BUSINESS COLLEGE

Suppose a hypothetical economy is currently in a situation of deficient aggregate demand of $64 billion. Four economists agree that expansionary fiscal policy can increase total spending and move the economy out of recession, but they are debating which type of expansionary policy should be used. Economist A believes that the government spending multiplier is 8 and the tax multiplier is 4. Economist B believes that the government spending multiplier is 4 and the tax multiplier is 2. Economist B believes that the government spending multiplier is 4 and the tax multiplier is 8.Compute the amount the government would have to increase spending to close the output gap according to each economist's belief. Then, for each scenario, compute the size of the tax cut that would achieve this same effect.

Answers

Answer 1

Answer:

Answer:

Check the explanation

Explanation:

Government needs to fill gap of $64 billions

for economist A

Tax multiplier is 2 so in order to fill a output gap of 64 billions, cut taxes by 64/ 2 = 32 billion

tax have to cut by $32 billions

govt spending multiplier is 8, so spendinh has to increase by 64/8=$8 billions.

for economist B

Tax multipler is 8 so to fill a output gap of 64 billions, cut taxes by 64/ 8= 8 billion

tax have to cut by $8 billions

govt spending multiplier is 4, so spending has to increase by 64/4=$16 billions.

⇒This means that Economist C likely believes that:

- Tax cuts induce investment spending and improve workers incentives.This is because cutting the taxes gives an incentive to the workers to work more.

⇒ A rise in government spending completely crowds out private sector spending, because increased govt spending increases the interest rate, hence private spending is crowded out.

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Johanna recently took over her father's business. She considered changing the date when she records and reports the business' financial results. Her accountant advised her not to do this. Which accounting principle is the basis of the accountant's advice
Case Study: Assume that are the financial manager of a company, which is considering apotential project with a new product that is expected to sell for an average price of $22 perunit and the company expects it can sell 350 000 unit per year at this price for a period of 4years. Launching this project will require purchase of a $2 000 000 equipment that hasresidual value in four years of $200 000 and adding $ 600 000 in working capital which isexpected to be fully retrieved at the end of the project. Other information is available below:Depreciation method: straight lineVariable cost per unit: $11Cash fixed costs per year $350 000Discount rate: 10%Tax Rate: 30%Do an analysis with cash flows of the project to determine the sensitivity of the project NPVwith the following changes in the value drivers and provide your results in (a) relevanttables:Unit sales decrease by 10%Price per unit decreases by 10%Variable cost per unit increases 10%Cash fixed cost per year increases by 10%
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The price of a stock is $64. A trader buys 1 put option contract on the stock with a strike price of $60 when the option price is $10. The trader makes a profit when the stock price is below _______________

Answers

Answer:

stock price is below $50

Explanation:

given data

price of a stock = $64

strike price = $60

option price = $10

solution

we know here that stock sell for $60 and pay for $10

so that here price of stock is

stock price = $60 - $ 10

stock price = $50

and net profit will be

net profit = $10 - $10

net profit = 0

so that we can say stock price is less than $50 for trader for making profit 0 or greater than 0.

so price will be below than $50

Which of the following measures the percentage change in earnings before interest and tax(or operating cash flow) associated with a given percentage change in sales? A) Degree of financial leverage B) Degree of operating leverage C) Degree of total leverage D) Degree of weighted averageWhat does P/E Ratio of a 10 indicate?
a. It would take 10 years for an investor to recover his or her initial investment
b. The firm will pay a dividend of $10 per share.
c. The value of the stock will be 10 times the initial investment at the time of maturity.
d. An investor would receive 10 percent of the total earnings of the firm, at the time of liquidation

Answers

Answer:

1. Measure of the percentage change in earnings before interest and tax or operating cash flow:

B) Degree of operating leverage

2. P/E Ratio of 10 indicates that:

c. The value of the stock will be 10 times the initial investment at the time of maturity.

Explanation:

Company B's degree of operating leverage is the financial measure that shows the degree of change of the operating income of the company in relation to a change in her sales revenue. With this measure, investors and analysts of Company B are able to evaluate how sales impacts the company's operating income. There are many ways to measure a company's degree of operating leverage. One of the methods subtracts the variable costs of sales and divides that number by sales minus variable costs and fixed costs.

Company A's P/E ratio or price/earnings ratio is the measure of the relationship between the current market price and its earnings per share. It is used to evaluate the value of the company's stock. It points out whether the company's stock is undervalued, overvalued, or correctly valued.

Rayya Co. purchases a machine for $159,600 on January 1, 2019. Straight-line depreciation is taken each year for four years assuming a eight-year life and no salvage value. The machine is sold on July 1, 2023, during its fifth year of service.Prepare entries to record the partial year’s depreciation on July 1, 2023, and to record the sale under each seperate situation. (1) The machine is sold for $79,800 cash. (2) The machine is sold for $67,032 cash.

Answers

Solution and Explanation:

Depreciation expense is calculated as follows:

Depreciation expense = Cost of machine minus residul value divide useful life of asset

= (159600 - 0) / 8 = 19950

Thus, annual depreciation expense is $19950

Partial year depreciation expense = Anuual depreciation multiply period

= 19950 mulitply 0.5 = $9975

Thus, partial depreciation expense for the 01st january 2023 to July 1, 2023 is $9975

the jorunal entry is as follows:

Depreciation account Dr. 9975 ($)

Accumulated depreciation Cr. 9975 ($)

1. if machine is sold for $79800 cash

Cash 79800

Accumulated depreciation 89775

gain on sale of machinery 9975

Machinery 159600

2. If machine is sold for $67032

Cash 67032

Accumulated depreciation 89775

loss on sale of machinery 2793

Machinery 159600

the c shellsort() function takes an array of gap values as a parameter. the array must contain a gap value of to guarantee proper sorting.

Answers

If the collection of gap values contains 1, ShellSort will correctly sort an array using that collection. the InsertionSort method The normal insertion sort is identical to interleaved with a gap of 1.

How does Shellsort work?

An expanded variant of the insertion sort algorithm is shell sort. In order to lessen the distance between the components to be sorted, it first sorts those that are far apart from one another. Based on the chosen sequence, the space between the pieces is compressed.

What is gap size in shell sort?

We start by selecting a gap size, which establishes the distance between the values in a subsequence. In the case of a starting gap size of 6, for instance, the first subsequence would contain values at positions 1, 7, 13, 19, and so forth, whereas the second subsequence would contain values at positions 2, 8, 14, 20, and so forth.

To know more about Shellsort visit: brainly.com/question/23609675

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Tidy Limited purchased a new van on January 1, 2018. The van cost $40,000. It has an estimated life of ten years and the estimated residual value is $3,500. Tidy uses the double-declining-balance method to compute depreciation. What is the adjusted balance in the Accumulated Depreciation account at the end of 2019

Answers

Answer:

$33,600

Explanation:

The computation is shown below:

But first we have to determined the following things

Depreciation rate

= 1 ÷ useful life

= 1 ÷ 10

= 0.1

It is double-declining so the rate is also double i.e. 0.20

Now in the first year, the depreciation expense is

= $40,000 × 0.20

= $8,000

Now in the second year, the depreciation is

= ($40,000 - $8,000) × 0.20

= $25,600

So, the accumulated depreciation at the end of 2019 is

= $8,000 + $25,600

= $33,600

Here the residual value is not relevant. hence, ignored it

Consider three imaginary countries. In Aire, saving amounts to $4,000 and consumption amounts to $12,000; in Bovina, saving amounts to $3,000 and consumption amounts to $24,000; and in Cartar, saving amounts to $10,000 and consumption amounts to $50,000. The saving rate is