Determine the combined present value as of December 31, 2021, of the following four payments to be received at the end of each of the designated years, assuming an annual interest rate of 8%. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided. Round your final answers to nearest whole dollar amount.)

Year Received   i =   n =   Payment   Present Value
2022 8% ? $9,250 ?
2023 8% ? 9,825 ?
2025 8% ? 11,400 ?
2027 8% ? 13,675 ?
Total ?

1. Which government activity is not an example of fiscal policy( TAXATION & SPENDING)?

a) Collecting unemployment insurance taxes

b) Collecting gasoline taxes

c) Providing solar energy subsidies

d) Buying missiles from defense contractors

e) Regulating natural monopolies

2. Confidence in Keynesian economics:

            a) Diminished in the 1960’s as inflation recurred.

            b) Diminished in the 1960’s as inflation occurred simultaneously with two recessions.

            c) Diminished in the 1960’s as unemployment recurred.

            d) Diminished in the 1970’s with “stagflation”

            e) Flourished through the 1980’s.

3. A change in income will
            a) Affect demand and supply the same.

            b) Affect quantity supplied through the income effect shift supply curve.

            c) Shift the demand curve.

            d) Have no effect since everything is held constant along a demand curve.

            e) Have a different effect on demand depending on equilibrium price.

4. The division of labor refers to:

            a) Having each worker or firm specialize in a separate task.

            b) Separating workers by race.

            c) Letting everyone share in a specific task.

            d) Letting each worker make a separate product from start to finish.

            e) Separating management from workers.

5. A price ceiling imposed by the government result in an:

            a) Excess demand at equilibrium price.

            b) Excess demand at the price ceiling.

            c) Excess supply at the price ceiling.

            d) Excess supply at equilibrium price.

            e) Excess demand at a price above the equilibrium.

6. The circular flow of the economy is primarily used to trace the flow of:

            a) Money through the economy.

            b) Consumer spending through the economy.

            c) Goods through the economy.

            d) Resources, production, and money through the economy.

            e) Resources through the production process.

7. If the price level is above the equilibrium level:

            a) The resulting excess demand will force the price level down.

            b) The resulting excess demand will force the price level up.

            c) The resulting excess supply will force the price level up.

            d) The resulting excess supply will force the price level down.

            e) The resulting unemployment will force the price level up.

8. A “laissez-faire” approach to the macroeconomy before the Great Depression influences our government to:

            a) See business downturns as a “serious malady” in a “healthy” system, and therefore take only short-term deficit spending measures to help recovery.

            b) See business downturns as a “serious malady” to an otherwise “healthy system,” and therefore wait for recovery to occur naturally.

            c) See business downturns as a “serious malady” to an otherwise “healthy system,” and therefore work to redesign the system to avoid such failure in the future.

            d) See business downturns as a failure of the type of system Adam Smith envisaged, and thus move toward a modern, more managed economy.

            e) See business downturns as a failure of the current system to be the type that Adam Smith envisaged, and thus move toward less government interference in the macro economy

9. Keynes believed that the Great Depression was caused by:

            a) Unemployment.

            b) Deficit spending by the government.

            c) The tax increases put through by President Herbert Hoover.

            d) The policies of “demand-style” economies.

            e) A fall in aggregate demand.

10. Keynes believed that the best method for ending the Great Depression would be to:

            a) Increase the money supply so that individuals would have more to spend.

            b) Cut government spending and increase taxes to reduce.

            c) Increase government spending and cut taxes so that consumers would spend more.

            d) Cut both government spending and taxes so that government would not be such a large     part of the economy.

            e) Increase both government spending and taxes to increase the role government played     in the economy.

11. Keynes was:

            a) In favor of a federal budget deficit to cure an inflation.

            b) Opposed to a federal budget surplus to cure an inflation.

            c) In favor of a federal budget deficit to cure a recession.

            d) In favor of a federal budget deficit regardless of the state of the economy.

12. Proponents of monetarism:

            a) Feel that fiscal policy of worthless.

            b) View government spending as the most important public policy tool.

            c) View taxation as the most important public policy tool.

            d) Support Keynesian economics.

            e) View the money supply as the most important public policy tool.

13. The word “stagflation” describes a situation in which:

            a) Inflation is stagnated.

            b) Inflation increases with economic growth.

            c) Inflation and unemployment occur at the same time.

            d) Inflation is low enough to grow economic growth.

            e) Inflation is zero.

14. The main difference between economic change before 1970 and after 1970 is that before 1970:

            a) Most macroeconomic instability was caused by simultaneous shifts in aggregate demand and aggregate supply.

            b) Most macroeconomic instability was caused by shifts in aggregate supply.

            c) Most macroeconomic instability was caused by shifts in aggregate demand.

            d) The government assumed no direct responsibility for the level of employment.

            e) The government itself was a much less important player in the macroeconomy.

15. The labor force consists of:

            a) All the people in the economy.

            b) All the people in the economy over 16 years of age.

            c) All the adults in the economy able to work.

            d) All the adults in the economy who hold jobs or are looking for them.

            e) All the adults in the economy qualified to hold a job.

16. Consider an economy with 100 people, 70 of whom hold jobs and 10 of whom are looking. The number of people in the labor force is:

            a) 100

            b) 30

            c) 10

            d) 80

            e) 70

17. Consider an economy with 100 people, 70 of whom hold jobs and 10 of whom are looking. The rate of unemployment is:

            a) 10 percent.

            b) 12.5 percent.

            c) 14.3 percent.

            d) 20 percent.

18. The labor force participation rate for women in the United States has

            a) Stayed the same over the last 30 years      

            b) Increased significantly since the 1950s     

            c) Been influenced by decreasing real wages since 1960     

            d) Trended substantially downward since the 1950s

            e) Increased only very slightly since the 1950s

Swanson, Inc., manufactures an advanced swim fin for scuba divers. Management is now preparing detailed budgets for the third quarter, July through September, and has assembled the following information to assist in preparing the budget:

a. The Marketing Department has estimated sales as follows for the remainder of the year (in pairs of swim fins). The selling price of the swim fins is $21 per pair.

July 6,400 October 4,400  

August 7,400 November 3,400  

September 5,400 December 3,400  

b. All sales are on account. Based on past experience, sales are expected to be collected in the following pattern:

43% in the month of sale

48% in the month following sale

9% uncollectible

The beginning accounts receivable balance (excluding uncollectible amounts) on July 1 will be $154,000.

c.

The company maintains finished goods inventories equal to 9% of the following month’s sales. The inventory of finished goods on July 1 will be 576 pairs.

d.

Each pair of swim fins requires 4 pounds of geico compound. To prevent shortages, the company would like the inventory of geico compound on hand at the end of each month to be equal to 20% of the following month’s production needs. The inventory of geico compound on hand on July 1 will be 5,192 pounds.

e.

Geico compound costs $2.50 per pound. Crydon pays for 60% of its purchases in the month of purchase; the remainder is paid for in the following month. The accounts payable balance for geico compound purchases will be $13,400 on July 1.

Required:

1a.

Prepare a sales budget, by month and in total, for the third quarter.

1b.

Prepare a schedule of expected cash collections, by month and in total, for the third quarter. (Do not round intermediate calculations.)

2. Prepare a production budget for each of the months July through October.

3a.

Prepare a direct materials budget for geico compound, by month and in total, for the third quarter. (Do not round intermediate calculations.)

3b.

Prepare a schedule of expected cash disbursements for geico compound, by month and in total, for the third quarter. (Do not round intermediate calculations.)

The sales budget is usually the first and most crucial of the component budgets in a master budget because all other budgets rely on it for planning purposes.  There are many internal and external factors that must be considered when setting the sales budget. Identify and explain at least (a) three internal factors and (b) three external factors that impact the sales budget.

The sales budget is usually the first and most crucial of the component budgets in a master budget because all other budgets usually rely on it for planning purposes. Assume that your company’s sales staff provides information on expected sales and selling prices for items making up the sales budget. The sales staff’s compensation is at least partly tied to these budgets. Is there a potential bias in information provided?

3. Consider an intertemporal model. Suppose that supply and demand are equal initially in the goods, labor, and money market. Due to COVID-19 consumers purchase only small amount of goods and services in the market, although firms can still produce output goods sufficiently.

(a) Draw the labor market(Ns/ Nd), output goods market(Ys/ Yd) and money market graphs (Ms/ Md) and then determine the effect of COVID-19 on the output level(y), the real interest rate(r), the price level(P), employment(N), and real wage(w).

(b) Draw and describe what happens in all the variables when the central bank raise the money supply.

(c) Draw and describe what happens in all the variables when the fiscal authority raise the government spending.

(d) Compare these two policy choices and explain the difference in detail

2. Consider a Keynesian model of the economy with the following equations:

C = 300 + 0.7Yd

Transfer payments = 500

T = 0.1Y

I = 300

G = 400

X = 150

M = 0.2Y

(a) Calculate the equilibrium income level.

(b) Government spending on goods and services increases by 50. Calculate the new equilibrium level of income. (1 mark)

(c) If potential GDP is 2,750 what is the size of the output gap between potential and actual GDP (derived from (a) above)? How much should public spending have been increased by in order to have fully closed the output gap?

(d) In the short-run Keynesian model of income determination what is the cause of the output gap, and what are the possible macro solutions?

Prepare

GradyGrady​'s direct materials​ budget, direct labor​ budget, and manufacturing overhead budget for the year. Round the direct labor hours needed for​ production, budgeted overhead​ costs, and predetermined overhead allocation rate to two decimal places. Round other amounts to the nearest whole number.

Grady​, Inc. manufactures model airplane kits and projects production at 650​, 500​, 450​, and 600 kits for the next four quarters.

First Quarter                                                            Second   Quarter        Third Quarter               Fourth Quarter                   Total

Direct materials (ounces) per kit

Direct materials needed for production

Plus________

Total direct materials needed

Less________

Budgeted purchases of direct materials

Direct materials cost per ounce

Budgeted cost of direct materials purchases

Direct materials are 4 ounces of plastic per kit and the plastic costs ​$1 per ounce. Indirect materials are considered insignificant and are not included in the budgeting process. Beginning Raw Materials Inventory is 850 ​ounces, and the company desires to end each quarter with 10​% of the materials needed for the next​ quarter's production. Grady desires a balance of 200 ounces in Raw Materials Inventory at the end of the fourth quarter. Each kit requires 0.10 hours of direct labor at an average cost of $10 per hour. Manufacturing overhead is allocated using direct labor hours as the allocation base. Variable overhead is $0.20 per​ kit, and fixed overhead is $165 per quarter.