Case study: Online shopping expected to soar
Christmas shoppers are expected to make Monday the 10th December the busiest day of the year for online shopping. Credit card firms are predicting a rise of more than 50% in online shopping this Christmas, compared with last year. Shoppers will spend £5.6bn online this month - more than 10% of all plastic card spending. But consumers are being warned to protect their computers from fraudsters with antivirus software and to examine sites carefully. High Street retailers are facing a nervous Christmas, with stores worried that a dip in consumer confidence could hit sales. But online retailers are expecting their peak day on Monday as shoppers try to make sure presents are delivered by Christmas. In the past five years, the number of adults shopping online has doubled to 30 million. Internet firm Play.com is preparing for an average 650 orders every minute. The firm is expecting to ship more than 250 tonnes of goods during the day, while overall sales are likely to be up almost a third year-on-year.
Use the case study above to answer the following
a) Explain three factors which could account for the 50% increase in online shopping.
b) Consumer spending on internet shopping increased significantly in recent years however, as a proportion of total consumer spending, the figure is still very small. Explain three reasons why online shopping still makes up a small fraction of total consumer spending.
c) Describe five major types of e-commerce business model.
d) Discuss the key dimensions of e-commerce security
In: Economics
The town of Cypress Creek is preparing to go to war against the American government. To do this, it is building a giant satellite laser! To build the laser, the government of the town will resort to taxation to fund its expenditure. The initial economy of Cypress Creek can be expressed by the following agents:
Consumers, C = 25 + 0.95(Y-T)
Output, Y = 5000
Government expenditures, G = 2000
Taxation, T = 2000
Investors, I = 750-125r
Markets are fully competitive and the equilibrium condition for markets are:
Goods and service market: Y =C + I + G
Financial market: I = S
When it builds the Satellite, government and taxation change to
Government expenditures, G = 4000
Taxation, T = 4000
Hank Scorpio, the towns' founder, announces that "even by increasing government spending and taxation, we are not worst off, as production has not changed!"
Hank Scorpio makes another announcement "People of North Haverbrook! We must all work together in this to crush the American Government - I implore you to save you wages! Don't spend!"
In: Economics
26. Which media headline describes a shift of the SAS curve only?
A) "Decreased consumer spending may lead to recession."
B) "Increased consumer spending is expected to lead to inflation, with no change in real GDP."
C) "Higher wage settlements may lead to inflation."
D) "Faster growth may be due to more women entering the labour force."
E) "Recent tornadoes destroyed factories in Edmonton and Calgary."
27. What can directly change aggregate demand and long-run aggregate supply?
A) GDP in the rest of the world (R.O.W.).
B) resource input prices.
C) interest rates.
D) value of the Canadian dollar.
E) business investment.
28. Aggregate demand decreases when
A) interest rates fall.
B) consumers become more optimistic.
C) government reduces net taxes.
D) interest rates rise.
E) government spending increases.
29. In the loanable funds market,
A) when interest rates are higher, businesses borrow more money for investment.
B) when interest rates are higher, consumers borrow more money for mortgages.
C) an increase in consumer savings causes the interest rate to rise.
D) savers are the demanders, and borrowers are the suppliers.
E) businesses do most of the borrowing to finance investment spending on new factories.
30. The OPEC oil price shocks of the 1970s were example of
A) negative demand shocks.
B) negative supply shocks.
C) positive demand shocks.
D) positive supply shocks.
E) what happens from listening to too much ABBA.
31. A negative supply shock causes
A) falling average prices.
B) increased real GDP.
C) decreased unemployment.
D) stagflation.
E) none of the above.
32. Falling average prices and lower unemployment most likely come from
A) negative demand shocks.
B) increased consumer confidence.
C) improved technologies.
D) negative supply shocks.
E) higher interest rates.
33. Demand shocks move unemployment and inflation in
A) the same directions, as the Phillips Curve suggests.
B) opposite directions, as the Phillips Curve suggests.
C) the same directions, which is not what the Phillips Curve suggests.
D) opposite directions, which is not what the Phillips Curve suggests.
E) circles.
34. When Komal gathers up all of her loose change and deposits it in her chequing account, the immediate effect is
A) both M1+ and M2+ increase.
B) M1+ increases and M2+ is unchanged.
C) M2+ increases and M1+ is unchanged.
D) both M1+ and M2+ are unchanged.
E) both M1+ and M2+ decrease.
35. Suppose you deposit $2,000 cash in your bank. The bank desires to hold 20 percent of all deposits as reserves. What amount of new loans will your bank create immediately after you make the deposit?
A) $400.
B) $8,000.
C) $1,600.
D) $2,000.
E) $10,000.
36. A debit card is
A) deposit money.
B) not money.
C) convertible paper money.
D) commodity money.
E) fiat money.
37. Canadian currency today is
A) credit money.
B) deposit money.
C) convertible paper money.
D) commodity money.
E) fiat money.
38. When the money supply increases, bond prices
A) fall and the price of money falls.
B) rise and interest rates rise.
C) fall and the price of money rises.
D) rise and interest rates fall.
E) fall and interest rates rise.
39. The Bank of Canada preserves the stability of the financial system by
A) serving as a lender of last resort.
B) issuing currency.
C) acting as banker to the government.
D) managing the money supply.
E) holding reserves of foreign currency.
40. Interests rates
A) are usually higher on short-term bonds than on long-term bonds.
B) are usually lower on low-risk bonds and higher on high-risk bonds.
C) for short-term bonds tend to fall when interest rates for long-term bonds rise.
D) are usually higher on low-risk bonds and lower on high-risk bonds.
E) for short-term bonds tend to rise when interest rates for long-term bonds fall.
41. All of the following create a demand for Canadian dollars in the foreign exchange market except
A) Susan from Manitoba goes shopping in New York.
B) Richard from New York buys a Government of Canada bond.
C) Samantha from France buys a bottle of Canadian wine.
D) Alexandra from Mexico pays tuition to the University of Montreal.
E) Rachel from New Jersey goes on a shopping trip in Toronto.
42. If the Canadian dollar exchanges for 0.90 U.S. dollars and also for 0.65 Euros, then a U.S. dollar exchanges for
A) 1.00 Euros.
B) 1.55 Euros.
C) 0.25 Euros.
D) 1.39 Euros.
E) 0.72 Euros.
43. The Canadian dollar depreciates if
A) Canadian interest rates fall relative to other countries.
B) the Canadian inflation rate falls relative to other countries.
C) Canadian real GDP increases.
D) R.O.W. demand for Canadian exports increases.
E) world prices for Canadian resources rise.
44. A lower inflation rate in Canada relative to other countries causes the Canadian dollar to appreciate because
A) Canadian real interest rates fall.
B) prices of Canadian resources fall in international markets.
C) speculators anticipate depreciation of the Canadian dollar.
D) Canadian products and services are relatively cheaper so exports to R.O.W. increase.
E) Canadian products and services are relatively cheaper so imports from R.O.W. increase.
45. What increases the demand for Canadian dollars in the foreign exchange market?
A) An increase in demand for imports from R.O.W. by Canadians.
B) A decrease in demand for Canadian exports by non-Canadians.
C) The Canadian dollar is expected to appreciate next year.
D) U.S. interest rates rise.
E) The Canadian dollar is expected to depreciate next year.
46. An inflationary gap results from
A) appreciation of the C$ leading to increased exports.
B) depreciation of the C$ leading to increased imports.
C) appreciation of the C$ leading to decreased exports.
D) depreciation of the C$ leading to increased exports.
E) appreciation of the C$ leading to decreased imports.
47. A weaker Canadian dollar hurts
A) importers.
B) exporters.
C) U.S. tourists in Canada.
D) U.S. students who attend Canadian universities.
E) none of the above.
48. Purchasing power parity states that
A) exchange rates adjust to equalize prices across countries.
B) prices adjust to equalize rates of return across countries.
C) rates of return adjust to equalize expected exchange rate fluctuations.
D) exchange rates adjust to equalize the real purchasing power of money across countries.
E) purchasing power adjusts to reflect expected exchange rate fluctuations.
49. A current account deficit means
A) Canadian spending on imports from R.O.W. is greater than R.O.W. spending on Canadian exports.
B) R.O.W. spending on Canadian exports is greater than Canadian spending on imports from R.O.W.
C) Canadian investments in R.O.W. are greater than R.O.W. investments in Canada.
D) R.O.W. investments in Canada are greater than Canadian investments in R.O.W.
E) there is also a capital account deficit.
50. When the inflation rate is 4 percent, the Bank of Canada will
A) buy bonds to lower interest rates and shift the aggregate demand curve rightward.
B) sell bonds to raise interest rates and shift the aggregate demand curve leftward.
C) do nothing, since an interest rate of 4 percent is desirable.
D) sell bonds to lower interest rates and accelerate the economy.
E) buy bonds to raise interest rates and slow down the economy.
51. If the annual inflation rate is 0.5 percent, the Bank of Canada will
A) sell bonds to raise interest rates and slow down the economy.
B) buy bonds to lower interest rates and accelerate the economy.
C) do nothing since an inflation rate of 0.5 percent is desirable.
D) buy bonds to raise interest rates and increase aggregate demand.
E) sell bonds to lower interest rates and increase aggregate demand.
52. During a period of deflation the Bank of Canada will
A) raise interest rates, causing an exchange rate depreciation.
B) lower interest rates, causing an exchange rate appreciation.
C) do nothing because falling prices are good.
D) lower interest rates, causing an exchange rate depreciation.
E) raise interest rates, causing an exchange rate appreciation.
53. When the Bank of Canada lowers the overnight rate, the Canadian interest rate differential ________ and the Canadian dollar ________ on the foreign exchange market.
A) increases; appreciates
B) increases; depreciates
C) decreases; appreciates
D) decreases; depreciates
E) decreases; reaches interest rate parity
54. When real GDP is less than potential GDP, an increase in the quantity of money leads to a(n)
A) increase in both real GDP and the price level.
B) decrease in real GDP and an increase in the price level.
C) constant real GDP and an increase in the price level.
D) decrease in both real GDP and the price level.
E) increase in real GDP and a decrease in the price level.
55. Fiscal policies increase potential GDP if they
A) increase the quantity of inputs.
B) increase the quality of inputs.
C) create incentive effects.
D) create supply-side effects.
E) do any of the above.
56. Which government fiscal policy is a negative supply shock?
A) decreasing taxes
B) decreasing transfer payments
C) decreasing government spending
D) increasing government spending
E) none of the above
57. According to the Laffer Curve, raising the tax rate
A) always increases total tax revenue.
B) always decreases total tax revenue.
C) does not change total tax revenue.
D) increases or decreases total tax revenue, depending on the tax rate.
E) taxes are a joke.
58. The structural deficit is the deficit
A) in a recession.
B) that occurs at potential GDP.
C) in an expansion.
D) caused by the business cycle.
E) that occurs at the trough of the business cycle.
59. Crowding out occurs when debt-financed government spending decreases private investment spending by
A) lowering interest rates.
B) raising interest rates.
C) lowering expectations.
D) improving expectations.
E) raising exchange rates.
60. It is a largely a myth about the national debt that
A) government borrowing may crowd out private investment.
B) government borrowing may crowd in private investment.
C) high interest payments on the debt may create self-perpetuating debt.
D) Canada will go bankrupt unless we repay the debt.
E) going into debt may be a not-smart choice.
In: Economics
Please post your responses below by due date as instructed. Please attempt at least 5 of the following questions as optional assignments. However, a maximum of extra 10 points (equivalent of about 2 points toward course grade) will be awarded, if attempted and substantiated. 1) "A balance of trade deficit must always be offset by net capital inflows from abroad." Agree or disagree with this statement and explain. 2) Suppose a Japanese firm buys a 1 year treasury bill with a face value of $10,000 today for $9400. If the value of the dollar declined from 90 to 80 yen during the year, what rate of return does the Japanese firm earn on its investment? 3) Draw a supply-demand diagram of the foreign exchange market for the dollar (valued in euros/$) Show the effects of the following events on the exchange rate. Explain your reasoning! a) The release of data showing stronger than expected RGDP growth in Germany. b) An increase in the federal funds rate by the Federal Reserve c) An announcement that U.S. trade deficits for the last quarter were much larger than previously expected d) A larger than expected increase in hourly wage rates in the US. 4) If the Fed wished to defend the exchange rate of the $ (i.e. prevent the $ exchange rate from falling) what policy action could it take? Explain. 5a) What is the "purchasing power parity" theory of exchange rates? If the price of a representative bundle of tradable goods is currently $5000 in the U.S. and 550000 yen in Japan, is the $ undervalued or overvalued when the exchange rate is 90 yen per $? 5b) Why don't actual exchange rates move to purchasing power parity levels in the short run? 6) The treasurer of a U.S. firm noted that although short run deposits in Swiss bank accounts had earned the firm only a 3% annualized return when measured in Swiss francs, in dollars the firm had realized a 12% rate of return. Explain as precisely as possible how this was possible. 7) In recent years the exchange rate of the $ has been noticeably high against the yen. If for some reason investors around the world now decide that this increase is a temporary phenomena and that the $ will fall relative to the yen in coming months, what would be the effect on prices of U.S. Treasury Securities? Explain. 8) Do US producers of tradable goods prefer a strong dollar or a weak dollar in currency markets? Explain.
In: Economics
Vehicle Sales: Consider the data below ( in thousands of units):
year Quarter 1 Quarter 2 Quarter 3 Quarter 4
2016: 4072 4521 4452 4418
2017: 4010 4392 4399 4334
2018: 4092 4484 4277 4360
Obtain the seasonal factors and enter them into the appropriate yellow cells below:
Quarter 1 Quarter 2 Quarter 3 Quarter 4
Seasonal Factor
Using the columns Year and Total (Annual Sales) below, obtain the regression equation from the Excel's Scatter Diagram
Year Quarter 1 Quarter 2 Quarter 3 Quarter 4
2016: 4072 4521 4452 4418
2017: 4010 4392 4399 4334
2018: 4092 4484 4277 4360
(enter equation and paste graph in appropriate yellow areas below) Enter equation --->
Paste Scatter Diagram --------------------------------------------------------------------------------------------------------------->
Using the regression equation, what is your forecast for year 2018? (enter answer in yellow cell below)
Enter Forecast for Year 2019 -->
Using the seasonal factors obtained and your forecast for Year 2019, forecast Quarters 1 to 4 of Year 2019 (enter values in appropriate yellow cells below)
Year Quarter 1 Quarter 2 Quarter 3 Quarter 4
2016: 4072 4521 4452 4418
2017: 4010 4392 4399 4334
2018: 4092 4484 4277 4360
Quarter 1 Quarter 2 Quarter 3 Quarter 4
Forecast for 2019
In: Economics
Part of the accounting records for the last quarter of 2017 of Boswell Corp., a Canadian private company applying IFRS, were destroyed due to a software malfunction. You have been tasked with reconstructing the accounting records related to inventory and receivables.
The following information has been salvaged:
Extract from the Quarterly Statement of Financial Position as at December 31, 2017
|
Oct 1, 2017 |
Dec 31, 2017 |
|
|
Current Assets |
||
|
Net realizable value of Accounts receivable |
$9,400 |
? |
|
Inventory |
600 |
? |
Aging of receivables analysis as at December 31, 2017 (Incomplete)
|
Days past due |
Amount |
Estimated uncollectible % |
Estimated uncollectible amount |
Observations |
|
0-30 |
3% |
|||
|
30-120 |
10% |
|||
|
>120 |
$2,000 |
50% |
$500 of the $2,000 were deemed completely uncollectible |
By talking to the CEO, the controller, and other employees of the accounting department you were also able to gather the following information:
Firm’s Accounting Policies:
a) The company uses the periodic inventory system and the FIFO cost flow assumption.
b) The company applies the aging of receivables analysis to adjust the AFDA at year-end.
The only inventory and sale-related transactions during the quarter were:
1. On October 15, 2017, Boswell Corp. sold 160 units at $20 each, shipped on the same day, FOB destination, and arrived 3 days later, freight-out of $80 for the entire shipment, and payment within 30 days. As at December 31, 2017, the client had still not paid.
2. On November 10, Boswell Corp. received from its supplier a shipment of 2,000 units costing $10 each. Boswell Corp. also had to cover shipping costs of $1,000, import duty taxes of $200 (non-refundable).
3. On December 1, Boswell Corp. sold 1,000 units at $20 each, 2/10, n/30. The client paid half of the total amount on December 5, but made no other payment since.
4. On December 15, 2017, Boswell Corp. signed a contract for the purchase of 1,000 units of inventory from a Canadian supplier at a price of $13 per unit. The supplier shipped the goods FOB destination on December 27. On December 31, 2017, the goods had not yet been delivered, and no invoice had been received.
Other information:
a) The physical count of inventory at the end of the previous quarter was 200 units. The physical count of inventory at the end of December 2017 was 1,040 units.
b) The beginning balance for Gross Accounts Receivable for the quarter was $10,000.
c) The CEO estimates that inventory on hand at the end of 2017 could be sold for a per unit price of $11, with $0.20 per unit costs to sell.
Required:
1. Re-construct the journal entries for the transactions during the quarter.
2. Make ALL necessary quarter-end adjusting entries as at December 31, 2017. Show your computation. (Hint: there are 4 adjusting entries needed to (1) record the write-down of inventory (2) record COGS and update ending inventory (3) record write-off (4) record bad debt expense using aging analysis.)
3. Present to the CEO the calculation of gross profit for the last quarter in 2017.
In: Accounting
Spending on credit cards decreases after the Christmas spending season (as measured by amount charged on a credit card in December). The accompanying data set contains the monthly credit card charges of a random sample of 99 cardholders. Complete parts a) through e) below.
|
December |
January |
|
|---|---|---|
|
1544.27 |
904.12 |
|
|
4296.56 |
7206.67 |
|
|
4231.61 |
4242.12 |
|
|
202.81 |
79.91 |
|
|
3298.24 |
4043.64 |
|
|
873.19 |
89.18 |
|
|
3810.19 |
3291.88 |
|
|
1933.67 |
2419.82 |
|
|
99.18 |
83.85 |
|
|
504.04 |
6.42 |
|
|
410.81 |
0.00 |
|
|
682.61 |
564.18 |
|
|
2161.39 |
2716.61 |
|
|
1123.94 |
187.14 |
|
|
2508.91 |
3268.47 |
|
|
1836.74 |
1524.15 |
|
|
9.95 |
1359.21 |
|
|
2335.77 |
733.37 |
|
|
78.61 |
75.02 |
|
|
101.37 |
70.29 |
|
|
598.63 |
633.69 |
|
|
648.99 |
1041.04 |
|
|
236.05 |
553.21 |
|
|
1266.11 |
1016.51 |
|
|
2122.66 |
1305.29 |
|
|
3.66 |
249.69 |
|
|
306.01 |
48.77 |
|
|
1902.62 |
872.67 |
|
|
559.31 |
485.47 |
|
|
2444.42 |
617.16 |
|
|
2802.07 |
1574.73 |
|
|
531.66 |
422.77 |
|
|
536.63 |
769.55 |
|
|
767.15 |
56.59 |
|
|
1957.22 |
1485.88 |
|
|
1677.47 |
495.22 |
|
|
2062.16 |
1064.18 |
|
|
397.01 |
510.68 |
|
|
5637.73 |
5640.54 |
|
|
5.49 |
5.49 |
|
|
2277.97 |
871.06 |
|
|
3817.64 |
1635.57 |
|
|
89.26 |
92.28 |
|
|
1452.86 |
669.77 |
|
|
527.62 |
829.52 |
|
|
105.78 |
69.26 |
|
|
1404.26 |
830.73 |
|
|
4232.29 |
2301.53 |
|
|
633.05 |
270.29 |
|
|
971.17 |
210.29 |
|
|
348.26 |
1011.77 |
|
|
0.00 |
1044.75 |
|
|
49.98 |
298.69 |
|
|
30.02 |
-29.98 |
|
|
472.03 |
1636.92 |
|
|
1115.27 |
1731.36 |
|
|
70.74 |
0.00 |
|
|
31.09 |
31.38 |
|
|
4.95 |
4.95 |
|
|
2523.34 |
1087.29 |
|
|
16.97 |
26.86 |
|
|
40.55 |
120.25 |
|
|
258.99 |
2007.56 |
|
|
122.88 |
291.58 |
|
|
0.00 |
104.07 |
|
|
109.79 |
53.01 |
|
|
5052.02 |
2841.17 |
|
|
3675.97 |
674.71 |
|
|
139.71 |
221.77 |
|
|
76.03 |
37.75 |
|
|
3153.81 |
533.38 |
|
|
2988.82 |
1931.72 |
|
|
651.65 |
692.13 |
|
|
9125.53 |
6804.52 |
|
|
916.77 |
392.98 |
|
|
2874.47 |
1307.01 |
|
|
798.29 |
796.03 |
|
|
34.57 |
0.00 |
|
|
44.17 |
1039.59 |
|
|
478.15 |
564.94 |
|
|
762.55 |
339.55 |
|
|
2349.89 |
5279.32 |
|
|
44.24 |
40.07 |
|
|
43.32 |
43.36 |
|
|
1339.63 |
653.94 |
|
|
1128.86 |
1070.82 |
|
|
2800.39 |
2334.09 |
|
|
52.16 |
91.46 |
|
|
1294.96 |
1435.03 |
|
|
328.42 |
719.74 |
|
|
28.34 |
28.59 |
|
|
599.23 |
980.01 |
|
|
4279.28 |
1576.48 |
|
|
567.56 |
0.00 |
|
|
479.95 |
161.82 |
|
|
1617.29 |
494.08 |
|
|
285.68 |
533.44 |
|
|
1283.56 |
462.02 |
|
|
3756.93 |
1479.44 |
a) Build a regression model to predict January spending from December's spending.
Jan with caret=____+____Dec (Round to four decimal places as needed.)
b) How much, on average, will cardholders who charged $2000 in December charge in January?
$____ (Round to the nearest cent as needed.)
c) Give a 95% confidence interval for the average January charges of cardholders who charged $2000 in December.
($___,$___) (Round to the nearest cent as needed.)
d) From part c), give a 95% confidence interval for the average decrease in the charges of cardholders who charged $2000 in December.
($___,$___) (Round to the nearest cent as needed.)
In: Statistics and Probability
1. Suppose the autonomous spending is 20, MPC is 0.75. Government spending and tax are unknown. Investment is following the function:
I(r) = 200 - 50r.
If the Government want to close the output gap of -30 by changing tax. Suppose Fed's monetary policy is fixing the real interest rate at 2%, thus the LM curve is horizontal. What is the change in tax the government should aim at?
2. Suppose the production function of a close economy is
F(K, L) = K.5L.5.
The full emloyment labor force, L, of the economy is 120 and the stock level of capital, K, is 30 at steady state. Suppose the money supply is 50, velocity is 2 and the current price level is 2.5. What is the output gap?
In: Economics
According to Chapter 7 “The Spending Allocation Model”, a decrease in government spending results in, among other things, an increase in investment in the long run. Suppose the capital stock is $1 trillion and a fall in government spending causes a $50 billion rise in investment. Determine the effect of the change in government purchases on long-run per capita output growth, using the growth accounting formula. (Assume that the coefficient on capital in the growth accounting formula is one-third.)
Suppose that a country has no growth in technology, and that capital and labor hours are growing at the same rate. What is the growth rate of real GDP per hour of work? Explain.
Suppose that capital in the country described in part (a) continues to grow at its previous rate and technology growth is still zero, but growth in labor hours falls to half its previous rate. What happens to growth in real GDP per hour of work?
In: Economics
What is mandatory spending also known as discretionary spending by the federal government? Define and give examples.
In: Economics