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Question - Minden Company manufactures a high-quality wooden birdhouse that sells for $25 per unit. Variable costs are $8 per unit, and fixed costs total $130,000. The company sold 40,000 birdhouses to customers during 2018. The president of Minden Company believes the following changes should be made in 2019:
1. The selling price of the birdhouse should be reduced by 20%.
2. Increase advertising by $35,000.
Assume these changes are made. Calculate the number of units Minden Company must sell in 2019 in order to earn a net income that is 17% larger than the net income earned in 2018.
Hubbard argues that the Fed can control the Fed funds rate, but the interest rate that is important for the economy is a longer-term real rate of interest. How much control does the Fed have over this longer real rate?
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