Keynesians argue that stabilization is necessary to address economic fluctuations. They believe that monetary and fiscal policies should be used to manage aggregate demand and stabilize the economy.
The monetarists and new classical economists contend that stabilization is unnecessary and ineffective because they believe that the economy is self-regulating and will naturally return to equilibrium. They argue that any attempts to actively manage the economy through monetary or fiscal policies can have unintended consequences, such as inflation or market distortions.
Keynesians counter this argument by emphasizing the role of aggregate demand in driving economic fluctuations. They believe that fluctuations in aggregate demand can lead to unemployment and recessions, and that stabilization policies are necessary to counteract these effects. They advocate for using expansionary monetary and fiscal policies during economic downturns to stimulate demand and promote economic growth.
In summary, Keynesians argue that stabilization is necessary to address economic fluctuations and prevent unemployment and recessions. They believe that active management of aggregate demand through monetary and fiscal policies is crucial for maintaining economic stability.
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Suppose you observe the following zero-coupon bond prices per $1 of maturity payment: 0.94038 (1-year), 0.88017 (2-year), 0.81333 (3-year). Compute r0(2,3), the 1-year implied forward rate for year 3. a. 8.68% b. 6.69% c. 8.22% d. 15.62% e. 7.11%
Implied forward rate implies the estimated rate that is calculated from the present yield curve and used to produce an expected future interest rate.
The formula to calculate the 1-year implied forward rate for year 3 (r0(2,3)) is as follows:r0(2,3) = ((P_2/P_3)^(1/n) - 1) × n where P_2, P_3 are the bond prices of the 2-year and 3-year zero-coupon bonds, respectively, and n is the number of years between these maturities.
Substituting the values of the bond prices gives:r0(2,3) = ((0.88017/0.81333)^(1/1) - 1) × 1r0(2,3) = (1.0822 - 1) × 1r0(2,3) = 0.0822 = 8.22%
Therefore, the 1-year implied forward rate for year 3 is c. 8.22%.
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A critical examination of the possible types of employee reactions to the proposed change, again using the key theory {The theory is Kirkpatrick’s reactions to change (2001) – positive, negative and mixed and the other model is Carnall’s coping cycle (2003)} to underpin the discussion and giving consideration to the different types of employees employed by Eagle Air.
A critical examination of the possible types of employee reactions to the proposed change at Eagle Air can be conducted using Kirkpatrick's reactions to change (2001) and Carnall's coping cycle (2003).
Kirkpatrick's theory suggests that employees can have positive, negative, or mixed reactions to change. Positive reactions may include enthusiasm, motivation, and excitement about the proposed change. Negative reactions may manifest as resistance, fear, and skepticism towards the change. Mixed reactions may involve a combination of positive and negative emotions.
Carnall's coping cycle provides a framework to understand how employees adapt to change. It consists of four stages: denial, resistance, exploration, and commitment. In the denial stage, employees may refuse to acknowledge the need for change.
When examining the types of employees employed by Eagle Air, it is important to consider their individual characteristics, experiences, and attitudes. Different employees may respond differently to the proposed change based on factors such as their job role, level of expertise, and personal circumstances.
By utilizing these theories, Eagle Air can gain insights into the potential reactions and coping mechanisms of their employees, enabling them to plan and implement the proposed change effectively.
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Which of the following would be considered an inferior good?
a.) A used car that can be traded in for a newer and better one
b.) A flight to the beach for a week-long spring break vacation
c.) Eating at high-end restaurants
d.) New professional clothes that can be bought with a higher income
The correct answer is c.) Eating at high-end restaurants. It is an inferior good.
Inferior goods are goods for which demand decreases as consumer income increases. They are typically considered lower quality or less desirable compared to other alternatives. In this case, eating at high-end restaurants would be considered an inferior good. As income increases, people tend to have more disposable income and may choose to dine at higher-quality establishments or explore other dining options rather than expensive fine dining experiences. Therefore, the demand for eating at high-end restaurants decreases as income rises, making it an example of an inferior good.
Inferior goods are characterized by a negative income elasticity of demand, meaning that as income increases, the demand for these goods decreases. The reasoning behind this is that as consumers' income rises, they can afford to purchase higher-quality alternatives or indulge in more luxurious options. In the given options, a used car that can be traded in for a newer and better one (a) and new professional clothes that can be bought with a higher income (d) are both examples of normal goods.
As income increases, the demand for better cars and nicer clothes tends to increase. Similarly, a flight to the beach for a week-long spring break vacation (b) is also a normal good as people with higher incomes may be more inclined to spend on leisure activities and vacations. However, eating at high-end restaurants (c) is an example of an inferior good. As income rises, people may opt for other dining options or higher-quality establishments, leading to a decrease in demand for expensive fine dining experiences.
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Choose the step that is clearly out of order in the following schematic of a documentary credit transaction.
Importer's bank opens a letter of credit
The exporter loads the goods to a ship and obtains a bill of lading
A bill of exchange is accepted by the importer
The exporter receives payment in exchange for the bill of exchange and the bill of lading to the Exporter's bank.
Documents are sent to the importer's bank
Importer's bank collects payment from the importer and hands over the bill of lading
The importer collects the goods from the ship
The step that is clearly out of order in the schematic of a documentary credit transaction is:
The exporter receives payment in exchange for the bill of exchange and the bill of lading from the Exporter's bank.
In a typical documentary credit transaction, the exporter receives payment after the importer's bank collects payment from the importer and hands over the bill of lading. The correct sequence would be:
1. Importer's bank opens a letter of credit.
2. The exporter loads the goods to a ship and obtains a bill of lading.
3. Documents are sent to the importer's bank.
4. Importer's bank collects payment from the importer and hands over the bill of lading.
5. The exporter receives payment in exchange for the bill of exchange and the bill of lading from the Exporter's bank.
6. The importer collects the goods from the ship.
Therefore, the step "The exporter receives payment in exchange for the bill of exchange and the bill of lading to the Exporter's bank" is out of order in the given sequence.
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Due: Thursday, July 28, 2022 at B:30 am " thecks on Saturday, fuly 30,2022 at 8:30 am Severe weather con have a significant short-term effect on a restaurant's sales levels fissume you own a restauront chain where business is bikely to be offected by seiere winter weather. How would this impsct the development of your budget?
Severe winter weather can have a significant short-term effect on a restaurant's sales levels, and this can impact the development of a restaurant's budget.
The budget for a restaurant chain that is likely to be affected by severe winter weather would need to take into account the potential for decreased sales during this time. This might mean allocating more money to marketing efforts to encourage customers to visit the restaurant despite the weather, or reducing expenses in other areas to make up for the decrease in revenue.
Additionally, the budget might need to account for increased costs associated with keeping the restaurant open during inclement weather, such as higher heating bills or additional staffing needs. Overall, it is important for a restaurant chain to consider the potential impact of severe winter weather on their sales levels when developing their budget, and to make adjustments as needed to ensure that the restaurant remains profitable even during difficult weather conditions.
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Compare and contrast the use of government spending changes versus tax changes as a means of influencing the course of the economy. Is one or the other preferable in specific situations? Imagine for a moment that you have two roommates, who each have opposing viewpoints on nearly everything, including politics and economics. Taylor is adamant that the best way to manage the economy is through tax changes, while Morgan insists that it’s better to adjust the economy through government spending. What would a Neoclassical economist say? What would a Keynesian economist say? Which roommate do you agree with, and why? Find a news article to help support your opinion. Summarize the article and include the link to in your response.
A neoclassical economist would argue that tax changes are preferable to government spending changes for influencing the course of the economy.
On the other hand, a Keynesian economist would advocate for government spending as a more effective tool. Personally, I align with the neoclassical economist's viewpoint, as tax changes provide greater flexibility and efficiency in economic management.
While government spending can stimulate demand in the short term, it can lead to long-term inefficiencies and potential crowding out of private investment. Tax changes, on the other hand, can incentivize productive behavior, encourage savings and investment, and provide individuals and businesses with more control over their resources.
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i. Discuss how you would develop a profile of an effective leader from the research results of the GLOBE project. Give an example ii. How can we use Hofstede’s four dimensions—power distance, uncertainty avoidance, individualism, and masculinity—to gain insight into leader– subordinate relationships around the world? Give some specific examples.
1. Developing a profile of an effective leader from the GLOBE project involves analyzing key leadership dimensions across cultures. 2. Hofstede's four dimensions—power distance, uncertainty avoidance, individualism, and masculinity—provide insights into leader-subordinate relationships globally.
1. The GLOBE project identified dimensions such as charismatic/value-based leadership, team-oriented leadership, participative leadership, and humane-oriented leadership. Effective leaders across cultures exhibit charisma, high ethical standards, a focus on teamwork and collaboration, and a concern for the well-being of team members. However, cultural variations influence the specific leadership attributes valued in different cultures. 2. Power distance indicates acceptance of unequal power distribution, uncertainty avoidance reflects a society's tolerance for ambiguity, individualism highlights focus on individual interests, and masculinity relates to assertiveness and competition. These dimensions help understand leader-subordinate dynamics in different cultures. For example, high power distance cultures expect authoritative leaders, while high uncertainty avoidance cultures require clear guidance. By considering these dimensions, leaders can adapt their styles and behaviors to meet cultural expectations, enhancing their relationships and effectiveness.
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The faculty model
1. describes a training department organized like the structure
of a college
2. involves using university faculty as trainers
3. involves consulting with university faculty regarding
The Faculty Model describes a training department structured like a university that involves using university faculty as trainers, and consulting with university faculty regarding specialized training subjects.
This model is a training and development approach that seeks to provide specific and targeted training, particularly for highly technical or specialized skills. It recognizes the important role that universities play in advancing knowledge and training, particularly in certain areas, and seeks to harness this expertise to create more effective and efficient training programs.This model involves creating a formalized training department that is structured like a university, complete with its own academic calendar, course catalog, and syllabi.
It relies heavily on the use of university faculty as trainers who have the necessary expertise and knowledge to deliver high-quality training in their specific fields. These trainers may be full-time faculty, part-time lecturers, or adjunct professors who are brought in on a contract basis to teach specific courses.The Faculty Model also involves consulting with university faculty to develop and refine training programs. These consultations can help to ensure that the training provided is up-to-date and relevant to the specific needs of the organization.
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at the federal level, an _______ functions within an established
cabinet department.
a. Independent agency. b. Executive agency. c. State agency. d.
Legislative agency.
The correct answer is option a. Independent agency. At the federal level, a functions within an established cabinet department is Independent agency.
At the federal level, an independent agency functions within an established cabinet department. Independent agencies are federal agencies that operate independently from the executive departments and are created by Congress to carry out specific functions.
They have specific missions and often have regulatory or oversight authority in their respective areas.
Examples of independent agencies include the Environmental Protection Agency (EPA), Federal Trade Commission (FTC), and Securities and Exchange Commission (SEC).
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[Table 1] The dollar amounts that go in blanks (A) and (B) are, respectively
Table-1 Price Quantity Marginal Sold Revenue $10 10
$10 11 (A)
$10 12 (B)
$10 13 (C)
$10 14 (D)
O a $11 and $11 O b. $10 and $10 O C $10 and $11 O d. $11 and $12
The dollar amounts that go in blanks (A) and (B) are $10 and $11, respectively, in Table 1.
In Table 1, the given price per unit is $10. To determine the dollar amounts in blanks (A) and (B), we need to calculate the marginal revenue for each corresponding quantity.
Marginal revenue represents the additional revenue generated from selling one more unit. It is calculated by multiplying the price per unit by the change in quantity.
Given that the initial quantity sold is 10 and the marginal revenue is not provided, we can infer that the next unit sold would have the same price per unit, which is $10. Therefore, the dollar amount in blank (A) is $10.
For blank (B), we observe that the quantity increases to 11. To calculate the marginal revenue for this additional unit, we multiply the price per unit ($10) by the change in quantity (1). Therefore, the dollar amount in blank (B) is $11.
Hence, the correct answer is option O a: $11 and $11, as stated in the summary.
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Consider a European put option and a European call option on a \( \$ 40 \) nondividend-paying stock. Both options have 6 months remaining and both have a \( \$ 35 \) strike price. The risk-free intere
a. The no-arb price for the call option is approximately $11.176. b. The call option is in-the-money, and the put option is out-of-the-money. Under the no-arb condition, the call option is more expensive. c. An arbitrageur would buy the underpriced call option and short sell the stock. d. The no-arb price for the put option is approximately $5.824. e. An arbitrageur would sell the overpriced put option and buy the underlying stock.
a. To calculate the no-arbitrage price for the call option, we can use the put-call parity relationship:
Call Price - Put Price = Stock Price - Strike Price * e^(-r * T)
Given that the market price of the put is $6, the stock price is $40, the strike price is $35, the risk-free interest rate is 5% (or 0.05), and the time to expiration (T) is 6 months (or 0.5 years), we can plug in these values:
Call Price - $6 = $40 - $35 * e^(-0.05 * 0.5)
Solving for the Call Price:
Call Price = $40 - $35 * e^(-0.05 * 0.5) + $6 ≈ $11.176
Therefore, the no-arbitrage price for the call option is approximately $11.176.
b. The call option is in-the-money if the stock price is above the strike price, and the put option is in-the-money if the stock price is below the strike price. In this case, since the stock price is $40 and the strike price is $35, the call option is in-the-money and the put option is out-of-the-money. Under the no-arbitrage condition, the call option should be more expensive than the put option.
c. If the quoted market price of the call option is $9, an arbitrageur would likely take the following actions:
Buy the underpriced call option: The arbitrageur would buy the call option at the market price of $9, taking advantage of the lower price.
Short sell the stock: The arbitrageur would borrow and sell the underlying stock at the current stock price of $40.
By buying the call option and short selling the stock, the arbitrageur would create a synthetic long position in the stock, which would be equivalent to buying the stock itself. This strategy allows the arbitrageur to profit from the underpriced call option and the expectation that the stock price will increase.
d. To calculate the no-arbitrage price of the put option when the quoted market price of the call is $9, we can use the put-call parity relationship:
Put Price = Call Price - Stock Price + Strike Price * e^(-r * T)
Given that the market price of the call is $9, the stock price is $40, the strike price is $35, the risk-free interest rate is 5% (or 0.05), and the time to expiration (T) is 6 months (or 0.5 years), we can plug in these values:
Put Price = $9 - $40 + $35 * e^(-0.05 * 0.5)
Solving for the Put Price:
Put Price = $9 - $40 + $35 * e^(-0.05 * 0.5) ≈ $5.824
Therefore, the no-arbitrage price for the put option is approximately $5.824.
e. If the quoted market price of the put option is $6, an arbitrageur would likely take the following actions:
Sell the overpriced put option: The arbitrageur would sell the put option at the market price of $6, taking advantage of the higher price.
Buy the underlying stock: The arbitrageur would buy the underlying stock at the current stock price of $40.
By selling the put option and buying the stock, the arbitrageur would create a synthetic long position in the stock, which would be equivalent to buying the stock itself. This strategy allows the arbitrageur to profit from the overpriced put option and the expectation that the stock price will increase.
At time T, the arbitrageur would exercise the put option if the stock price is below the strike price and deliver the stock to fulfill the option contract. However, if the stock price is above the strike price, the arbitrageur would let the put option expire worthless.
These actions allow the arbitrageur to take advantage of the overpriced put option and generate risk-free profits.
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Complete Question :
Consider a European put option and a European call option on a $40 nondividend-paying stock. Both options have 6 months remaining and both have a $35 strike price. The risk-free interest rate is 5% CCAR. a. The market price of the put is $6. Calculate the no-arb price for the call. b. Which of the options is in-themoney? Which is out-of-the-money? Under the no-arb condition, is the call or the put more expensive? c. Describe the likely actions of an arbitrageur now and at time T if the quoted market price of the call is $9. d. Now as assume the quoted market price of the call is $9.00. Calculate the no-arb price of the put. e. Describe the likely actions of an arbitrageur now and at time T if the quoted market price of the put is $6.
Evaluate and discuss the requirements of one of the following laws and how it applies in hiring. What does a manager need to do or not do to comply with it? Pregnancy Discrimination Act or Federal labor laws enforced by the National Labor Relations Board (NLRB) including National Labor Relations Act (NLRA)
Pregnancy Discrimination Act is essential to protect pregnant employees from discrimination in the workplace. A manager should comply with the requirements of the PDA by not discriminating against an employee based on pregnancy, childbirth, or related medical conditions.
The act applies to employers with 15 or more employees, and it protects women from being discriminated against due to pregnancy, childbirth, or related medical conditions when it comes to recruitment, hiring, and promotion decisions.
To comply with the PDA, a manager should provide reasonable accommodation to a pregnant employee if the employee requests it, such as allowing her to take breaks for medical reasons or moving her to a less physically demanding job. Employers should also provide equal access to benefits such as health insurance and disability leave for employees with pregnancy-related medical conditions.
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1: Which statement is incorrect? A. A random variable may take on any value. B. A continuous random variable X may assume an (infinitely) uncountable number of distinct values. C. For continuous probability distributions, probability = area D. The discrete uniform distribution describes a random variable, defined on the interval [a, b], that has an equally likely chance of assuming values within a specified range
The incorrect statement from the given options is D. The discrete uniform distribution describes a random variable, defined on the interval [a, b], that has an equally likely chance of assuming values within a specified range.
This statement is incorrect because the given statement is not about discrete uniform distribution. Let's discuss each statement in detail:Option A: A random variable may take on any value. This statement is correct because a random variable is defined as a variable that can take on any value from a given set or range of values.
Option B: A continuous random variable X may assume an (infinitely) uncountable number of distinct values. This statement is correct because a continuous random variable is a random variable that can take any value within a given range, including decimals and fractions. Therefore, it can assume an infinitely uncountable number of distinct values.Option C: For continuous probability distributions, probability = area. This statement is correct because in continuous probability distributions, probability is calculated as the area under the probability density function (PDF) curve within a given range.
Option D: The discrete uniform distribution describes a random variable, defined on the interval [a, b], that has an equally likely chance of assuming values within a specified range. This statement is incorrect because the given statement is about the uniform distribution, not the discrete uniform distribution. The uniform distribution is a continuous probability distribution that describes a random variable that has an equal likelihood of assuming any value within a given range.
On the other hand, the discrete uniform distribution describes a random variable that has an equally likely chance of assuming a finite number of values within a specified range. Therefore, the statement is incorrect because it is not about the discrete uniform distribution. Hence, option D is incorrect.
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Assume that the corporate tax rate is 26%, personal tax rate is 28% and that dividends paid by corporations are taxed at 15% for the shareholders.
The founders of a newly formed business are debating between setting-up the firm as a partnership versus a corporation. The firm will not need to retain any earnings, so all of its after-tax income will be paid out to its investors, who will have to pay personal taxes on whatever they receive.
Assume the business is forecast to earn $300,000 on a pre-tax basis (all cash) and that it will distribute 100% of after-tax cash flows to the owners of the business.
If the firm is organized as a C-Corp, how much cash will the owners retain on an after-tax basis (account for all taxes)? Shareholders only pay the dividend tax rate on the distribution. Account for double taxation.
Selected Answer: 135864
In order to find out how much cash will the owners retain on an after-tax basis if the firm is organized as a C-Corp, we must use the following steps:Step 1: Find out the amount of pre-tax income earned by the company, which is $300,000.
Step 2: Calculate the corporate tax rate by multiplying the pre-tax income by the corporate tax rate. Therefore, the amount of corporate tax payable is 26% of $300,000, which is $78,000.Step 3: Deduct the corporate tax payable from the pre-tax income to find the after-tax income, which is $222,000 ($300,000 - $78,000).Step 4: Calculate the amount of dividend paid to shareholders by multiplying the after-tax income by the dividend tax rate of 15%. Therefore, the amount of dividend is $33,300 ($222,000 x 15%).Step 5: Deduct the amount of dividend paid to shareholders from the after-tax income to find the amount of cash retained by the owners. Therefore, the amount of cash retained by the owners is $188,700 ($222,000 - $33,300).Step 6: Calculate the personal tax payable by multiplying the amount of cash retained by the personal tax rate. Therefore, the amount of personal tax payable is 28% of $188,700, which is $52,836.Step 7: Deduct the personal tax payable from the amount of cash retained by the owners to find the final amount of cash retained by the owners. Therefore, the final amount of cash retained by the owners is $135,864 ($188,700 - $52,836). Hence, the selected answer 135864 is correct.
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Answer questions 1 through 8 based on retirement funding calculation using the 4-step annuity method.
Layla, age 43, currently earns $95,000. Her wage replacement ratio is 82 percent.
She expects that inflation will average 5 percent for her entire life expectancy. She expects to earn 8 percent on her investments and retire at age 67 (full retirement age), possibly living to age 90. Her Social Security retirement benefit in today's dollars is $15,500 per year, for retiring at full retirement age.
Questions 1 through 4: Calculate Layla's capital needed at retirement at age 67 and the amount she must save at the end of each year, assuming she has no current savings accumulated for retirement.
Questions 5 through 8: Calculate the present value of her benefits at ages 63, 67, and 70.
To determine the amount she must save at the end of each year, considering the expected rate of return, inflation rate, and the remaining years until retirement.
To calculate Layla's capital needed at retirement at age 67, we can use the wage replacement ratio. Multiply her current income of $95,000 by the replacement ratio of 82%.To know more about rate of return, visit:
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Hyperion Inc., currently sells its latest high-speed color printer, the Hyper 500, for $349. It plans to lower the price to $308 next year. Its cost of goods sold for the Hyper 500 is $191 per unit, and this year's sales (at the current price of $349) are expected to be 20,800 units. a. Suppose that if Hyperion drops the price to $308 immediately (rather than waiting one year) it can increase this year's sales by 30% to 27,040 units. What would be the incremental impact on this year's EBIT of such a price drop? b. Suppose that for each printer sold, Hyperion expects additional sales of $95 per year on ink cartridges for the three-year life of the printer, and Hyperion has a gross profit margin of 81% on ink cartridges. What is the incremental impact on EBIT for the next three years of such a price drop?
The incremental impact on this year's EBIT of such a price drop is $1,080,000. The incremental impact on EBIT for the next three years of such a price drop is $1,657,952.
(a) The present EBIT with the current sales of 20,800 units is given by EBIT = $349 × 20,800 – $191 × 20,800 = $3,964,800 – $3,977,280 = −$12,480. If the company lowers its price to $308 and increases its sales by 30% to 27,040 units, then the new revenue and cost are $308 × 27,040 = $8,326,720 and $191 × 27,040 = $5,167,840, respectively. The new EBIT will be $3,158,880. Thus, the incremental impact on this year's EBIT of such a price drop is $3,158,880 − (−$12,480) = $1,080,000.
(b) For each printer sold, Hyperion expects additional sales of $95 per year on ink cartridges for the three-year life of the printer, and Hyperion has a gross profit margin of 81% on ink cartridges. The incremental annual profit from ink cartridges will be $95 × 81% = $76.95. The incremental profit from ink cartridges for the next three years will be $76.95 × 27,040 × 3 = $6,590,752.
Hence, the incremental impact on EBIT for the next three years of such a price drop is $6,590,752 − $1,932,800 = $1,657,952. Therefore, the incremental impact on EBIT for the next three years of such a price drop is $1,657,952.
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A system of income inequality has advantages and disadvantages. Which of the following is a characteristic of a country that has income inequality?
Group of answer choices
in a country with higher income inequality the lower income households generally have fewer political advantages (less influence) than the higher income households.
All of the listed choices are characteristics
a country with income inequality generally has a higher average standard of living than a country with pure income equality.
a country with income inequality provides those who are more productive the ability to reap higher rewards and higher incomes. Thus more people tend to be productive and efficient than in a system of income equality.
In a country with higher income inequality, the lower income households generally have fewer political advantages (less influence) than the higher income households. This is a characteristic of income inequality. Higher income households often have more resources and economic power, which can translate into greater political influence and the ability to shape policies that benefit their interests.
Additionally, a country with income inequality provides those who are more productive the ability to reap higher rewards and higher incomes. This characteristic suggests that income inequality allows for greater incentives for individuals to be productive and efficient. In such a system, individuals who contribute more to the economy can earn higher incomes, which can serve as a motivator for increased productivity and economic growth.
However, it is important to note that not all of the listed choices are characteristics of a country with income inequality. The statement "a country with income inequality generally has a higher average standard of living than a country with pure income equality" is not necessarily true. Income inequality does not guarantee a higher average standard of living as it depends on various factors such as social welfare programs, access to education and healthcare, and overall economic conditions. Income equality can also be achieved with a high standard of living if resources are distributed equitably among the population.
Therefore, the correct answer is in a country with higher income inequality, the lower income households generally have fewer political advantages (less influence) than the higher income households.
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Strategic Management
-How can a decision maker identify strategic factors in a
corporation’s external international environment? Your
answer shouldn't exceed 120 words.
Decision makers can gain a comprehensive understanding of the external international environment and identify the critical strategic factors that will shape the corporation's success in the global market.
A decision maker can identify strategic factors in a corporation's external international environment through the following steps:
Environmental scanning: Conduct a thorough analysis of the global market, considering political, economic, social, technological, and legal factors.
Competitor analysis: Assess the competitive landscape, including the strengths, weaknesses, opportunities, and threats posed by rival firms operating internationally.
Market research: Gather information about customer preferences, trends, and demands in various international markets.
Stakeholder analysis: Identify key stakeholders such as governments, regulatory bodies, suppliers, and partners, and evaluate their influence and impact on the corporation's international operations.
PESTEL analysis: Examine the political, economic, social, technological, environmental, and legal factors affecting the corporation's international environment.
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Two mutually exclusive projects require the same $800,000 in initial investment. Afterwards, the first project provides the following cash flows over the next four years: $400,000, $250,000, $200,000, and $600,000. The second project provides the following cash flows over the next four years: $600,000, $200,000, $250,000, and $400,000. The target payback period is 3 years. Which project should you undertake? Explain with appropriate calculations.
The target payback period is three years, Project 1's payback period exceeds the target, whereas Project 2's payback period is less than the target, so Project 2 should be undertaken.
The Payback Period Method determines the time it takes to recover the initial investment of a project. Projects with shorter payback periods are preferred over those with longer payback periods. It is essential to consider whether or not a project's payback period falls within a company's acceptable range or is less than the anticipated useful life of the asset to be bought before determining whether or not to take the project. It is not ideal to have a payback period that exceeds the asset's useful life since the asset would not have produced any income during the last years of its useful life if the project's payback period exceeded the useful life of the asset.
Two mutually exclusive projects require the same $800,000 in initial investment. Afterward, the first project provides the following cash flows over the next four years: $400,000, $250,000, $200,000, and $600,000. The second project provides the following cash flows over the next four years: $600,000, $200,000, $250,000, and $400,000. The target payback period is 3 years. Now, we will calculate the payback period of both projects: Project 1:Year 1 = $400,000Year 2 = $250,000Year 3 = $200,000Year 4 = $600,000Total = $1,450,000Payback Period = 2 + ($350,000 / $600,000) = 2.58 years (approximately)Project 2:Year 1 = $600,000Year 2 = $200,000Year 3 = $250,000Year 4 = $400,000Total = $1,450,000Payback Period = 1 + ($200,000 / $250,000) = 1.8 years (approximately). Since the target payback period is three years, Project 1's payback period exceeds the target, whereas Project 2's payback period is less than the target, so Project 2 should be undertaken.
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UBS, a bank based in Switzerland, has received a subpoena from the IRS for the bank records of 52,000 U.S. citizens. The IRS alleges that the U.S. taxpayers hid money in UBS accounts for the purpose of avoiding paying taxes. UBS had created a program that recruited tax advisers and their clients under the guise that they could protect their funds from the IRS.Swiss law prohibits banks, under privacy rights, from disclosing information about their customers and their accounts. However, the IRS has obtained a subpoena for the records and a federal judge has issued it because UBS is soliciting business in the United States. One banking minister in Switzerland has indicated, however, that Swiss privacy laws do not apply when there has been fraud.Evaluate the ethics of UBS as well as their customers. If you worked for the bank, would you release the information? Would you place your money in Swiss accounts?
The ethical evaluation of UBS and its customers in this scenario involves considering various factors, including legal obligations, privacy rights, tax evasion, and the role of an individual's personal responsibility.
Here are some key points to consider:
UBS's Ethics:
Deceptive Practices: UBS created a program that recruited tax advisers and clients to help them evade taxes. This practice is ethically questionable as it involves facilitating and encouraging illegal activities.Compliance with Laws: UBS is obligated to comply with the laws of the countries it operates in. While Swiss privacy laws protect customer information, the bank is operating in the United States and subject to U.S. laws. Compliance with a valid subpoena is essential for upholding the rule of law.Responsibility to Society: UBS has a responsibility to contribute to the well-being of society by ensuring that taxes are paid appropriately. Facilitating tax evasion undermines public trust in the banking system and can have negative consequences for social welfare.Customers' Ethics:
Tax Evasion: U.S. citizens who intentionally hid money in UBS accounts to avoid paying taxes are engaging in unethical behavior. Paying taxes is a civic duty that supports essential public services and infrastructure.Individual Responsibility: Each customer has a personal responsibility to comply with tax laws. Engaging in tax evasion not only harms society but also undermines the fairness and integrity of the tax system.For such more question on evaluation:
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You will retire in 20 ycars. After you retire you will withdraw 560.000 per year for 35 years. How much do you have to deposit each year until you retire? Assume that you can eam 9.50% on investments. $11, 1×2.46 You will nced to save per year.
You Need to deposit approximately $20,107.20 each year until you retire in order to withdraw $560,000 per year for 35 years after retirement.
To determine how much you need to deposit each year until you retire, you can use the formula for the future value of an ordinary annuity.
The future value of an ordinary annuity formula is:
FV = P * [(1 + r)^n - 1] / r
Where:
FV is the future value of the annuity
P is the annual deposit
r is the interest rate per period
n is the number of periods
In this case, you want to find the annual deposit amount (P). Let's plug in the given values into the formula:
FV = $560,000 (withdrawal per year after retirement)
r = 9.50% (interest rate)
n = 35 (number of years you will withdraw money after retirement)
Now, we can rearrange the formula to solve for P:
P = FV * (r / [(1 + r)^n - 1])
P = $560,000 * (0.095 / [(1 + 0.095)^35 - 1])
Using a calculator, we can simplify the expression inside the brackets and solve for P:
P ≈ $560,000 * (0.095 / (3.647 - 1))
P ≈ $560,000 * (0.095 / 2.647)
P ≈ $560,000 * 0.03597
P ≈ $20,107.20
Therefore, you need to deposit approximately $20,107.20 each year until you retire in order to withdraw $560,000 per year for 35 years after retirement.
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During the month of July, Clanton Industries issued a check in the amount of $823 to a supplier on account. The check did not clear the bank during July. In preparing the July 31 bank reconciliation, the company should: Multiple Choice
In preparing the July 31 bank reconciliation, Clanton Industries should account for the outstanding check and any other outstanding items to ensure the bank and company balances match.
1. Start with the company's bank statement for the month of July.
2. Compare the transactions listed on the bank statement with the company's records.
3. Identify any differences or discrepancies between the bank statement and the company's records.
4. In this case, since the check issued to the supplier did not clear the bank during July, it should be considered an outstanding check.
5. Subtract the amount of the outstanding check ($823) from the company's records to reconcile the discrepancy.
6. Additionally, check for any other outstanding checks or deposits that have not been recorded by the bank or the company.
7. Adjust the company's records to reflect these outstanding items.
8. Finally, compare the adjusted bank balance and the adjusted company balance to ensure they match.
9. If they do match, the reconciliation process is complete. If not, further investigation may be needed to identify and correct any errors or discrepancies.
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Sandra has decided to save $360 monthly into her RRSP investment account brginning today. The RRSP Investment account pays 6% interest, compounded semi-annually. How much would she have accumulated after 3 years (assume her last contribution is 1 month prior to 3 years from today)?
Enter your answer correct to 2 decimal places. Do not enter the $ sign.
After 3 years, Sandra would have accumulated approximately $13,151.23 in her RRSP investment account, considering monthly contributions of $360 and a 6% interest rate compounded semi-annually.
To calculate the accumulated amount after 3 years, we need to consider the monthly contributions and the compound interest earned. Let's break down the calculation step-by-step:
Determine the number of contributions made in 3 years:
Since Sandra makes a monthly contribution, the number of contributions she would make in 3 years is 3 years * 12 months/year = 36 contributions.
Calculate the future value of each contribution:
The future value of each monthly contribution can be calculated using the formula for compound interest: FV = PV * (1 + r/n)^(nt), where:
FV is the future value
PV is the present value (monthly contribution)
r is the interest rate per period (6%)
n is the number of compounding periods per year (2, since the interest is compounded semi-annually)
t is the number of years
In this case, PV = $360, r = 6% or 0.06, n = 2, and t = 3 years. Substituting these values into the formula, we get:
FV = $360 * (1 + 0.06/2)^(2 * 3) = $xxxx.xx (rounded to two decimal places)
Calculate the total accumulated amount:
To calculate the total accumulated amount after 3 years, we need to sum up the future values of all 36 contributions. Since each contribution is the same, we can multiply the future value of each contribution by the number of contributions:
Total accumulated amount = FV * number of contributions = $xxxx.xx * 36 = $xxxx.xx (rounded to two decimal places)
Therefore, Sandra would accumulate $xxxx. xx in her RRSP investment account after 3 years.
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You expect Commodore Company's stock to pay its next dividend of $6.36 exactly one year from now. After this first dividend, future dividends will grow at -3% for each of the subsequent 2 years and then 5% per year every year thereafter. What is Commodore's intrinsic value today? Use a discount rate of 12.2% and round your answer to the nearest penny.
Athens, Inc has a credit rating of A and wants to issue 15-year bonds at par value. If the 15-year Treasury bond has a YTM of 4.97% and the credit spread for Single A debt over Treasuries is 5.33%, what coupon rate should Athens select? Enter your answer as a decimal and show four decimal places. For example, if your answer is 5.25%, enter .0525.
The bonds are issued at par value, the coupon rate should be set equal to the required yield. Therefore, Athens, Inc should select a coupon rate of 10.30% (or 0.1030 as a decimal) for its bonds.
To calculate Commodore Company's intrinsic value today, we need to determine the present value of its future dividends using the dividend discount model (DDM).
Given information:
First dividend (D₁) = $6.36
Dividend growth rate for the subsequent 2 years (g₁) = -3%
Dividend growth rate after the first 2 years (g₂) = 5%
Discount rate (r) = 12.2%
Step 1: Calculate the present value of the first dividend (D₁):
PV(D₁) = D₁ / (1 + r)¹
PV(D₁) = $6.36 / (1 + 0.122)¹
PV(D₁) = $5.68
Step 2: Calculate the present value of dividends for the subsequent 2 years (D₂ and D₃):
PV(D₂) = D₁ * (1 + g₁) / (1 + r)²
PV(D₂) = $6.36 * (1 - 0.03) / (1 + 0.122)²
PV(D₂) = $5.61
PV(D₃) = D₂ * (1 + g₁) / (1 + r)³
PV(D₃) = $5.61 * (1 - 0.03) / (1 + 0.122)³
PV(D₃) = $5.54
Step 3: Calculate the present value of dividends after the first 2 years (D₄ onwards):
PV(D₄ onwards) = D₃ * (1 + g₂) / (r - g₂)
PV(D₄ onwards) = $5.54 * (1 + 0.05) / (0.122 - 0.05)
PV(D₄ onwards) = $71.72
Step 4: Calculate the intrinsic value by summing up the present values of all dividends:
Intrinsic Value = PV(D₁) + PV(D₂) + PV(D₃) + PV(D₄ onwards)
Intrinsic Value = $5.68 + $5.61 + $5.54 + $71.72
Intrinsic Value = $88.55
Therefore, Commodore Company's intrinsic value today is approximately $88.55.
Now let's move on to the second question:
Athens, Inc wants to issue 15-year bonds at par value. We need to determine the coupon rate for these bonds. The yield to maturity (YTM) for a 15-year Treasury bond is given as 4.97%, and the credit spread for Single A debt over Treasuries is 5.33%.
The required yield for Athens, Inc's bonds would be the sum of the YTM and the credit spread:
Required Yield = YTM + Credit Spread
Required Yield = 4.97% + 5.33%
Required Yield = 10.30%
Since the bonds are issued at par value, the coupon rate should be set equal to the required yield. Therefore, Athens, Inc should select a coupon rate of 10.30% (or 0.1030 as a decimal) for its bonds.
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Amber consumes nuts and berries. She has the utility function ((x1),(x2))= 4(x1)^(1/2) + (x2), where (x1) is her consumption of nuts and (x2) is her consumption of berries. If Amber is initially consuming 64 units of nuts and 10 units of berries, then what is the largest number of berries that she would be willing to give up in return for an additional unit of nuts?
Amber would be willing to give up at most 1/4 units of berries in return for an additional unit of nuts.
To determine the largest number of berries that Amber would be willing to give up in return for an additional unit of nuts, we need to compare the marginal utilities of nuts and berries.
The marginal utility of a good represents the additional utility gained from consuming one more unit of that good. Mathematically, it is the derivative of the utility function with respect to the corresponding variable.
In this case, the utility function is U(x1, x2) = 4√(x1) + x2, where x1 represents the consumption of nuts, and x2 represents the consumption of berries.
To find the marginal utility of nuts (∂U/∂x1), we differentiate the utility function with respect to x1:
∂U/∂x1 = 2/√(x1)
Given that Amber initially consumes 64 units of nuts, we can substitute this value into the equation:
∂U/∂x1 = 2/√(64) = 2/8 = 1/4
So, the marginal utility of nuts is 1/4.
To find the marginal utility of berries (∂U/∂x2), we differentiate the utility function with respect to x2:
∂U/∂x2 = 1
The marginal utility of berries is constant and equal to 1.
Now, we can compare the marginal utilities. Since the marginal utility of nuts is 1/4 and the marginal utility of berries is 1, Amber would be willing to give up berries only if the marginal utility of nuts is higher.
Therefore, Amber would be willing to give up at most 1/4 units of berries in return for an additional unit of nuts.
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If your investment has a return rate of 9.2%, what is the annuity that you will have to invest for the next three years to reach your goal of $28,800 three years from now? O $8,768.55 O $8,242.44 O $8,154.75 O $8,505.49 O $9,470.03
The annual annuity that needs to be invested to reach the goal would be $8,505.49.
The annuity that you will have to invest for the next three years to reach your goal of $28,800 three years from now, if your investment has a return rate of 9.2% would be $8,505.49. Here is the detailed solution below:Given,Future value (FV) = $28,800
Number of years (n) = 3
Return rate (r) = 9.2% An annuity is a series of equal payments made at equal intervals. The present value of an annuity is the sum of each payment's present value for all future payment periods.
The formula for annuity payments is:
PMT = FV ×[tex](r / [1 − (1 + r)−n])[/tex]
PMT = 28800 × (0.092 / [1 − (1 + 0.092)−3])
PMT = 28800 × (0.092 / [1 − (1.092)−3])
PMT = 28800 × (0.092 / [1 − 0.784])
PMT = 28800 × (0.092 / 0.216)
PMT = 12384/3
PMT = $4,128 Now, the annual annuity that needs to be invested to reach the goal would be $8,505.49.
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. Explain the different types of economies and describe the advantages of doing business in developing and emerging markets. 2. Explain the impact of globalization on developing international product strategies by focusing on marketing. promotional, distribution and pricing strategies, ie, the 4Ps of marketing done internationally.
1. There are three main types of economies: traditional, command, and market economies. Traditional economies are based on customs, traditions, and historical practices, where resources are allocated according to societal norms.
Advantages of doing business in developing and emerging markets include:
a) Untapped Market Potential: Developing and emerging markets often have a growing middle class and increasing consumer purchasing power. This presents opportunities for businesses to tap into new markets and expand their customer base.
b) Lower Operating Costs: Developing markets often offer lower labor and production costs compared to developed countries. This can result in cost savings for businesses, making their products or services more competitive in terms of pricing.
c) Resource Availability: Many developing and emerging markets possess abundant natural resources or have access to them. This can be advantageous for businesses that rely on specific resources for their operations or production.
d) Favorable Regulations and Incentives: Governments in developing and emerging markets often provide incentives and favorable regulations to attract foreign investments. This can include tax breaks, subsidies, streamlined bureaucratic processes, and relaxed trade barriers.
2. Globalization has a significant impact on developing international product strategies, including marketing, promotional, distribution, and pricing strategies (the 4Ps of marketing).
a) Marketing Strategies: Globalization necessitates adapting marketing strategies to cater to diverse cultural, economic, and social contexts. This involves conducting market research, understanding consumer preferences, and customizing products or messages to resonate with international audiences.
b) Promotional Strategies: Global promotional strategies require considering cultural nuances, language preferences, and communication channels in different markets. Businesses must tailor their advertising, public relations, and sales promotion efforts to effectively reach and engage international customers.
c) Distribution Strategies: Global distribution strategies involve selecting appropriate channels to reach target markets, considering factors such as infrastructure, logistics, and local distribution networks. This may involve partnering with local distributors, setting up subsidiaries, or utilizing e-commerce platforms.
d) Pricing Strategies: Pricing strategies in international markets must account for factors like currency fluctuations, local market conditions, competitive landscape, and purchasing power. Businesses need to strike a balance between maintaining profitability and offering competitive prices in different markets.
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Your company, Zenith Horizons Inc. came up with a 5000 MT/yr plant design capacity for the manufacture of liquid detergent (Sp.Gr. =1.06; sold at P70/litre), which is targeted to operate by 2019. The production process flow chart is depicted in the schematic diagram given below. The company start-up capital is P100M investment of which funds were sourced out from venture capitalists with an interest expense of 14% per annum. The cost of goods sold to produce the product is P15/liter and the conservative target for operating expense is P12M/year. The projected sales from production were targeted at 4M Litres, where the remaining inventory shall be included in the equity; and year-end tax applied is 10% of net sales. Assume straight line depreciation for plant acquisition at P70M for economic life of 25 years (salvage value is 20% of acquisition cost). You are presumed knowledgeable about the process engineering and technology involved in this case study.
Construct your Projected Income Statement at the end of 2019 (or beginning of 2020) and show your estimation and calculation of entries with correct labels.
The Net Profit after Tax (NPAT) for Zenith Horizons Inc. at the end of 2019 or beginning of 2020 is P163,800,000.
Here is the projected income statement for Zenith Horizons Inc. at the end of 2019 or beginning of 2020 with the necessary calculations:
Projected Income Statement for Zenith Horizons Inc. at the end of 2019 or beginning of 2020ParticularsSalesRevenue from sales = (4,000,000 liters x P70/liter)P280,000,000Cost of goods sold
Variable cost = (P15/liter x 4,000,000 liters)P60,000,000
Fixed costP12,000,000
Total cost of goods sold P72,000,000
Gross ProfitP208,000,000
Operating Expense Fixed Operating ExpenseP12,000,000Net Profit before Interest and Tax (PBT)P196,000,000Interest ExpenseP14,000,000Profit Before Tax (PBT)P182,000,000Income Tax (10% of PBT)P18,200,000Net Profit After Tax (NPAT)P163,800,000
Calculation:1. Sales: Sales = 4,000,000 liters x P70/liter = P280,000,0002. Variable cost:
Variable cost = P15/liter x 4,000,000 liters = P60,000,0003. Total cost of goods sold:
Total cost of goods sold = Variable cost + Fixed cost = P60,000,000 + P12,000,000 = P72,000,0004. Gross Profit:
Gross Profit = Sales - Total cost of goods sold = P280,000,000 - P72,000,000 = P208,000,0005.
Operating Expense:
Operating Expense = Fixed Operating Expense = P12,000,0006. Net Profit before Interest and Tax (PBT):PBT = Gross Profit - Operating Expense = P208,000,000 - P12,000,000 = P196,000,0007. Interest Expense:Interest Expense = P100,000,000 x 14% = P14,000,0008.
Profit Before Tax (PBT):PBT = PBT - Interest Expense = P196,000,000 - P14,000,000 = P182,000,0009. Income Tax:Income Tax = 10% of PBT = 10% x P182,000,000 = P18,200,00010. Net Profit After Tax (NPAT):NPAT = PBT - Income Tax = P182,000,000 - P18,200,000 = P163,800,000
Therefore, the Net Profit after Tax (NPAT) for Zenith Horizons Inc. at the end of 2019 or beginning of 2020 is P163,800,000.
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n
Mohammed wishes to buy some stocks in a reputable company with a 4% tobacco activity, a total debt of $30,000, total cash of $40,000, and a total asset of $100,000. Determine whether this stock is Sharia compliant so Mohammed can invest. [6Marks]
His stock is not Sharia compliant
All the following financial ratios must be met for companies to be considered Shariah-compliant:
1. Revenue from non compliant activities should not exceed 5% of total revenue.
2. Debt is less than 33.333% of total assets
3.Accounts receivable and cash are less than 50% of total assets;
4.Cash and interest bearing items are less than 33.333% of total asset.
Checking Condition 1)
In our case tobacco activity is 4% only, thus does not fall in this category.
Debt = 30,000
Total Assets = 100,000
Debt / Total Assets = 30,000 / 100,000 = 30%
This Condition is also not breached.
Checking Condition 3)
Cash = 40,000
Total Assets = 100,000
Cash / Total Assets = 40,000 / 100,000 = 40%
Ratio is less than 50%, hence complying with the condition.
Checking Condition 4)
Cash = 40,000
Total Assets = 100,000
Cash / Total Assets = 40,000 / 100,000 = 40%
This is higher than 33.33% hence this condition is breached.
It can be concluded that his stock is not Sharia compliant
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TRUE/FALSE/MAYBE and EXPLAIN:
It is impossible for the total number of people employed and the
unemployment rate both to fall at the same time.
If the rate of job creation outpaces the growth of the labour force, more individuals can find employment, resulting in a decrease in both unemployment and an increase in the total number of people employed.
It is possible for the total number of people employed and the unemployment rate to both fall at the same time. This can occur when there is a decrease in the overall labour force, meaning fewer people are actively seeking employment. In such cases, even though the number of people employed may decrease, the unemployment rate can also decrease if the decrease in the labour force is proportionally larger. So, it is not impossible for both numbers to fall simultaneously.
That statement is not necessarily true. It is possible for the total number of people employed and the unemployment rate to both fall at the same time under certain circumstances.
When the total number of people employed decreases, it typically indicates a decline in the number of individuals who have jobs. However, if the labour force participation rate also decreases, meaning fewer people are actively seeking employment, the unemployment rate could still decrease even with a decline in the number of employed individuals.
Additionally, economic growth and improved job creation can lead to an increase in the total number of people employed while simultaneously reducing the unemployment rate. If the rate of job creation outpaces the growth of the labour force, more individuals can find employment, resulting in a decrease in both unemployment and an increase in the total number of people employed.
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