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04.01.2020 •
Business
In the equation of exchange, m x v = p x q, the p represents
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Ответ:
P in the equation represents Price level
Explanation:
The equation above is referred to as the equation of exchange.
M = money supply, V= velocity of money, P= price level and Q= real output (real GDP)
P × Q gives the nominal GDP while M×V is the effective money supply.
The total value of goods and services available in the economy (represented by the nominal GDP) is equals to the total amount of money available to purchase them (the effective money supply.
The velocity of money is the rate at which money been is used or spent for transaction purposes in the economy. It is assumed to be constant.
For example, If there exist only a $1000 note in the economy, this amount just needs to be spent once to purchase a total nominal GDP of $1000. However, if there exist just one $500 note, then it means the $500 will need to be spent 2 times to purchase the total value of goods worth $1000. The 2 is the velocity of money
This equation is also used to explain the concept of the quantity theory of money.
The theory states that if an economy is operating at the full employment level, an increase in money supply will not impact the real GDP rather it will drive up the price level up. This idea forms the basis of the position of some economists that money supply drives inflation
The assumptions of the theory are as follows:
The velocity of money is constant
The the economy is at the full employment output. This implies that the economy is using all of its productive resources efficiently
Ответ:
475,000
Explanation:
Hey there! For this question, we will be using the COGS and SG&A formulas.
Basic Formula: Revenue - COGS - SG&A = Pretax profits
How do you calculate the SG&A?
Well, SG & A = (Contribution - Prextax income)
SG & A = ($400,000 - $125,000)
SG & A= $275,000
What's next?
Now, you must calculate for revenue.
Contribution margin/Revenue = Contribution Margin Ratio
Revenue = Contribution Margin/Contribution Margin Ratio
Revenue = $400,000/.25
Revenue = $1.1m
Now, let's use the COGS formula.
COGS: Starting inventory + purchases - ending inventory = cost of goods sold
Revenue - COGS - SG&A = Pretax profits
1.1m - COGS - 400k = 125k
COGS = $1.1m - $125k - $400k
Final 1.100 Million (1,000,000)