CORRECTION NEEDED FOR FINANCE 1.0 YOU ARE NOT SUPPOSED TO WRITE AN ESSAY FOR THIS QUESTION LOOK ON QUESTION AGAIN 2. SEE THE QUESTION AGAIN NO NEED OF ESSAY WHERE ARE THE FIGURES ASKED BY QUESTION SEE THE ? MARK AND ANSWER THOSE FIGURES FROM THE DATA OF THE WEBSITE NO ? MARK ANSWERED 3. BOTH ARE THE SUBPARTS FIND THE SHEDULE OF MEETINGS AND PRESS RELEASES AND ANSWER ALL THE QUESTIONS ON THE BASIS OF THOSE DATA. ECONOMICS Q.2 PLS ELABORATE DEEPLY NOT WITH 3 LINES Q.4 PLS EXPLAIN EACH POINTS Q.5 DEEPLY EXPLAIN Q.7 EXPLAIN MORE DEEPLY WITH COMMENTS Q.9 EXPLAIN MORE Q.10 ALL QUESTIONS ARE NOT EXPLAINED Q.11 EXPLAIN MORE DEEPLY Pro-Forma and Business Cycle Research Paper 6 Pro-Forma and Business Cycle Research Paper In this paper we will research the businesses of Wal-Mart and Starbucks to compare and contrast the current financial statements of these companies. We will describe the financial viability of these businesses using ratio analyses and summarize a typical business cycle for the businesses and identify where the companies are in the cycle. Every business will experience various stages of the business cycle. Each stage, such as growth or contraction, has its own challenges that require different approaches to be successful. The typical business cycle will encounter trends including slowdown, bottom, growth, and peak (Bowlin, 2014). As a company goes through a normal period of expansion they may see the slowdown occur where sales begin to fall off and a decision must be made about moving toward the expansion stage or exiting. During the slowdown there is still fierce competition and with negative cash flow the company will eventually hit the bottom. If moving toward expansion, efforts to gain market share are aggressive in order to find new profit channels. Business will begin to see a peak as the company enters new markets or adds new products to existing markets and the cycle begins again. Walmart and Starbucks are two large companies with long-standing competitive advantages. Each has seen significant profits that have resulted in a relatively stable cash flow. In the business cycle Walmart and Starbucks are mature companies because they've achieved stability and their revenue growth is in line with the growth of the economy. Additionally, mature businesses tend to build up cash balances which can then be passed onto investors as dividends. Walmart has returned over 2 billion to its shareholders in dividends and share repurchases ("Walmart Reports Fy", 2014). Starbucks returned a record $1.2 billion to its shareholders (Starbucks Corporation Fiscal 2013 Annual Report, 2013). Comparison of Wal-Mart and Starbucks current financial statements Wal-Mart Stores Inc. operates retail stores in many parts of the world. Starbucks Corp. deals in the manufacture and sale of coffee and tea. It operates through its Americas, Europe, Middle East, and Africa segments. Ratios Wal-Mart Starbucks Valuation P/E Current 15.52 7,396.0.

1. CORRECTION NEEDED
FOR FINANCE
1.0 YOU ARE NOT SUPPOSED TO WRITE AN ESSAY FOR
THIS QUESTION
LOOK ON QUESTION AGAIN
2. SEE THE QUESTION AGAIN NO NEED OF ESSAY
WHERE ARE THE FIGURES ASKED BY QUESTION
SEE THE ? MARK AND ANSWER THOSE FIGURES FROM
THE DATA OF THE WEBSITE NO ? MARK ANSWERED
3. BOTH ARE THE SUBPARTS FIND THE SHEDULE OF
MEETINGS AND PRESS RELEASES AND ANSWER ALL
THE QUESTIONS ON THE BASIS OF THOSE DATA.
ECONOMICS
Q.2 PLS ELABORATE DEEPLY NOT WITH 3 LINES
Q.4 PLS EXPLAIN EACH POINTS
Q.5 DEEPLY EXPLAIN
Q.7 EXPLAIN MORE DEEPLY WITH COMMENTS
Q.9 EXPLAIN MORE
Q.10 ALL QUESTIONS ARE NOT EXPLAINED
Q.11 EXPLAIN MORE DEEPLY
Pro-Forma and Business Cycle Research Paper
6
Pro-Forma and Business Cycle Research Paper

2. In this paper we will research the businesses of Wal-Mart and
Starbucks to compare and contrast the current financial
statements of these companies. We will describe the financial
viability of these businesses using ratio analyses and
summarize a typical business cycle for the businesses and
identify where the companies are in the cycle.
Every business will experience various stages of the business
cycle. Each stage, such as growth or contraction, has its own
challenges that require different approaches to be successful.
The typical business cycle will encounter trends including
slowdown, bottom, growth, and peak (Bowlin, 2014). As a
company goes through a normal period of expansion they may
see the slowdown occur where sales begin to fall off and a
decision must be made about moving toward the expansion
stage or exiting. During the slowdown there is still fierce
competition and with negative cash flow the company will
eventually hit the bottom. If moving toward expansion, efforts
to gain market share are aggressive in order to find new profit
channels. Business will begin to see a peak as the company
enters new markets or adds new products to existing markets
and the cycle begins again.
Walmart and Starbucks are two large companies with long-
standing competitive advantages. Each has seen significant
profits that have resulted in a relatively stable cash flow. In the
business cycle Walmart and Starbucks are mature companies
because they've achieved stability and their revenue growth is
in line with the growth of the economy. Additionally, mature
businesses tend to build up cash balances which can then be
passed onto investors as dividends. Walmart has returned over 2
billion to its shareholders in dividends and share repurchases
("Walmart Reports Fy", 2014). Starbucks returned a record $1.2
billion to its shareholders (Starbucks Corporation Fiscal 2013
Annual Report, 2013).

3. Comparison of Wal-Mart and Starbucks current financial
statements
Wal-Mart Stores Inc. operates retail stores in many parts of the
world.
Starbucks Corp. deals in the manufacture and sale of coffee and
tea. It operates through its Americas, Europe, Middle East, and
Africa segments.
Ratios
Wal-Mart
Starbucks
Valuation
P/E Current
15.52
7,396.00
P/E Ratio (with extraordinary items)
15.54
368.40
P/E Ratio (without extraordinary items)
15.30
7,733.00
Price to Sales Ratio
0.51
3.89
Price to Book Ratio
3.17
13.00
Price to Cash Flow Ratio
10.54
20.27
Enterprise Value to EBITDA
8.34
18.93
Enterprise Value to Sales
0.62

4. 3.50
Total Debt to Enterprise Value
0.19
0.02
Efficiency
Revenue/Employee
216,497.00
81,825.00
Income Per Employee
7,217.00
46.00
Receivables Turnover
70.85
28.44
Total Asset Turnover
2.34
1.51
Liquidity
Current Ratio
0.88
1.02
Quick Ratio
0.24
0.81
Cash Ratio
0.10
0.60
Profitability
Gross margin
24.82
21.32
Operating Margin
5.64
15.02
Pretax Margin
5.18

5. -1.54
Net Margin
3.33
0.06
Return on Assets
7.79
0.08
Return on Equity
20.81
0.17
Return on Total Capital
12.06
0.15
Return on Invested Capital
13.31
0.15
Capital Structure
Total Debt to Total Equity
74.28
29.00
Total Debt to Total Assets
42.62
11.28
Long-Term Debt to Equity
58.43
29.00
Long-Term Debt to Total Capital
33.53
22.48
Market Capitalization
As of the 12 months ending Apr 30, 2014 Wal-Mart has a
market capitalization of $242.5 billion compared to Starbucks’s
$55.68 billion. Wal-Mart has a higher market capitalization than
Starbucks. This difference points out that investment in Wal-

6. Mart are more stable and thus viable and exposed to lower risks
than in Starbucks.
Return on Investment (ROI)
With respective Returns on investments of 13.3% and 0.15% for
Wal-Mart and Starbucks for the year ending 31 December, 2013,
Wal-Mart promises far higher return on capital invested than
Starbucks. It is more profitable to invest capital in Wal-Mart
than in Starbucks.
Pay-Back Period Analysis
Going by the ROI to analyze how fast it would take to recover
the invested capital, it can be seen that the invested capital can
be recovered faster at Wal-Mart than at Starbucks.
The income statement is basically the first financial
statement that will be presented in an annual report or quarterly
Securities and Exchange Commission (SEC) filing. It will
contain the numbers most often discussed when a company
announces its results, such as revenue, earnings and earnings
per share. The income statement shows how much money the
company generated (revenue), how much the company spent
(expenses) and the difference between the two (profit) over a
certain time period.
Starbucks
The best way for a company to improve profitability is by
increasing sales. Starbucks has aggressive long-term sales
growth goals that include a distribution system of 20,000 stores
worldwide. It has been Starbucks consistent sales growth that
has increased their profitability. Profit must equal to total
revenue minus total expenses.

7. Period Ending: 9/29/2013 VS.
9/30/2012
Total Revenue: $14,892,200
$13,299,500
Cost Revenue: $6,382,300
$5,813,300
Gross Profit: $8,509,900
$7,486,200
Wal-Mart
Wal-Mart income statement presents information on the
financial results of a company’s business activities over a
period of time. The income statement communicates how much
revenue the company generated during a period and what cost it
incurred in connection with generating that revenue.
Period Ending: Jan 31, 2014 VS.
Jan 31, 2013
Total Revenue: $473,076
$466,114
Cost Revenue: ($358,069)
($352,488)
Gross Profit: $115,007
$113,626 (USD $ in Millions)
Wal-Mart stores have increased net sales from 2012-2014.
However, Wal-Mart operating income has also increased from
2012-2013, with a slight decline from 2013 to 2014. It also

8. declined from income continuing operations before income
taxes from 2013-2014. Income from continuing operations
declined from 2013-2014, and consolidated net income
attributed to Wal-Mart declined from 2013-2014.
Wal-Mart, though a very profitable company, did face
challenges which brought a decline on the income statement
versus Starbucks. Increasing sales offers the first sign of strong
fundamentals. Rising margins will indicate increasing efficiency
and profitability, with both companies it is noted that Wal-Mart
had a change in the company’s profitability.
References
http://stock.walmart.com/financial-reporting/unit-counts-
square-footage.
http://stock.starbucks.com/financial-reporting/unit-counts-
square-footage.
Writer, S. (2014). . "Wal-Mart Plans to Close 48 Bud's Discount
City Stores." New York Times.
July 23, 1997. Retrieved on June 14, 2014.
Bowlin, K. (2014). What is a business cycle & why is it
important?. Retrieved from
http://smallbusiness.chron.com/business-cycle-important-
21827.html
Starbucks Corporation fiscal 2013 annual
report. (2013). Retrieved from
http://file:///C:/Users/Zakiya/Downloads/Starbucks%20Fiscal%2
02013%20Annual%20
Report
%20-%20FINAL.PDF

9. Walmart reports FY 15 Q1 EPS of $1.10; weather impacted EPS
approximately $0.03. (2014).
Retrieved from
http://news.walmart.com/newsarchive/investors/2014/05/15/wal
mart-reports-fy-
15-q1-eps-of-110-weather-impacted-eps-approximately-003
Sheet1University of Phoenix Faculty MaterialKudler Opening
Budget Startup CostsConstructionSite
preparation100,000Building1,000,000Trade
Fixtures400,00020%
CONTINGENCY300,000SUBTOTAL:1,800,000Operating
CapitalMarketing/PR50,000Launch
Event25,000Equipment50,000Inventory750,000Operating
Supplies10,000Legal
fees25,000Permits10,000Insurance25,000Preopening Salaries
and Travel125,00010%
Contingency107,000SUBTOTAL:1,177,000Occupancy CostR E
Taxes12,000Utilities10,000SUBTOTAL:22,000TOTAL2,999,00
0Capitalization PlanCash from Principle Owners300,000Cash
from Venture Capital Partners600,000Preferred return of 80% of
net profit until principle is paid, then 10% of net profitsBank
Loan2,100,0007.5% APR on a 15-year term3,000,000
Sheet2
Sheet3
ECONOMICS 301
Running Head: ECONOMICS 301
Name:
Instructor:
Course:
Date:

10. 1. How are presidential election outcomes related to the
performance of the economy?
The performance of the economy relies heavily on the kind of
leadership to be instituted in the country. This is because it’s
the authorities who will dictate the regulatory environment and
the provision of opportunities mostly in the private sector.
According to political scientists who considered the US
scenario depicted that if Mitt Romney was to win the
presidential ticket, unemployment was to drop by 0.3% as
compared to Obama. This is mainly because of the kind of
leadership the two individual’s exhibit. Thus presidential
elections denote economic performance in a country. Above all
expectations that arise from the citizens lead to higher interest
rates in the country which in turn lead to motivation of
investment plans among investors and other stakeholders hence
harnessing the economy.
2. Discuss the difference between Microeconomics and
Macroeconomics.
Microeconomics is the study of particular markets, and
segments of the economy. It looks at issues such as consumer
behavior, individual labor markets, and the theory of firms. On
the other hand Macroeconomics is the study of the whole
economy. It looks at ‘aggregate’ variables, such as aggregate
demand, national output and inflation.
3. Use the concepts of gross and net investment to distinguish
between an economy that has a rising stock of capital and one
that has a falling stock of capital. “In 1933 net private
domestic investment was minus $6 billion. This means that in
that particular year the economy produced no capital goods at
all.” Do you agree? Why or why not? Explain: “Though net
investment can be positive, negative, or zero, it is quite
impossible for gross investment to be less than zero.”
When gross investment exceeds depreciation, net investment is
positive and production capacity expands; the economy ends the
year with more physical capital than it started with. When gross
investment equals depreciation, net investment is zero and

11. production capacity is said to be static; the economy ends the
year with the same amount of physical capital. When
depreciation exceeds gross investment, net investment is
negative and production capacity declines; the economy ends
the year with less physical capital. The first statement is wrong.
Just because net investment was a minus $6 billion in 1993 does
not mean the economy produced no new capital goods in that
year. It simply means depreciation exceeded gross investment
by $6 billion. So the economy ended the year with $6 billion
less capital.
The second statement is correct. If only one $20 spade is bought
by a construction firm in the entire economy in a year and no
other physical capital is bought, then gross investment is $20—
a positive amount. This is true even if net investment is highly
negative because depreciation is well above $20. If not even
this $20 spade has been bought, then gross investment would
have been zero. But gross investment can never be less than
zero.
4. What are the major factors that have affected U.S. household
consumption since the recession in 2001?
· Household consumption has been flat or diminished. Income
and employment have been stagnant or declining. Economic
trends indicate minimal growth.
· Wars in Iraq and Afghanistan are a drain on human and
material resources.
· Energy producers have increased the percentage of household
budgets for utilities and fuel.
5. Briefly explain how the following would shift the IS function
to the right.
a) A change to lump-sum taxation (Specify whether increase or
decrease is needed to shift IS curve to the right.
b) A change to government spending (Specify whether increase
or decrease is needed to shift IS curve to the right.
a. A decrease in lump sum tax causes the IS curve to shift to the
right, this is because the consumer will be willing to move to a
higher indifference curve that offers more satisfaction in line

12. with the budget constraint.
b. A higher Government spending will spur the economy and
shift the IS curve out. An increase in government spending
leads to → increase in planned injections → negative
unplanned investment (stocks go down) → increase in output →
increase in transactions demand for money → decrease in
speculative demand for money → increase in interest rate →
decrease in investment → some crowding out which leads to the
increase in output being more modest than it would otherwise
be.
6. Explain briefly how a change to the following MS, MD, or P
(ceteris paribus) would shift the LM function to the right.
Include in your discussion whether the variable would have to
increase or decrease to cause the rightward LM shift. Discuss
which of these the FED exercises control over.
a. If the money supply increases, ceteris paribus, the interest
rate is lower at each level of Y, or in other words, the LM curve
shifts right. That is because at any given level of output Y,
more money means a lower interest rate.
b. A decrease in money demand will shift the LM curve to the
right this is due to the lower interest rates at output Y.
c. The LM curve shifts right when prices fall, this is because
when prices are low they increase real money balances which
actually shift the LM curve to the right.
When the Fed sells bonds to the public, it increases the supply
of bonds, thus shifting the supply curve to the right. The result
is that the intersection of the supply and demand curves and
occurs at a lower price and a higher equilibrium interest rate,
and the interest rate rises. With the liquidity preference
framework, the decrease in the money supply shifts the money
supply curve to the left, and the equilibrium interest rate rises.
Hence the money supply curve is crucial in FED application.
7. By how much will GDP change if firms increase their
investment by $8 billion and the MPC is .80? If the MPC is
.67?
GDP will increase $40 billion if the MPC is .80. An MPC of

13. .80 will produce a multiplier of 5. The multiplier times the $8
billion change in spending will change GDP by $40 billion.
Change in GDP = Change in Investment x (1/ (1 - MPC)) $40
billion = $8 billion x (1/ (1 - .8)). GDP will increase by
approximately $24 billion when the MPC is .67
8. Suppose that private sector spending is highly sensitive to a
change in interest rate. Compare the effectiveness of monetary
and fiscal policy in terms of rising and lowering real GDP
If private sector spending is highly sensitive to a change in the
interest rate, then the IS curve is relatively flat. The main effect
of a fiscal expansion will be a higher interest rate that reduces
private sector spending almost as much as the fiscal expansion
increases autonomous spending. As a result, the fiscal
expansion causes very little increase in output. In the case of a
fiscal contraction, the effect of the lower interest rate on private
sector spending almost offsets the effect of the fiscal
contraction. As a result, fiscal policy is unable to have much of
an impact on output.
On the other hand, monetary policy is quite capable of changing
output if private sector spending is highly sensitive to a change
in the interest rate. A policy of tight money will result in a
sharp contraction of private sector spending as the interest rate
rises. Easy money will provide a large stimulus to private sector
spending as the interest rate falls.
9. Assume that a hypothetical economy with an MPC of .8 is
experiencing severe recession. By how much would government
spending have to increase to shift the aggregate demand curve
rightward by $25 billion? How large a tax cut would be needed
to achieve this same increase in aggregate demand? Why the
difference? Determine one possible combination of government
spending increases and tax decreases that would accomplish this
same goal.
In this problem, the multiplier is 1/.2 or 5 so, the required
increase in government spending = $5 billion. For the tax cut
question, initial spending of $5 billion is still required, but only
.8 (= MPC) of a tax cut will be spent. So .8 x tax cut = $5

14. billion or tax cut = $6.25 billion. Part of the tax reduction
($1.25 billion) is saved, not spent. One combination: a $1
billion increase in government spending and a $5 billion tax cut.
10. What are government’s fiscal policy options for ending
severe demand-pull inflation? Use the aggregate demand-
aggregate supply model to show the impact of these policies on
the price level. Which of these fiscal policy options do you
think might be favored by a person who wants to preserve the
size of government? A person who thinks the public sector is
too large?
Options are to reduce government spending, increase taxes, or
some combination of both. If the price level is flexible
downward, it will fall. In the real world, the goal is to reduce
inflation—to keep prices from rising so rapidly—not to reduce
the price level. A person wanting to preserve the size of
government might favor a tax hike and would want to preserve
government spending programs. Someone who thinks that the
public sector is too large might favor cuts in government
spending since this would reduce the size of government. The
ratchet effect implies that prices are rigid downward.
11. Explain why relatively flat as opposite relatively steep labor
demand curves are more consistent with the empirical
observation that there are relatively minor changes in the real
wage rate over the course of the business cycle.
If the short-run aggregate supply curve is relatively flat, then a
change in aggregate demand results mainly in a change in
output and only a small change in the price level, given the
nominal wage rate. Therefore, there is little change in the real
wage rate, given the nominal wage rate. Furthermore, if the
demand for labor curve is relatively flat, it will not take much
of a change in the nominal wage rate relative to the price level
to return the real wage to the equilibrium real wage rate.
Therefore, the price level changes that result from the shifts of
the SAS due to changes in the nominal wage should occur at a
rate that is similar to the rate of change in the nominal wage.
If, on the other hand, the SAS curve is relatively steep, then a

15. change in aggregate demand shows up mainly as a change in the
price level, resulting in a large change in the real wage rate,
given the nominal wage rate. The same logic applied in the
previous paragraph would show why there would need to be a
large change in the nominal wage rate relative to the price level
necessary to restore that labor market to equilibrium if the labor
demand curve is relatively steep. Therefore, the empirical
observation that there are relatively minor changes in the real
wage rate over the course of a business cycle is more consistent
with relatively flat labor demand and short-run aggregate supply
curves.
12. Is sustainable long-run equilibrium always reached when the
AD and SAS curves intersect? Why or why not?
No. The economy is in short-run equilibrium when the AD and
SAS curves intersect, but not necessarily in long-run
equilibrium. It will be a sustainable long-run equilibrium only if
the economy finds itself operating on both the labor demand
curve and the labor supply curve. This occurs only where the
labor demand and labor supply curves intersect, so there is no
pressure to change. At that point the actual real wage equals the
equilibrium real wage and Y = YN. At any other combination of
W, P, and Y, the SAS curve will shift as expectations are
adjusted.
13. If the equilibrium real wage remains constant, what happens
to the nominal wage when the actual inflation rate exceeds the
expected inflation rate?
When the equilibrium real wage is constant and output is at the
natural rate, the nominal wage will be increasing at the same
rate as the inflation rate. If output is greater than the natural
rate and actual inflation exceeds expected inflation, then the
actual real wage would be falling. In this case, we would expect
workers to try to increase the rate of growth of nominal wages.
14. In the steady state, the government benefits from inflation.”
Explain
The government is assumed to have a desired level of
expenditures equal to a fraction, -y, of national income. Its

16. revenue sources are threefold: various corporate, interest-
income, and capital gains taxes; the issuance of money; and a
labor-income tax. When we compare steady states attainable
through different rates of inflation, the labor-income tax will be
assumed to vary so as to maintain the government's budget-
balance condition. Even if labor is supplied elastically, this tax
will affect the real variables of the system only insofar as it
changes savings and ultimately the capital stock. Since the real
level of money balances is m, and the labor force is growing at
rate n, which will therefore be the growth rate of output and
capital in the steady state, the government can issue money at
the rate of MN without causing any inflation in the price level.
Inflation at rate TT produces extra revenue of TRM.
References
Flemming, J. S. (1976). Inflation. London: Oxford University
Press.
Pen, J. (1965). Modern economics. Baltimore: Penguin Books.
Samuelson, P. A., & Nordhaus, W. D. (1985). Economics. New
York: McGraw-Hill.
EC 301
1. How are presidential election outcomes related to the
performance of the economy?
2. Discuss the difference between Microeconomics and
Macroeconomics.
3. Use the concepts of gross and net investment to distinguish
between an economy that has a rising stock of capital and one
that has a falling stock of capital. “In 1933 net private
domestic investment was minus $6 billion. This means that in
that particular year the economy produced no capital goods at
all.” Do you agree? Why or why not? Explain: “Though net
investment can be positive, negative, or zero, it is quite
impossible for gross investment to be less than zero.”

17. 4. What are the major factors that have affected U.S. household
consumption since the recession in 2001?
5. Briefly explain how the following would shift the IS function
to the right.
a.
A change to lump-sum taxation (Specify whether increase or
decrease is needed to shift IS curve to the right.)
b.
A change to government spending (Specify whether increase or
decrease is needed to shift IS curve to the right.)
6. Explain briefly how a change to the following MS, MD, or P
(ceteris paribus) would shift the LM function to the right.
Include in your discussion whether the variable would have to
increase or decrease to cause the rightward LM shift. Discuss
which of these the FED exercises control over.
a. MS.
b. MD (money demand).
c. P (price index).
7. By how much will GDP change if firms increase their
investment by $8 billion and the MPC is .80? If the MPC is
.67?
8. Suppose that private sector spending is highly sensitive to a
change in interest rate. Compare the effectiveness of monetary
and fiscal policy in terms of rising and lowering real GDP
9. Assume that a hypothetical economy with an MPC of .8 is
experiencing severe recession. By how much would government
spending have to increase to shift the aggregate demand curve

18. rightward by $25 billion? How large a tax cut would be needed
to achieve this same increase in aggregate demand? Why the
difference? Determine one possible combination of government
spending increases and tax decreases that would accomplish this
same goal.
10. What are government’s fiscal policy options for ending
severe demand-pull inflation? Use the aggregate demand-
aggregate supply model to show the impact of these policies on
the price level. Which of these fiscal policy options do you
think might be favored by a person who wants to preserve the
size of government? A person who thinks the public sector is
too large?
11. Explain why relatively flat as opposite relatively steep labor
demand curves are more consistent with the empirical
observation that there are relatively minor changes in the real
wage rate over the course of the business cycle.
12. Is sustainable long-run equilibrium always reached when the
AD and SAS curves intersect? Why or why not?
13. If the equilibrium real wage remains constant, what happens
to the nominal wage when the actual inflation rate exceeds the
expected inflation rate?
14. “In the steady state, the government benefits from
inflation.” Explain.