[7] Household spending:

A) is based primarily on unearned income.

B) tends to fluctuate widely as the economy moves through the business cycle.

C) is larger than the combined spending of all U.S. businesses, government units, and foreign buyers.

D) all of these answers are correct.

[9] If the only spending in the economy were household spending based on earned income, and if households always spent all of their incomes, from one year to the next the level of economic activity would:

A) increase.

B) decrease.

C) not change.

D) change in no predictable way.

[10] Injections into the spending stream come from:

A) household earned income.

B) profits, rents, and interest, but not wages.

C) household earned income, transfer payments, and borrowing.

D) sources other than household earned income, and include transfer payments and borrowing.

[11] Which of the following is an injection into the spending stream?

A) Taxes paid to the government.

B) Spending from transfer payments.

C) Spending from household earned income.

D) All of these answers are correct.

[14] Holding all else equal, you would expect the level of economic activity to increase if household:

A) saving were less than taxes.

B) saving plus taxes were more than earned income.

C) saving plus taxes were less than spending from borrowed funds and transfer payments.

D) all of these answers are correct.

[15] Considering only the household sector, an economy will:

A) expand as spending from transfers and borrowing, and savings and taxes increase.

B) contract as spending from transfers and borrowing, and savings and taxes increase.

C) expand as spending from transfers and borrowing increases, and contract as savings and taxes increase.

D) contract as spending from transfers and borrowing increases, and expand as savings and taxes increase.

The goods-trade gap was £8.3bn, compared with £7.6bn in October, the Office for National Statistics said today. Economists predicted £7.5bn, according to a Bloomberg News survey. The Bank of England last week cut the benchmark interest rate to 1.5pc, the lowest in its history, to combat the recession. Policy makers said that the world economy ``appears to be undergoing an unusually sharp and synchronised downturn'' which will hurt global trade. “We see another rate cut in February,'' said David Page, an economist at Investec Securities. ``The bank is aware that we're going through a particularly sharp adjustment in global demand.'' Exports fell 5.8pc on the month while imports dropped 1.8pc, the statistics office said. Overseas sales of oil, chemicals, cars and other commodities slipped. The goods trade gap with countries outside the European Union widened to 5.3bn pounds in November, the most on record. The trade surplus with the U.S. narrowed to £301m, the smallest since February 2007, the statistics office said today. Oxford, England-based Electrocomponents Plc, a supplier of 350,000 products from cables to calculators, said last month sales worsened on weaker demand in Europe, the Asia-Pacific region and the U.S. The International Monetary Fund forecasts recessions in the US, Japan and the euro area. The UK economy contracted 0.6pc in the third quarter after stalling in the second, government data show.

a) What has been the recent performance of the UK trade balance?

b) What has been the reaction of the Bank of England to the current economic recession?

c) Which was the economic rationale behind the BoE decisions?

d) How effective was monetary policy?

West and Jones Granite Corp uses a standard cost system for its single product. The following data are available: ACTUAL for the current year: Purchase of raw materials (5,200 sq ft at $11.80) $61,360 Raw materials used 4,800 sq ft Direct Labor costs (22,000 at $13.80) $303,600 Actual variable overhead cost $64,250 Units produced 5,820 units Standards per unit of product: Raw materials 1.0 sq ft at $10.70/sq ft Direct labor 3.8 hours at $13.50/hr Variable overhead $2.75 per direct labor hour Compute the following variances: 1. material variance (price and quantity) 2. labor variance (rate and efficiency) 3. variable overhead variance (spending and efficiency)

1- Using the attached problem, compute the material price variance.

2-

Using the attached problem, compute the material quantity variance.

West and Jones Granite Corp uses a standard cost system for its single product. The following data are available: ACTUAL for the current year: Purchase of raw materials (5,200 sq ft at $11.80) $61,360 Raw materials used 4,800 sq ft Direct Labor costs (22,000 at $13.80) $303,600 Actual variable overhead cost $64,250 Units produced 5,820 units Standards per unit of product: Raw materials 1.0 sq ft at $10.70/sq ft Direct labor 3.8 hours at $13.50/hr Variable overhead $2.75 per direct labor hour Compute the following variances: 1. material variance (price and quantity) 2. labor variance (rate and efficiency) 3. variable overhead variance (spending and efficiency)

1- Using the attached problem, compute the material price variance.

2-

Using the attached problem, compute the material quantity variance.

Consider the marginal tax rate (denoted t). It was noted in class that if t rises:

a. the spending multiplier with taxes will fall and there will be more output variability

b. the spending multiplier with taxes will rise and there will be less output variability

c. the spending multiplier with taxes will fall and there will be less output variability

d. the spending multiplier with taxes will rise and there will be more output variability

Can anyone please explain how to work these questions??

Suppose that a $20 billion increase in disposable income (YD) leads to a $10 billion increase in consumption spending (C).
Instructions: Round your answers to 1 decimal place.

A. What is the MPC in this economy? $____

B. What is the size of the spending multiplier? _____

C. If, instead, consumption spending (C) increased by $12 billion due to the increase in disposable income (YD), what would be the size of the spending multiplier? _____

Assume for this economy that the spending multiplier is 4.
Instructions: Enter your answers as whole numbers.  

A. If consumer spending falls by $25 billion because of a decline in household wealth, and investment spending rises by $40 billion due to higher expected rates of return on investment, in what direction and by how much will the aggregate demand curve initially shift?

Leftward OR Rightward by $______Billion.

B. Given the spending multiplier stated above, in what direction and by how much will the aggregate demand curve eventually shift?

Leftward OR Rightward by $______Billion.

Red Canyon T-shirt Company operates a chain of T-shirt shops in the southwestern United States. The sales manager has provided a sales forecast for the coming year, along with the following information:

Each T-shirt is expected to sell for $17.

The purchasing manager buys the T-shirts for $7 each.

The company needs to have enough T-shirts on hand at the end of each quarter to fill 27 percent of the next quarter’s sales demand.

Selling and administrative expenses are budgeted at $84,000 per quarter plus 14 percent of total sales revenue.

Required:
1. Determine budgeted sales revenue for each quarter.



2. Determine budgeted cost of merchandise purchased for each quarter.



3. Determine budgeted cost of good sold for each quarter.



4. Determine selling and administrative expenses for each quarter.



5. Complete the budgeted income statement for each quarter.

Red Canyon T-shirt Company operates a chain of T-shirt shops in the southwestern United States. The sales manager has provided a sales forecast for the coming year, along with the following information: Budgeted Unit Sales Quarter 1 47,000 Quarter 2 74,000 Quarter 3 37,000 Quarter 4 74,000 Each T-shirt is expected to sell for $22. The purchasing manager buys the T-shirts for $9 each. The company needs to have enough T-shirts on hand at the end of each quarter to fill 32 percent of the next quarter’s sales demand. Selling and administrative expenses are budgeted at $94,000 per quarter plus 10 percent of total sales revenue. Required: 1. Determine budgeted sales revenue for each quarter. 2.Determine budgeted cost of merchandise purchased for each quarter. 3. Determine budgeted cost of good sold for each quarter. 4.Determine selling and administrative expenses for each quarter. 5.Complete the budgeted income statement for each quarter.