When the dollar depreciates, each dollar buys. According to purchasing-power parity, if prices in the United States increase by a larger percentage than prices in Poland, then. What role do interest rates play in allocating capital to different potential borrowers? Government policy can also influence allocation of capital and the level of interest rates. Which of the following is a cause of frictional unemployment? Sheamous loses his job and decides to sit on the beach rather than look for work during the next few months. If investors believed that capital taxes would remain low, how would the governments action affect the level of investment? If people decide to hold less currency relative to deposits, the money supply. Suppose also that the price elasticity of demand for cigarettes is 1.2 and the price elasticity of supply is 0.7. He transfers $2,100 from his checking account to his savings account. If the governments expenditures exceeded its receipts, it would likely. More risky than short-term bonds and so pay higher interest. The default-risk premium on a bond equals the: difference between the expected return on the bond and the U.S. Treasury yeild. d. and the labor-force participation rate are both unaffected. What is its saving? We explore & analyses the requirements & challenges of each industry individually. a. lowers the discount rate. what term refers to those who link the buyers and sellers of stocks, earning a profit by collecting a commission on each transaction. A proof of equality of debits and credits in a general ledger. Which factor sets an upper limit on how much can be paid for savings? There are three major facts regarding term structure: Interest rates on long-term bonds are usually higher than interest rates on short-term bonds. (p. 160). Explain: Although long-term bonds are heavily exposed to interest rate risk, short-term T-bills are heavily exposed to reinvestment rate risk. What are the two items whose sum is the cost of equity? a. 1. Starting a new venture? The income statement for Electronic Wonders reports net sales of $91,758 million and cost of goods sold of$69,278 million. In a closed economy, what does (Y - T - C) represent? Other things the same, if the price level is lower than expected, then some firms believe that the relative price of what they produce has. Other things the same, the unemployment rate. Draw a graph that shows the efficient level of swimming-pool hours per day to be eight hours. All or part of a firm's profits may be paid out to the firm's stockholders in the form of. If saving is greater than domestic investment, then. In response to the terrorist attacks of September 11, 2001, the Fed started lowering the FFR target the following week. The effect of an increase in the price level on the aggregate-demand curve is represented by a. c. movement to the left along a given aggregate-demand curve. b. a. That is, can it set rates at any level it chooses? b. decreased, so they decrease production. Two closely watched statistics are the unemployment rate and the employmentpopulation ratio (calculated as the percentage of the adult population that is employed). The nominal exchange rate. Golf Challenge Corp. is a retail sports store carrying golf apparel and equipment. Interest rates on short-term bonds are occasionally higher than interest rates on long-term bonds. If these individuals were counted as out of the labor force instead of as unemployed, then. Our industry-specific experience, commitment to quality and in-depth knowledge in technology has empowered us to deliver superior services across multiple industries such as healthcare, ecommerce, media, retail, travel, food, logistics, real estate, finance and bank. What is the probability exactly four of those in the sample name chocolate? Negative publicity will result in a loss of future contribution margin of $100 for each external failure. Explain why corporate bonds default and liquidity premiums are likely to increase with their maturity. Given the situation depicted in the graphs, which of the following will happen? In general, as a person includes fewer stocks and more bonds in his portfolio, Abby buys health insurance because she knows that she has health risks that wouldn't be obvious to an insurance company. Delicate balancing act. An auto company goes bankrupt and lays off its workers, who immediately start looking for new jobs. b. either a rise in output or a fall in velocity. What factors other than cost schuld Safe Travel consider before changing inspection techniques? Assume that all of the work of the IT department could be outsourced to an independent company for $97.50 per hour. Several firms have made him offers, but he thinks he might be able to find a firm where his talents could be put to better use. (b) Why do you think it took so long for the nation to establish a central banking authority? However, the bondholders do have some protection in case of liquidation. b. right, and an increase in the actual price level does not shift short-run aggregate supply. Initial public offerings (IPOs) tend to occur more frequently during bearish (weak) stock markets. Is the action by Golf Challenges owner ethical? Congress was unable to agree on a program to help stimulate the economy until March 2002. Prices in both the U.S. and China rise, but prices in China increase by a smaller percentage. 2. An examination of balance sheet amounts indicates accounts receivable increased $1,733 million, inventory increased$883 million, and accounts payable to suppliers decreased $1,967 million. Other things the same, if workers and firms expected inflation to be 2%, but it is only 1% then, A decrease in the expected price level shifts short-run aggregate supply to the. Suppose we select a sample of ten people and ask them to name their favorite flavor of ice cream. E. Southlandia will experience a balance of trade deficit. The dollar amount you pay is a nominal value. 2. Borrowers bid for the available supply of debt capital using interest rates: The firms with he most profitable investment opportunities are willing and able to pay the most for capital. How does Golf Challenges use of FIFO improve its net profit margin and current ratio? c. What is the probability four or more name chocolate? The steps required to formulate fiscal policy are: The short-run aggregate supply curve is horizontal because wages and prices are assumed to be fixed. a. for those who save than for those who borrow. a. sales or by raising the discount rate. d. neither frictional nor structural unemployment, Minimum wages create unemployment in markets where they create a. d. surplus of labor. If short-term interest rates are lower than long-term rates, why might a borrower still choose to finance with a long-term debt? Does the interest rate on a T-bond include a default risk premium? $$ c. Numerous students graduate from college but cannot find work. c. a higher interest rate because it has more risk. Bigego proclaims that more people are working now than when he took office. a. both the unemployment rate and labor-force participation rate would be higher. Investors care about the after tax returns, and as such would demand higher interest rates for compensation for higher taxes, and would accept lower interest rates for less taxed investments, o The interest rate on a long-term bond is an average of the interest rates investors expect on short-term bonds over the lifetime of the long-term bond, o The interest rate on a long-term bond is an average of the interest rates investors expect on short-term bonds over the lifetime of the long-term bond, plus a term premium, o The interest rate on a bond of a particular maturity is determined only by the demand and supply of bonds of that maturity, Physical assets such as land and buildings _____. Does the Fed have complete control over U.S. interest rates? The marginal cost should be shown by a horizontal line that hits the vertical axis at$80. The company has two product lines (clothing and shoes), which are produced in separate manufacturing facilities; however, both manufacturing facilities share the same support services for information technology and human resources. riskier than short-term bonds, and so interest rates on long-term bonds are usually higher than interest rates on short-term bonds. a. cyclical unemployment amounting to 0.5 percent of the labor force. In which of the following cases is the present value of this payment the lowest? There is evidence that the rate at which money changed hands rose during the German hyperinflation. Bonds for which property is pledged to secure the claims of bondholders, Bonds secured by the pledge of securities, such as stocks or bonds of other companies. The sum of the marginal benefit or demand curve should slope downward from left to right and intersect the marginal cost above eight hours of daily operation. Using borrowed funds to earn a profit greater than the interest that must be paid on the borrowing, When a bond is paid and the liability is removed from the company's balance sheet, A fund established to accumulate assets to pay off bonds when they mature. Daspal Technology Services. During the internal inspection, the alternative technique will detect only 3.5%of the 200,000 car seats that have stitching problems. Risk: the chance that an investment will provide a low or negative return; ability to pay loan. Which of these is NOT one of the benefits that depository institutions (such as banks) offer society? In a closed economy, what does (T - G) represent? All rights reserved. b. net capital outflow rises, so the trade deficit decreases. 1. Which of the following shifts the short-run aggregate supply curve right? Tom has a law degree. Economists use labor-market data to evaluate how well an economy is using its most valuable resource its people. A. b. price level rises and its currency depreciates relative to other currencies in the world. The stores owner is currently looking over Golf Challenges preliminary financial statements for its second year. A country has $1.5 billion dollars of domestic investment and net exports of $2 billion. d. rises. \text{Shoes} & \text{7,920} & \text{176}\\ The claims of creditors, including bondholders, rank above those of stockholders. Original capitalized value of the asset minus any depreciation/amortization/depletion. Both domestic investment and net capital outflow increase. Affect interest rates? 1. \text{Information Technology (IT)} & \text{\$1,200} & \text{\$4,000} & \text{\$5,200}\\ d. purchases or by lowering the discount rate. Using the direct method, calculate (1) cash received from customers and (2) cash paid to suppliers. Bonds that are rated Baa or better by Moody's (or rated as BBB or better by Standard & Poor's) are referred to as: Bonds that were initially released as investment grade, but were later reclassified as junk bonds are known as: a short term loan issued on a discount basis. If people decide to hold more currency relative to deposits, the money supply. Copyrights 2021. d. You receive the payment 5 years from now and the interest rate is 5 percent. Which of the following is correct? Corporate bonds yield more than Treasury bonds because of their additional default and liquidity risk. Other things the same, the unemployment rate. Which of the following shifts aggregate demand to the right? b. households want to lend more, so the interest rate falls, making the quantity of goods and services demanded rise. T-bonds have a quoted interest rate but are free from default risk . All 200,000 car seats were inspected last year, and 5% were found to have problems with the stitching. c. 20 ice cream cones. Safe Travels only problem with its car seats was stitching in the straps. When the Bank of Canada conducts open market purchases, It buys treasury securities, which increases the money supply. Which if the following is not a reason actual labour markets experience unemployment? D. inelastic demand. Hardwood Furniture Store considered building a store in a new location. d. would reduce the multiplier. Long-term bonds are exposed to interest rate risk because as pricing of LT bonds decline as interest rates rise. Bonds issued at one time but payable over a period of years, Bonds that give the owner the right to convert the bonds into common stock under specified conditions, Bonds that allow the issuing corporation to require the holder to surrender the bonds for payment before their maturity date. A major problem is that its cost of inventory has continually increased in the past two years. Wondering how to get your business idea off on the right foot in the competitive..Learn More, Are you looking for a digital partner for your agency? E. elastic demand . c. increases and the labor-force participation rate is unaffected. The owner recalculates ending inventory using FIFO and submits those numbers and statements to the loan officer at the bank for the required bank review. No. How does this situation illustrate the effects of policy lags on monetary and fiscal policy? b. A candidate for political office announces the following policies which, he says, economics clearly demonstrates will lead to higher output in the long run: 1. reduce immigration from abroad 2. make trade more open between the US and other countries: d. 1 shifts long-run aggregate supply left, 2 shifts long-run aggregate supply right. Derek decides to forego a major appliance purchase and save the money. You conclude that. Decreases the job search effort of the unemployed, Economists have found evidence that receiving unemployment insurance benefits, Franklin Allen, Richard A. Brealey, Stewart C. Myers. Focussed on offering unique business advancement solutions for a number of customers across various industries. d. loses value both in terms of the domestic goods and services it can buy and in terms of the Chinese currency it can buy. \text{Clothing} & \text{10,080} & \text{440}\\ How does a foreign fiscal expansion affect domestic output if the domestic central bank does not change the policy rate? The maturity risk premium reflects the net effects of those two opposing forces. In a closed economy, what does (Y - T - C) represent? Suppose the government levies a tax of $0.50 per pack on the buyers of cigarettes. \end{matrix} Other things the same, an increase in the price level makes the dollars people hold worth. Suppose a closed economy had public saving of $2 trillion and private saving of $4 trillion. As a result of this transfer by itself. After investors have responded to the announced tax reduction, does the government have an incentive to renege on its policy? Which of the following should it do? If the price paid to retire the bonds is greater than the carrying amount of bonds the company needs to record a loss on retirement. It is considering an alternative internal inspection plan that will cost only$3.00 pre car seat inspected. \text{Human resources (HR)} & \text{800} & \text{2,000} & \text{2,800}\\ Distinguish between the real risk free rate of interest, and the nominal (quoted) risk free rates of interest. What is a yield curve, and what information would you need to draw this curve? Consider both efficiency and equity. Sportz, Inc., manufactures athletic shoes and athletic clothing for both amateur and professional athletes. Which of the following is the correct way to compute the future value of $X that earns r percent interest for N years? Other things the same if reserve requirements are decreased, the reserve ratio. d. the nominal exchange rate defined as Polish currency per dollar falls. C. Capital will flow into Northlandia. The only way the store can meet the required financial ratios agreed on with the bank is to change from LIFO to FIFO. The following shows costs (in thousands) for each manufacturing facility and for each support department. A person's net worth is the difference between the value of the items she/he owns and the amounts he/she owes to others. If you..Learn More. You need interest rates and years to maturity. b. increases the interest rate and so investment spending decreases. Some persons are counted as out of the labor force because they have made no serious or recent effort to look for work. Reasons that make CRM systems important: Why Zoho CRM is in the hype now. $$ In which case do these changes both make it less likely that they will now build the store? The amount the corporation must pay for the bond when it is called. Shipping costs are $8.00 per car seat, and repair costs are$1.00 per car seat. Provide several examples of items you had to do without because of limited resources, and explain how you adjusted to this situation. What can the government do to increase the credibility of announced policy changes? a. your nominal wage increase. \text{Clothing} & \text{5,000} & \text{16,000} & \text{21,000}\\ Ignoring brokerage fees, Nancy will. What key assumptions underlies the pure expectation theory? Defective units that were sold and shipped to customers are shipped back to Safe Travel and repaired. Compared to stocks, bonds offer the holder. Unsecured bonds backed only by a corporation's general credit. Backed with rising consumer demands.. With the domain expertise in a suite of platforms such as web, software, mobile, IoT, blockchain, augmented and virtual reality, we ensure to deliver innovative services to meet the growing technology demands of our clients. How do risk and inflation impact interest rates in the economy? Explain how your graph demonstrates that this is the optimal quantity of this public good. Long-term debt instruments that are written promises to repay the principal at a future date. Which of the following is a certificate of indebtedness? b. increases in the profitability of capital due perhaps to technological progress. Which of the following is not a determinant of the long-run level of real GDP? The shape of the yield curve depends on investors' expectations about future interest rates. This means that. Horngren's Cost Accounting: A Managerial Emphasis, Frank Hodge, Patricia A. Libby, Robert Libby, Fundamental Financial Accounting Concepts, Alvin A Arens, Mark A Beasley, Randal J Elder, Jocelyn sells short 1000 shares of JKLO stock at $31.25 per share and six months later purchases the shares at $29 each. d. fell. d. neither an increase in the price level that is greater than expected nor an increase in the expected price level. In December 1999 people feared that there might be computer problems at banks as the century changed. $$ c. decreases, the money multiplier increases, and the money supply increases. What is the formula for Depreciation Expense. New technologies.. Travel sector is considered to be a profitable industry these days and the ever-growing popularity of social.. Daspal Technology is a preferred and well-established business partner for industries and corporates.. The numbers are not favorable. a. lower risk and lower potential return. A central bank increases the reserve requirement, but it wants to offset the effects on the money supply. Unemployment of this type is called structural. What are national saving and investment for this country? When Rajiv goes shopping for a new MP3 player, he notices that he pays 7.35 percent sales tax on the purchase. d. the unemployment rate would be lower and the labor-force participation rate would be unaffected. Under the expectation hypothesis, if people expect interest rates to be stable over time, yield curves would be: interest rates move together for bonds of different maturities. b. If the price of ice cream cones rises, to maintain the real value of her money holdings she needs to hold more dollars. However, soon after they made this decision, both the interest rate and the cost of building the store changed. Our professionals at.. Media industry has been witnessing a accelerating growth these days. According to the equation of exchange, the price level would change less than proportionately with a rise in the money supply if there were also. A recent survey, 35 percent indicated chocolate was their favorite flavor of ice cream. & \text{Variable Costs} & \text{Fixed Costs} & \text{Total Costs by Department}\\ The example with Abby. Compared to bonds, stocks offer the holder All else equal when people become more optimistic about a company's future, the Demand for the stock and the price will both rise. The consumer price index (CPI) is generally assumed by economists to: the group of 3 economists appointed by the president to provide fiscal policy is called the what. They involve no pledge of specific property. You observe a closed economy that has a government deficit and positive investment. Bob is looking for work after school, but everywhere he fills out an application, the managers say they always have a lot more applications than open positions. d. negative and its saving is smaller than its domestic investment. Other things the same, a decrease in the U.S. interest rate. Identify total cost of quality by category (appraisal, internal failure, and external failure). Molly holds $60. Daspal Technology is..Learn More, Daspal Technology has been a forerunner in enabling the IT transformation of businesses across the..Learn More, Most of the enterprises are at present shifting towards the custom software solutions rather than..Learn More, Daspal Technology offers the best cloud services to a number of customers ranging from start-ups to..Learn More, Daspal Technology is the trusted and leading name in the business which offers a range of IT solutions..Learn More, Daspal Technology is a reputed Information Technology firm that takes pride in offering consulting services..Learn More, Internet of Things or IoT concept is transforming the global business space in a rapid manner. During recessions, banks typically choose to hold more excess reserves relative to their deposits. Which of the following is not included in M1? In which of the following cases would it necessarily be true that national saving and private saving are equal for a closed economy? After an unsuccessful search, some of the laid-off workers quit looking for new jobs. D. Capital will flow into Southlandia. Both frictional and structural unemployment. In which of the following situations must national saving rise? Safe Travel is concerned with the high upfront cost of inspecting all 200,000 units. a. The shoeleather cost of inflation refers to. Maturity Risk Premium always increases with maturity. How does positive expectations of future markets effect the Loanable funds market? If yes, then look no further. Suppose the government announced a reduction in taxes onincome from capital investments, like new factories. As prices rise you notice you give up fewer goods to make your payments. It follows that, One determinant of the natural rate of unemployment is the, Suppose that some people report themselves as unemployed when, in fact, they are working in the underground economy. The interest rate in Northlandia will rise. d. increases when the interest rate increases, so people desire to hold less of it. What grade of funds can Pension funds only invest in? Economic theory and Empirical evidence indicate that: Long-term bonds generally provide lower interest rates than do short-term bonds. How does a weak U.S. dollar affect you as a consumer? Suppose that some people are counted as unemployed when, to maintain unemployment compensation, they search for work only at places where they are unlikely to be hired. This action. Brad buys home owners insurance and then is less careful to make sure he's put out his cigarettes. Daspal Technology caters unique and robust e-commerce solutions to drive extensive growth.. Are you in search of the best healthcare support services? Pander says that the unemployment rate is higher now than when Bigego took office. Usually the call price is slightly above the face value. Satchel loses his job and immediately begins looking for another. Other states do not. Reduces search effort and raises unemployment, Which of the following best illustrates the medium of exchange function of money, You pay for your double latte using currency, The ease with which an asset is converted to the medium of exchange, Bank of Canada does all except which of the following, The federal reserve is the U.S. Central bank, When the Bank of Canada conducts open market transactions, it, Buys or sells government bonds from the public.