First fully define durable and non-durable goods. Second graphically and in writing and describe the business cycle from recession and depression to economic boom.

Please show which are which above

5.   Refer to the above table and answer the following questions:

      Consumption expenditure is $________

      Investment expenditure is $________

      Government purchases of goods and services is $__________

      Net exports is $_____________

      GDP is $_________________

The components of GDP in the accompanying table were produced by the Bureau of Economic Analysis. Category Components of GDP in 2013 (billions of dollars)

Consumer spending

Durable goods $1,263.0

Nondurable goods 2,622.9

Services 7,615.7

Private investment spending

Fixed investment spending 2,564.0

Nonresidential 2,047.1

Structures 456.4

Equipment and intellectual property products 1,590.7

Residential 516.9

Change in private inventories 106.1

Net exports

Exports 2,259.9

Imports 2,757.2

Government purchases of goods and services and investment spending

Federal 1,245.9

National defense 770.7

Nondefense 475.1

State and local 1,879.6

1) Calculate 2013 consumer spending.

2) Calculate 2013 private investment spending.

3) Calculate 2013 net exports.

4) Calculate 2013 government purchases of goods and services and government investment spending.

5) Calculate 2013 gross domestic product.

6) Calculate 2013 consumer spending on services as a percentage of total consumer spending.

7) Calculate 2013 exports as a percentage of imports.

8) Calculate 2013 government purchases on national defense as a percentage of federal government purchases of goods and services.

The menu cost reasoning for sticky prices includes which of the following concepts

Using the CPI data from 1988-2009, the category of consumer goods that changes prices most frequently is

More durable goods tend to change prices

A study from the Billion Prices Projects studied goods that are sold both in-store by Wal-Mart and online by Amazon. The study found that

  Durable goods                                          400

                                      Non-resident investment                                 300

                                      Federal purchase of goods                               300

                                      Exports                                                            500

                                      State and local purchases of goods                250

                                      Residential investment                                        5

                                      Imports                                                            150

                                      Change in business inventories                        -25

                                      Nondurable goods                                          600

                                    Depreciation                                                       50

                                    Net factor income from abroad                          30

Determine:

i)                Personal consumption expenditures

ii)              The value for gross private domestic investment

iii)             The value of Net Exports

iv)             The value of government spending in

v)               The value of gross domestic product (GDP)

vi)             The value of GNP

vii)           The value of NNP

2. In an economy, Y (national income) + C (Consumption) + I (investment). If consumption + $50m + 0.75Y, planned investment = $180m and national income = $800m, realised investment will be:

$50m

$100m

$200m

$300m

Analyze a recent purchase you made of a durable good (durable goods are goods that don't wear out quickly or those that have a lifespan of more than three years - computers, cars, mobile phones, kitchen appliances, etc.)

Write a 1,050- to 1,400-word paper in which you review the steps that you took in making this purchasing decision.

Base your review on the following six steps in the consumer decision process:

1. Problem recognition
2. Information search
3. Alternative evaluation
4. Purchase
5. Use
6. Evaluation

Answer the following questions in your paper:

• How many of these stages did you go through?
• Which stage(s) in the purchasing process was/were most important to you?
• If you skipped certain stages, what marketing or previous experience influenced you to skip this stage?
• What could the selling organization have done more effectively from a marketing standpoint to help you move through these stages?

1. I/S Analysis:  The following ratios have been calculated for the SolarMolar Company. Note that SolarMolar has NO DEBT.  Given this information and nothing else, analyze the income statement data and provide your thoughts regarding TWO changes you may encourage SolarMolar to consider.                                                                                                                                  (5 pts)

                                                                                                            2018                2017                2016

Gross profit margin                                                    41.9%              42.5%              42.1%

Operating profit margin                                              15.7%              21.7%              21.5%

Net profit margin                                                        11.8%              13.0%              12.9%

2. B/S Analysis:  You are reviewing the balance sheet of DGD Inc., (a durable goods manufacturer) and you notice a sizeable amount of “Deferred Taxes Payable” in the long-term liabilities section of the balance sheet.                                                                                                             (6 pts)

1. Explain how this liability was created

2. Is this a liability that you expect to be repaid in the next five years?  Explain.

3. SOCF Analysis:  Your are reviewing the statement of cash flows for DGD Inc., (a durable goods manufacturer) and you notice that CFFO is meaningfully positive and growing.  However, you also notice that FCF last year was negative.  Given that a firm’s purpose in life is to generate cash flow, would you expect this durable goods company to be in peril?                                      (4 pts)

4. B/S:  Johnny Jim Corporation’s 2019 balance sheet has no funded, long-term debt on the balance sheet.  However, there are operating leases payments that must be made in the future as follows:  

         2018                 47,116

            2019                 43,449

            2020                 41,315

            2021                 37,383

      2022                 32,168

            Thereafter       87,582  (assume this is 30,000/30,000/27,582 in 2023/2024/2025)

1. Calculate an adjustment you would make (assuming a 5% interest rate) to reflect the amount of balance sheet debt these operating leases represent.                          (6 pts)

For the following items, follow the directions, write the correct answer in the blank, or circle the correct answer.

Having applied for a job at the Commerce Department’s Bureau of Economic Analysis, you are given the following hypothetical data to study before your interview.  Figures are total value in billions of dollars.

Household spending on:

            Services                                                =          $3,008

            Nondurable goods                                =          $1,776

            Durable goods                                      =            $706

Business spending on plant and equipment        =             $815

Wear and tear on factory equipment                 =            $200

Inventory changes                                             =                $9

New homes constructed                                    =           $397

Existing homes which were destroyed                =           $123

State and Local Government spending on:

                        Consumption                            =           $540

                        Investment                               =           $113

Federal Government spending on:

                        Consumption                            =            $691

                        Investment                               =            $132

Depreciation of government assets                    =            $245

Transfer Payment                                             =          $2,936

Imports                                                            =            $855

Exports                                                             =            $961

1. What is the total value of consumption spending in this economy?

_________5490_____________________________________________________________________.

2. What is the total value of net private investment spending in this economy?

_______1221_______________________________________________________________________.

3. What is the total value of government purchases in this economy?

______________________________________________________________________________.

4. What is the total value of net exports in this economy?

______________________________________________________________________________.

5. Using the expenditure approach, what is GDP for this economy?

______________________________________________________________________________.

6. Which entries in the table are not counted as part of the economy’s GDP? _________________

______________________________________________________________________________.

Need summary of the below article.

The four components of gross domestic product are personal consumption, business investment, government spending, and net exports. That tells you what a country is good at producing. GDP is the country's total economic output for each year. It's equivalent to what is being spent in that economy. The only exception is the shadow or black economy.

The formula to calculate the components of GDP is Y = C + I + G + X.

That stands for: GDP = Consumption + Investment + Government + Net Exports, which are imports minus exports. In 2017, U.S. GDP was 68 percent personal consumption, 17 percent business investment, 17 percent government spending, and negative 3 percent net exports.

Here's how the Bureau of Economic Analysis divides U.S. GDP into the four components.

1. Personal Consumption Expenditures

Consumer spending contributes 70 percent of total United States production. In 2017, that was $12.6 trillion. Note that the figures reported are real GDP. It's the best way to compare different years. They are rounded to the nearest billion. The BEA sub-divides personal consumption expenditures into goods and services.

Goods are further sub-divided into two even smaller components. The first is durable goods, such as autos and furniture. These are items that have a useful life of three years or more. The second is non-durable goods, such as fuel, food, and clothing.

The retailing industry is a critical component of the economy since it delivers all these goods to the consumer. The BEA uses the latest retail sales statistics as its data source. Since this report comes out monthly, it gives you a preview of this component of the quarterly GDP report.

Services are almost half of U.S. GDP.

These include commodities that cannot be stored and are consumed when purchased. It contributes 45 percent of GDP. That's a big increase since the 1960s when services contributed 30 percent to GDP. Thank the expansion in banking and healthcare. Most services are consumed in the United States. These are difficult to export.

Why does personal consumption make up such a large part of the U.S. economy? America is fortunate to have a large domestic population within an easily accessible geographic location. It's almost like a huge test market for new products. That advantage means that U.S. businesses have become excellent at knowing what consumers want.

2. Business Investment

The business investment includes purchases that companies make to produce consumer goods. But, not every purchase is counted. If a purchase only replaces an existing item, then it doesn't add to GDP and isn't counted. Purchases must go toward creating new consumer goods to be counted.

In 2017, business investments were $3.197 trillion. That's 18 percent of U.S. GDP. It's double its recession low of $1.5 trillion in 2009. In 2014, it beat its 2006 peak of $2.3 trillion. The BEA divides business investment into two sub-components: Fixed Investment and Change in Private Inventory.

Most of Fixed Investment is non-residential investment. That consists primarily of business equipment, such as software, capital goods, and manufacturing equipment. The BEA bases this component on shipment data from the monthly durable goods order report. It’s a good leading economic indicator.

A small but important part of non-residential investment is commercial real estate construction. The BEA only counts the new construction that adds to total commercial inventory. Resales aren't included. The BEA adds them to GDP in the year they were built.

Fixed investment also includes residential construction, which includes new single-family homes, condos, and townhouses. Just like commercial real estate, the BEA doesn't count housing resales as fixed investments. New home building was $600 billion in 2017.

That was 3 percent of GDP. Combined, commercial and residential construction was $1.07 trillion or 6 percent of GDP.

The 2008 financial crisis burst the bubble in housing. Residential construction reached its peak in 2005 when it added $872 billion to GDP. Comparisons over time are always adjusted for inflation. It didn't hit bottom until 2010 when only $382 billion was added. Housing's contribution to GDP plummeted from 6.1 percent to 2.6 percent during this time. At its peak in 2005, combined commercial and residential construction contributed $1.3 trillion or 9.1 percent of GDP. In 2010, it fell to a low of $748.7 billion or 5.1 percent of GDP.

Change in Private Inventory is how much companies add to the inventories of the goods they plan to sell. When orders for inventories increase, it means companies receive orders for goods they don't have in stock. They order more to have enough on hand. It's important for companies to have enough inventory so they don't disappoint and turn away potential customers. An increase in private inventories contributes to GDP.

A decrease in inventory orders usually means that businesses are seeing demand slack off. As inventories build, companies will cut back production. If it continues long enough, then layoffs are next. So, the change in private inventories is an important leading indicator, even though it contributed less than 1 percent of GDP in 2017.

3. Government Spending

Government spending was $3.1 trillion in 2017. That's 17 percent of total GDP. It's less than the 19 percent it contributed in 2006. In other words, the government was spending more when the economy was booming before the recession. That's exactly when it should have been spending less to cool things off. Slower spending now is a result of sequestration, which was also timed poorly. Austerity measures shouldn't be used when the economy is struggling to recover.

The federal government spent $1.2 trillion in 2017. Almost 60 percent was military spending. State and local government contributions rose to 11 percent. This increase is because government revenues have improved now that the recession is over.

4. Net Exports of Goods and Services

Imports and exports have opposite effects on GDP. Exports add to GDP and imports subtract.

The United States imports more than it exports, creating a trade deficit. America still imports a lot of petroleum, despite gains in domestic shale oil production. The U.S. economy is based on services, which are difficult to export. In 2017, imports subtracted $3.3 trillion, while exports added $2.5 trillion. As a result, international trade subtracted $859 billion from GDP.

Components of 2017 GDP Chart

Lahser Corp. produces component parts for durable medical equipment manufacturers. The controller is building a master budget for the first quarter of the upcoming calendar year. Selected information from the accounting records is presented next:

a. Accounts Receivable as of January 1 are $56,800. Selling price per unit is projected to remain stable at $13 per unit throughout the budget period. Sales for the first six months of the upcoming year are budgeted to be as follows: January $99,100 February $118,100 March $114,700 April $108,400 May $103,300 June $121,200

b. Sales are 20% cash and 80% credit. All credit sales are collected in the month following the sale.

c. Lahser Corp. has a policy that states that each month’s ending inventory of finished goods should be 10% of the following month’s sales (in units).

d. Three pounds of direct material is needed per unit at $2.20 per pound. Ending inventory of direct materials should be 20% of next month’s production needs.

e. Monthly manufacturing overhead costs are $5,530 for factory rent, $2,900 for other fixed manufacturing costs, and $1.10 per unit produced for variable manufacturing overhead. All costs are paid in the month in which they are incurred.

Questions:

1. What are the budgeted total cash collections for the 1st quarter? (1 point)

2. What are the budgeted total cash collections for the 2nd quarter? (1 point)

3. What is the budgeted production for the first quarter in terms of number of units? (HINT: Convert total sales to unit sales for each month) (1 point)

4. What is the budgeted direct materials cost for the first quarter? (1 point)

5. What is the budgeted manufacturing overhead for the first quarter? (1 point)