over time. Because tax-deferred accounts allow you to invest funds before you pay taxes on them, you give more of your current funds an opportunity to take advantage of this “magical” mechanism.

Explanation for 3.

Many people expect to earn less in retirement than they did in their working years as they downsize and shift to relying on pensions, Social Security and retirement accounts for income. If your income drops, your tax bracket may drop, too. In that case, you could wind up paying less in taxes over time, since your withdrawals in retirement would be taxed at a lower rate than those funds would’ve been when you were working.

Explanation for 4.

Usually, when you sell stocks or other assets that have grown in value since you bought them, you realize a capital gain, which triggers a related tax. But within a tax-deferred account, you can buy and sell assets without triggering any tax at all. You can feel free to make investment moves without worrying about the effect of a sale on your current tax situation ― as long as that money stays in your tax-deferred account.

Explanation for 5.

Except in special cases, withdrawing money from a traditional IRA or employer-sponsored plan before the age of 59½ will come with a 10% early withdrawal penalty. Why is that a good thing? Because one of the biggest impediments to building your retirement savings is the temptation to tap into it early to cover your current expenses. Keeping the money in your tax-deferred account can be a powerful incentive for avoiding early withdrawals.

Hope this helps and have a wonderful day!


Related Questions

Determine a formula for the capacitance in terms of K1 , K2 , the area A of the plates, and the separation d . [Hint: Can you consider this capacitor as two capacitors in series or in parallel

Answers

Based on the capacitance of both capacitors, the formula in terms of K1, K2, and the area is (2 x ε₀ x A x K₁ x K₂) / (d x (K₁ + K₂)).

What is the formula for the capacitance?

Express the capacitance of the first capacitor as:

C₁ = (k₁ x ε₀ x A) / d₁

Express that of the second capacitor as:

C₂ = (k₂ x ε₀ x A) / d₂

The equivalence capacitance will be:

1/C = ( d₁ / (k₁ x ε₀ x A)) + (d₂ / (k₂ x ε₀ x A))

C = (2 x ε₀ x A x K₁ x K₂) / (d x (K₁ + K₂))

Full question is:

Two different dielectrics fill the space between the plates of a parallel-plate capacitor as shown in Fig. 24-31. Determine a formula for the capacitance in terms of K1, K2, the area A, of the plates, and the separation d1 = d2 = d/2. [Hint: Can you consider this capacitor as two capacitors in series or in parallel?]

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What category of investors sees syndicate equity financing as a good opportunity?

Answers

Small investors sees syndicate equity financing as a good opportunity.

A group of investors known as an equity syndicate decides the price of an equity IPO before it goes public. The equity syndicate determines this price by taking into account a number of variables, including the hedge risk and the company's financial situation. Any equity syndicate has a relatively small membership, which is often made up of senior investment bank personnel.

Equity syndicates conduct the majority of their own hiring through lateral hires and recommendations from friends and family. In general, one needs to have a lot of experience in corporate finance and ECM to join the equity syndicate. According to estimates, there are probably fewer than 100 people who belong to equity syndicates globally.

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which is a way to increase your net worth

Answers

Ways to increase your net worth are

Contribute more money to your retirement fund.Reduce your spending.It's time to get rid of high-interest loans.Make a contingency fund. This is further explained below.

What is net worth?

Generally, taking into consideration all financial assets and obligations of a person/company/household.

In conclusion, Consolidate or renegotiate your debts.

Keep your vehicles for as long as you can.

Boost your wages

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the nurse is helping a mother breast-feed her newborn. which activity by the infant is the best indicator that effective

Answers

The mouth covers most of the areolar surface of the breast is the best indication by infant during breast feeding.

Effective attachment involves covering most of the areolar surface of the breast with the newborn's mouth; effective attachment helps compress the milk glands.

What is breast feeding?The procedure through which a kid is fed human breast milk is known as breastfeeding or nursing. Breast milk may come directly from the mother's breast, expressed by hand, or pumped and given to the child.Breastfeeding should start during the first hour of a newborn's life and should continue as frequently and as much as the baby desires, according to the World Health Organization (WHO). The WHO and other health organizations advise solely breastfeeding for six months.The WHO recommends exclusive breastfeeding for the first six months of life, followed by continued breastfeeding with suitable complementary foods for up to two years and beyond.Of the 135 million babies born each year, only 42 percent are breastfed within the first hour of life, only 38 percent of mothers practice exclusive breastfeeding during the first six months, and 58 percent continue breastfeeding with appropriate complementary foods for up to two years and beyond.

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The group of people within an organization who make business buying decisions are best described as _______.

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The group of people within an organization who make business buying decisions is best described as the buying center.

This is further explained below.

What is business?

Generally, The buying center is the name given to the group of individuals inside an organization who are responsible for making purchasing decisions for the company.

In conclusion, killing an animal or bird for food, recreation, or financial gain: mule deer hunting. A hunting dog and a firearm.

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Assume that projects alpha and beta are mutually exclusive. the correct investment decision and the best rational for that decision is to?

Answers

The best rational decision is to invest in project Beta, since NPV Beta > NPV Alpha

What is the best rational decision?

Net present value is the present value of after-tax cash flows from an investment less the amount invested. Only projects with a positive NPV should be accepted. A project with a negative NPV should not be chosen because it isn't profitable.

When choosing between positive NPV projects, choose the project with the higher NPV first because it is more profitable.

NPV can be calculated using a financial calculator

NPV calculation for project alpha:

Cash flow in year 0 = -79

Cash flow in year 1 = 20

Cash flow in year 2 = 25

Cash flow in year 3 = 30

Cash flow in year 4 = 35

Cash flow in year 5 = 40

I = 17 %

NPV =$12.01

NPV calculation for project beta:

Cash flow in year 0 = -80

Cash flow from year 1 to 7 = 25

I  = 14%

NPV = 27.21

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The amount by which actual or expected sales exceeds break-even sales is referred to as.

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The amount by which actual or expected sales exceed break-even sales is referred to as more accurate product costing.

A break-even analysis is what, exactly?

Break-even analysis involves figuring out and looking at an entity's margin of safety based on the revenues received and related costs. The study, in other words, demonstrates how many sales are necessary to cover operating expenses.

The break-even analysis establishes the number of sales required to cover all fixed costs for the organization by analyzing various pricing levels in relation to various levels of demand. A demand-side study would provide a seller with important information about their selling capacities.

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Blank______ levels of withdrawal behavior are closely correlated with a Blank______ degree of organizational commitment.

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High levels of withdrawal behavior are closely correlated with a low degree of organizational commitment.

The definition of behavior is the way a person or thing acts or reacts. Behavior can be of two types:

voluntaryinvoluntary

Good behavior helps to enhance an individual's understanding as to why people act the way that they do as well as assist with ways to help manage people within the organization.

Three fundamental types of behavior can be distinguished: the purely practical, the theoretical-practical, and the purely theoretical. These three types of behavior have three different reasons: the first a determining reason, the second a motivating reason, and the third a supporting reason.

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Cocaine, __________, and heroin freely available to adults could be used by youngsters as easily as cigarettes and alcohol are.

Answers

Cocaine, methamphetamine, and heroin are freely available drugs to adults and could be used by youngsters as easily as cigarettes and alcohol.

Drugs

The above pharmaceuticals are all instances of TERATOGENS. Teratogens are chemicals that lead to embryonic deformity and birth abnormalities in newborns. Teratogens come in many forms, including medications, chemicals, radiation, maternal infections, etc. These drugs have a variety of effects; they can immediately end a pregnancy or result in an improperly formed child. Thus, the intake of drugs has to be banned.

Any chemical or action that prevents a fetus from developing normally while it is inside the mother is considered a teratogen. Examples include medications (both prescription and over-the-counter), toxins, maternal undernourishment, infectious infections, etc.

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For the fall semester, you had to pay a nonrefundable fee of $800 for your meal plan, which gives you up to 240 meals. if you eat 200 meals, your average cost per meal is:______.

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The average cost per meal is $4.

Average cost, often known as unit cost, is calculated by dividing the total cost by the quantity of a good produced. Average cost strongly influences how businesses decide to price their goods. The cost per output unit is known as average cost, sometimes known as average total cost (ATC). By dividing the whole cost by the total production volume, we can find the average cost. The production cost per unit, or average cost, is determined by dividing the entire cost by the total output.

The average cost determines a commodity's long-term price and supply. Normal gains are included in the average cost. Therefore, the company earns greater profits if the price of a commodity exceeds its average cost. The company suffers losses, though, if the price is below the typical cost.

[tex]Average cost =[/tex] [tex]\frac{total cost }{number ofunits of a goods produced}[/tex]

[tex]Average cost =\frac{800}{200}[/tex]

Average cost = $4

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The costs of direct materials, direct labor, and overhead for partially completed products are known as:

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The costs of direct materials, direct labor, and overhead for partially completed products are known as total manufacturing costs.

Direct material costs are the costs of raw materials and parts used to manufacture products. The materials must be clearly identifiable in the resulting product (otherwise they are considered community costs). Direct material costs are one of the few variable costs associated with the production process.

Therefore, it is used to derive the throughput from the production process. The throughput is the revenue minus all fully variable costs. Examples of direct materials include wood used to build houses, automobile steel, radio circuit boards, and fabrics used to assemble garments.

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Compare and contrast the differences between liberal ideology, conservative ideology and libertarian ideology in regards to governmental regulation of the marketplace.

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Conservative ideology Conservatives used to believe that government should always  be small, operating generally at the  local or state level. They favor the  minimal government interference in the economy . They only prefer private sector-based solutions to problems.

Liberal ideology: Liberals used to believe that government should always intervene in the economy and provide a huge range of social services to ensure equality and well being  across the society. Liberals generally believe that the government should not regulate private or social behaviors.

Libertarian ideology: Libertarian intentions of the founders are that they  favor only the limited government intervention in personal, social, and economic issues.

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Sending birthday greetings and discounts based on customer profile data is considered to be ________________________ in database-driven marketing communications.

Answers

Sending birthday greetings and discounts based on customer profile data is considered to be personalized communications in database-driven marketing communications.

What do you understand by personal communication?

Personal communications may be private letters, memoranda, emails, personal interviews, or telephone discussions. As the material cannot be accessible by others, personal communications are only cited in the text and are not listed in the references.

What involves the use of databases to customize communications to customers for the purpose of promoting a product or service?

Database marketing is a type of direct marketing that uses customer or potential customer databases to create personalized messages to market a good or service.

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The __________ assures the payment of otherwise non-collectable court judgments against licensees who have committed fraud, misrepresentation, deceit, or conversion of trust funds in a transaction.

Answers

The SAFE act assures the payment of otherwise non-collectable court judgments against licensees who have committed fraud, misrepresentation, deceit, or conversion of trust funds in a transaction.

What is the SAFE act?

This was the act in the United States that made it mandatory for houses to be registered and licensed.

The act is based on houses that are used as residences. The full meaning of the act is the  Secure and Fair Enforcement for Mortgage Licensing Act.

The main purpose of the SAFE act is to try to ensure that consumers are protected and also help in the reduction of fraud. This would be done by setting a standard for licensing and the originators of mortgage loans.

Hence the correct answer to the question is the SAFE act.

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Do you think Home Depot is segmenting the contractor market using only business variables or a combination of business and consumer variables

Answers

Definitely business and consumer variables. Their consumer variables have jumped in the last 10 years

INCOME STATEMENT Evaluation

Listed below are some accounts for Woburn Landscaping Co. for the year ended December 31, 2020. Sort the list of the following accounts into an Income Statement, using appropriate formatting.

Salaries Expense
5,050
Hydro Expense
1,150
Landscaping Revenue
13,100
Repair Expense
980
Rent Expense
4,200
Internet Expense
1,020
Advertising Expense
1,770
Supplies Expense
250
Plant Sales
3,900
General Expense
40

Answers

The income statement net income is $2,540.

Income statement

Income statement for Woburn Landscaping Co. for the year ended December 31, 2020

Revenue:

Landscaping Revenue $13,100

Plant Sales $3,900

Total revenue $17,000

Expenses:

Salaries Expense $5,050

Hydro Expense $1,150

Repair Expense $980

Rent Expense $4,200

Internet Expense $1,020

Advertising Expense $1,770

Supplies Expense $250

General Expense $40

Total expenses $14,460

Net income $2,540

($17,000-$14,460)

Therefore the income statement net income is $2,540.

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Bond P is a premium bond with a 10 percent coupon. Bond D is a 5 percent coupon bond currently selling at a discount. Both bonds make annual payments, have a YTM of 7 percent, and have five years to maturity. What is the current yield for Bond P and Bond D

Answers

Let Bond par value be 1000

Bond P:

Coupon rate=10%

YTM=7%

time=9 years

Calculation of current price:

Particulars Year Amount PV Factor  YTM=7% Present value

Ineterest 1-9 years 100 6.515232 651.52

Value 9 1000 0.543934 543.93

       1195.45

Current price =1195.45

Current yield=Annual interest based on coupon rate*100/current price

The current yield of Bond P=100*100/1195.45=8.37%

Bond D:

Coupon rate=5%

YTM=7%

time=9 years

Calculation of current price:

Particulars Year Amount PV Factor  YTM=7% Present value

Interest 1-9 years 50 6.515232 325.76

Value 9 1000 0.543934 543.93

       869.69

Current price =869.69

Current yield=Annual interest based on coupon rate*100/current price

The current yield of Bond D=50*100/869.69=5.75%

Capital gains yield

current price bond P=1195.45

Next year's price bond P=100°5.971299+1000*0.582009=1179.14

The capital gain yield on bond P=(next year price-current price)/current price

                                       =(1179.14-1195.45)/1195.45

                                       =-1.36%

current price bond D=869.69

Next year's price bond D=505.971299+1000*0.582009=880.57

The capital gain yield on bond D=(next year price-current price)/current price

                                       =(880.57-869.69)/869.69

                                       =1.25%.

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Answer the following question as it relates to the 2013 Louisiana Residential Agreement to Buy or Sell: The deposit shall be returned to the buyer and the purchase agreement shall be declared null and void for all of the following reasons EXCEPT:

Answers

The deposit shall be returned to the buyer and the purchase agreement shall be declared null and void for all of the following reasons EXCEPT The buyer changes his mind about the property.

When a fault is reported by the buyer, the seller has 30 days to fix it or get a closing title insurance policy. Any effort on the part of the seller to resolve a title dispute or get a closing title insurance policy will not be interpreted as an acknowledgment of a problem. Seller's only obligation is to return the Buyer's deposit if, in Seller's judgement, the objection cannot be eliminated or removing it would be unprofitable.

This Agreement shall cease and be void upon receipt by Buyer of the Deposit, and Buyer and Seller shall be relieved and discharged from all further claims and obligations to one another hereunder, with the exception of those that expressly continue beyond the expiration of this Agreement. None of the provisions of this Agreement, regardless of any other term to the contrary, shall obligate Seller to commence any legal action or make any payment, including any payment in excess of $5,000.00, in order to resolve any title issues.

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Assume the nominal rate was 11.50% and the inflation rate was 3%. Using the Fisher Effect, what was the real rate

Answers

The real rate was 8.25%.

Real rate  = 8.25%

Dear Student

Thank you for  using Chegg

Please find below the answer

Statement showing Computations

Particulars

 Fisher formula is (1 + nominal rate) = (1 + real rate) x (1 + inflation rate),

(1+.115) = (1 + realrate) *(1+.03)

(1.115) = (1 + realrate) *(1.03)

1.0825 = 1 + real rate

Real rate  = 8.25%.

The nominal interest rate (or interest rate) is the rate of increase in money you pay lenders using borrowed money. Nominal interest rates are often used by banks to represent interest rates on various loans and investments. For example, if your loan has a nominal interest rate of 5%, you can expect to pay $50 in interest for every $1,000 you borrow. At the end of the year he will pay $1,050.

The real interest rate is the interest rate that takes inflation into account. This means it is adjusted for inflation and reflects the real interest rate of a bond or loan. Simply put, this rate reflects the rate of return after taking inflation into account.

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If you were running an advertising campaign for designer men's suits, you should target families with Multiple Choice higher incomes. poor taste in clothing. lower incomes. similar tastes and preferences.

Answers

Higher incomes

You should target families with higher incomes.

How do you determine the target market and target audience?

Companies segment the market to determine the target audience, then create marketing plans for each group of customers to tailor the offerings to their needs. Based on research into market sectors with the most potential for the business, the target market is selected. A company could concentrate on multiple demands and choose a primary and secondary objective. In this instance, the business concentrates on targeting families with higher incomes and allocates the majority of its resources to them.

Your target market seems to be a very difficult thing to define. But if you divide the procedure into several parts, you may quickly identify the appropriate market niche.

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The method of cost estimating that falls between the other two cost estimating methods in complexity is the __________ method.

Answers

The method of cost estimating that falls between the other two cost estimating methods in complexity is the unit-in-place method.

What is Cost Estimation?

In the field of project management, cost estimation is the process of estimating all of the costs associated with completing a project within scope and according to its timeline.

Initial, high-level estimates are often used in the earliest stages of project planning and can determine whether or not a project is ultimately pursued. Once a project is approved and an organization chooses to move forward with it, more detailed and granular cost estimates become necessary in order to appropriately allocate various resources.

A thorough cost estimate should include both the direct and indirect costs associated with bringing a project through to completion. Depending on the specifics of the venture, this will likely include various overhead costs (utilities, labor, etc.), labor costs (including both time and wages paid), materials and equipment costs, vendor fees (if the project requires third-party workers, freelancers, or other contractors), and more.

What is Unit-In-Place Method?

A technique used by appraisers to estimate the reproduction cost (new) of a structure. The method involves estimating the cost of producing and installing individual components, such as the foundation, exterior walls, and plumbing. Similar methods include the trade-breakdown method and segregated costs method.

Therefore, we can conclude that the correct option is C.

Your question is incomplete, but most probably your full question was:

The method of cost estimating that falls between the other two cost estimating methods in complexity is the __________ method.

A. Comparative unit

B. Quantity survey

C. Unit-in-place

D. Reproduction cost

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Which of the following statements is MOST accurate? Group of answer choices Hinduism is a polytheistic religion. Hinduism is a monotheistic religion. Hindus disagree about how many gods there are. Hinduism practices a form of serial monotheism

Answers

The following statements is MOST accurate : Hindus disagree about how many gods there are.

What is Hinduism?

Hinduism is a religion with various Gods and Goddesses.

According to Hinduism, three Gods rule the world.

Brahma: The Creator.

Vishnu: The Preserver.

Shiva: The Destroyer.

Lord Vishnu did his job of preserving the world by incarnating himself in different forms at times of crisis.

Although all Hindus acknowledge the existence and importance of a number of gods and demigods, most individual worshipers are primarily devoted to a single god or goddess, of whom Shiva, Vishnu, and the Goddess are the most popular.

Therefore, we can conclude that the Correct Answer is : C. Yes, most Hindus do not agree about number of Gods .

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Lemony lemonade has​ 3,200 gallons of lemonade in wip​ inventory, with​ 76% of materials already added. The lemonade is​ 50% through the process. Assuming all conversion costs are added evenly throughout the​ process, what are the equivalent units for conversion​ costs?.

Answers

Based on the process that Lemony Lemonade uses to make lemonade, the equivalent units for conversion​ costs is 1,600 units.

What equivalent units are for conversion costs?

This can be found as:

= Number of units that are WIP x Percentage of completion

Solving gives:

= 3,200 x 50%

= 1,600 units

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Which of the following is a coverage that is broad because it can cover personal as well as commercial entities

Answers

Specialized Coverage is coverage that is broad because it can cover personal as well as commercial entities.

A business is a commercial for a commercial enterprise. industrial activity is selling goods or offerings for earnings. there may be additionally commercial buying and selling within the ahead and futures markets, typically performed for heading purposes.

A Commercial is defined as paid marketing. An instance of a business is a commercial for soda or cereal.

Commercial means involving or relating to the buying and selling of goods. In its heyday, the city was a major center of industrial and commercial activity.

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To avoid problems with schedules and deadlines, contractors are held accountable with _________ clauses in the contract for failure to perform up to standard.

Answers

To avoid problems with schedules and deadlines, contractors are held accountable with penalty clauses in the contract for failure to perform up to standard.

Party who comes in contract to perform certain tasks and breach the compensation  in case the contract is failed to be completed is called a penalty clause resulting to the payment of certain penalty to the aggrieved party.

There are certain deadlines, schedules given by contractors so they could complete the task on time resulting to failure of performance upto a standard can lead a penalty .

The sum payable is the agreed amount or completion of work with providing spare days .

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Strickland Corporation has invested in debt securities. Strickland intends to actively buy and sell this investment for profit. This investment is classified as:

Answers

The answer is trading security.

A corporation that trades securities buys them with the intention of making a quick profit.

Companies will only invest if they think there is a good chance they will be compensated for the risk they are taking because they do not intend to hold such securities for an extended period of time.

If a corporation finds an undervalued security and wishes to take advantage of the chance, it may decide to speculate on various debt or equity assets.

Debt securities and equity securities are both included in the category of securities known as trading securities.

Hence, in the given case where Strickland Corporation has invested in debt securities. Strickland intends to actively buy and sell this investment for profit. This investment is classified as trading security.

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The table below shows the weekly demand for hamburgers in a market where there are just three buyers.

Answers

At a price of $6, the quantity of hamburgers demanded in the market is 17.

What is the quantity of hamburgers demanded ?

A market demand schedule is a table that shows the total quantity of a good that is demanded at a certain price in the market. Looking at the table, it can be seen that there is an inverse relationship between price and quantity demanded.

In order to determine the total quantity demanded when price is $6, add the quantity demanded by buyer 1, 2 and 3 together.

Total quantity demanded : 7 + 4 + 6=  17

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A negative externality occurs when Question 16 options: the private marginal costs are equal to the social marginal costs. the private marginal costs are less than the social marginal costs. the private marginal benefits are less than the social marginal benefits. the private marginal costs are greater than the social marginal costs.

Answers

When a negative externality exists, the marginal social cost is always higher than the marginal private cost. So, the correct answer is option A the private marginal costs are less than social marginal costs.

What is a negative externality?

When the manufacturing process has a negative impact on unconnected third parties, this is referred to as a negative production externality. For instance, manufacturing facilities contribute to noise and air pollution throughout the production process.

What happens when a negative externality exists?

The marginal social cost and the marginal private cost are no longer equal when a market has negative production externalities. As a result, the supply curve (which indicates the marginal private cost) does not accurately reflect the marginal societal cost and the social cost is instead larger due to the externality's per-unit cost.

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A business cycle is best defined as economic fluctuations around trend growth.
a. True b. False

Answers

A business cycle is best defined as economic fluctuations around trend growth. This statement is true.

Business cycles are a sort of variation that may be found in the overall economic activity of a country.

A business cycle is made up of expansions that occur roughly at the same time in many different economic activities, followed by contractions that are similarly widespread (recessions).

This series of modifications is periodic but not recurrent.

Business cycles are made up of coordinated cyclical upswings and downswings in output, employment, income, and sales, which are four broad indices of economic activity.

In the business cycle, expansions and contractions alternate (also called recessions).

Recessions frequently begin at the business cycle's high, when an expansion comes to an end, and finish at its trough, when the following expansion starts.

Hence, the statement "A business cycle is best defined as economic fluctuations around trend growth." is true.

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A business cycle is best defined as economic fluctuations around trend growth: True .

Reason: A business cycle is ups and downs of output around its trend.

A business cycle is a cycle of fluctuations in the Gross Domestic Product (GDP) around its long-term natural growth rate. Business cycles chart the ups and downs of an economy, and understanding them can lead to better financial decisions.

The four stages of the business cycle are expansion, peak, contraction, and trough. Factors such as GDP, interest rates, total employment, and consumer spending, can help determine the current stage of the economic cycle.

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If a firm is experiencing _____________________, then as the quantity of output rises, the average cost of production rises.

Answers

If a firm is experiencing decreasing returns to scale, then as quantity of output rises, the average cost of production rises. Economies of scale are cost advantages a company has as a result of increasing its output level.

Benefit results from inverse connection between quantity produced and fixed cost per unit. When all production factors are increased by a specific percentage, outcome is a less-than-proportional rise in output, this is known as decreasing returns to scale. The three types of return to scale are constant returns to scale (CRS), increasing returns to scale (IRS), and decreasing returns to scale (DRS).

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