1.Since 1960, government spending of purchases, transfers and net interest has grown or shrunk as a portion of USA GDP?

a.As an economy is stuck in recession government purchases rise, fall or remain unchanged?

b.As an economy is stuck in recession government transfers rise, fall or remain unchanged?

2.As an economy is stuck in recession government net interest payments ON PAST DEBTS rise, fall or remain unchanged?

a.Name a government automatic stabilizer program.

b.How does your government program automatically counteract the economy?

3.Of the three lags, which one hurts fiscal policy the most?

The CEO of a computer hardware company notices that its sales are concentrated at the beginning of each quarter and at the end of each quarter, with few sales in the middle. Sales at the beginning of the quarter and at the end of the quarter have much lower prices, about 10% lower than earlier sales. Why?

8)

a. An increase in your nominal income and a decrease in your real income might occur simultaneously if your nominal income increases more than the cost of living increases. real income increases at the same rate as the cost of living increases. nominal income increases less than the cost of living increases. real income increases more than the cost of living increases. b. The losers from inflation are those with significant debt. incomes that increase at the rate of inflation. no savings. fixed incomes in nominal terms. c. Those who lose the most from unemployment are minority groups and those with the least skill. those with the most skill. those that paid the least in taxes. those with the highest living standards. d. Consider the choice between (a) full employment with a 6 percent annual rate of inflation or (b) price stability with an 8 percent unemployment rate. Which of the following statements is true? Option (a) risks inflationary expectations that will give rise to creeping inflation, whereas option (b) might encourage expansionary policies that push the economy toward inflation. Option (a) might encourage expansionary policies that aggravate inflation, whereas option (b) might lower spending and push the economy toward deflation. Option (a) might encourage expansionary policies that aggravate inflation, whereas option (b) might encourage expansionary policies that push the economy toward inflation. Option (a) risks inflationary expectations that will give rise to creeping inflation, whereas option (b) might lower spending and push the economy toward deflation.

1. Consider the experience of Japan in the past two decades and of Europe more recently. What are the causes of deáation in those countries?

2. How do central bankers typically feel about deflation? Why?

3. Consider our basic OLG model when the population is growing and the supply of money is fixed.

(a) Summarize the key predictions of this simple model.

(b) Are there any predictions of the model which seem particularly at odd with the conventional wisdom of central bankers about deflation? If yes, provide

an interpretation of the possible sources of this disagreement.

(c) To what extent does this simple model help you understand deflation in Japan?

Article:

Europe: Deflation decoded

The spectre of deflation descended over the global economy this week as the eurozone recorded falling prices for the first time in more than five years, raising fears that the world could enter a vicious circle of sliding incomes and spending.

Prices in the eurozone dropped by 0.2 per cent in the year to December, following a 50 per cent drop in oil prices since June. While many economists had seen this coming in the currency union, there are now fears that deflation could spread. With oil prices at $50 a barrel, at least 18 states — including Germany and the UK — could see negative inflation, according to estimates by Oxford Economics.

Deflation fears rattled the stock market, with global shares plunging on Monday before paring back their losses. Investors know that once an economy falls into outright deflation — a persistent and generalized fall in prices — it is very difficult to climb out. This is what happened in Japan, where policy makers have struggled to lift prices since 1999. But while Japan offers a cautionary tale, it does not have to be that way.

Japan is an example of “bad” deflation, where prices fall as a result of slowing demand. As consumers expect goods to become cheaper in the future, they postpone purchases, worsening the slump. If price levels keep sliding, nominal incomes may start to fall, making it much harder to service debt. A wave of bankruptcies can follow, compounding the misery.

But there is also a rosier deflation scenario. Falling prices can be the result of better productivity, as workers create goods and services at a lower cost. Sliding import costs can also have a positive effect, boosting disposable income.

This happened in West Germany in 1986, when consumer prices dropped by up to 1 per cent as oil prices fell, but output over the next three years grew by a healthy average of 2.9 per cent.

The question for investors and politicians is which of these two scenarios the world economy is in. For now, the drop in prices appears to resemble the experience of the late 1980s more than the Depression years of the 1930s. Inflation has been largely driven down by the cost of energy, while core inflation —which strips the effect of goods with more volatile prices — has generally held up.

Nor is there much evidence that consumers are delaying purchases in the expectation that prices will keep falling. Retail sales growth across advanced economies rose by about 2 per cent in the year to November, according to estimates by Capital Economics.

In fact, so long as the price decline remains limited to energy, there is little reason to believe this change in psychology will happen. “Why should a consumer look at a lower oil price and say ‘the cost of filling the family SUV with gasoline has gone down, I had better not buy that flat screen TV that I want, because it will be cheaper next month?’,” said Paul Donovan, a UBS economist.

And despite falling inflation, experts at the World Bank and the International Monetary Fund still expect global growth to be faster in the coming year thanks to lower oil prices.

There is a big exception to the rosy scenario, however: the eurozone and, in particular, its more troubled“periphery” countries such as Greece and Spain. A survey of inflation expectations carried out inDecember for the European Commission shows buyers expected prices to be flat over the next year.

These worries will be weighing on the European Central Bank when it meets on January 22. Many analysts say the ECB will have no choice but to embark on a sovereign bond-buying programme in the hope of boosting inflation.

“The pressure remains firmly on the ECB to deliver a sizeable quantitative easing programme at its meeting later this month to prevent deflation from becoming firmly entrenched,” said Jessica Hinds of Capital Economics.

Central bankers in the US, the UK and elsewhere have fewer reasons to worry for now. But they will be watching prices like hawks.

A short bout of deflation can be a blessing for consumers, especially when it is driven by a slide in the price of oil or another imported necessity. Households find that their paycheques go further. And lower prices also mean that indebted households have more money to payoff what they owe.

But a protracted period of deflation will have a different effect on shoppers’ behaviour. Knowing that all goods will be cheaper tomorrow than today, they will postpone their purchases. This has a pernicious effect on businesses, which face a slump in demand and a squeeze in profits.

The financial troubles of companies are bound to have an impact on households. Some will face the prospect of lay-offs or pay cuts, reducing their disposable income and hurting consumption. Even those who are spared will face greater uncertainty and may save more of their income, further weighing on demand. Finally, indebted workers will find it harder to pay back their debt, which is rising in real terms as wages remain stagnant or fall.

Aprotracted period of low prices makes it more likely that workers will not ask for higher wages when they bargain with employers. In fact, they may be perfectly content to accept a stagnant salary, as this would still increase their purchasing power in the face of sliding prices. This effect on wage negotiation is one of the reasons it is so hard to leave a prolonged period of deflation.

Shinzo Abe, Japan’s prime minister, has urged companies to pay more to their workers, as he sees bargaining rounds as a key battleground in his fight against deflation. But so far, wage growth is still sluggish.

Companies: Winners and losers

The impact of deflation on businesses depends on how the price of their products moves relative to the cost of inputs needed to make them.

The recent plunge in crude prices helps to explain how this works.

Businesses whose costs are heavily dependent on the price of oil, such as airlines, have enjoyed a bumper few months.In December, analysts at Barclays estimated that the US aviation industry could see their costs drop by $10bn. This will translate into fatter profit margins.

Conversely, oil majors are suffering from a significant squeeze in their profits, as the value of their output falls, while their input prices are roughly unchanged.

Not all corporations are equally vulnerable: relative financial strength depends on factors such as debt levels or the strength of cash flow. Investment prospects, however, can be hit severely, though this depends on future oil prices rather than on current ones.

In a scenario of generalised deflation, however, all companies face a tricky balancing act.With output prices falling, managers will have to take the axe to their costs to preserve profit margins.This means cutting workers’ pay, for example.

However, economists generally think of wages as “sticky downwards”: meaning it can be hard to impose nominal cuts to the value of a worker’s pay. This means they have to cut jobs, worsening the slump by raising unemployment.

Full-blown deflation will also put the stability of the financial sector at risk. In theory, falling prices help creditors, who see the real value of their loans rise.

But, a prolonged period of stagnation could lead to a wave of bankruptcies, which will hit the banks’ balance sheets. Lenders will also suffer from any fall in asset prices, which will reduce the value of any collateral they hold.

Markets: Watch the ripple effects

Deflation has profound consequences for financial markets.The initial effects are clear-cut, but the secondary responses are far harder to predict. In a deflationary environment, the biggest winners are conventional fixed-income bonds. They pay a coupon whose value will rise over time if deflation persists. The biggest losers are index-linked bonds. Beyond the bond market, cash grows more popular, even when it pays virtually zero interest, because it will grow in value with deflation. Financial engineers would likely redouble their efforts to find ways to guarantee returns. Commodity prices fall, by definition. As for equities, deflation implies a lack of corporate pricing power and a lack of growth — both bad for stock markets. But David Bowers of London’s Absolute Strategy Research points out that money will flow to companies that can make themselves as bond-like as possible. They can do this by paying out more cash in dividends, or by buying back their own stock. As he puts it, “companies are incentivised torun themselves for cash”. This leads to the potential second-order effects. If companies have an incentive to pay out cash, they tend to spend less on capital investments — which weakens economic growth. Companies appear to have already started adapting. For the 12 months to the end of September,Howard Silverblatt of Standard & Poor’s found that S&P 500 companies spent $902bn on buybacks and dividends combined — an increase of 20 per cent compared with a year earlier. This far outstrips the growth in their earnings or revenues . And it was also 5.5 times the $164.7bn they devoted to capital expenditures. The late 1990s equity market led to wild over-investment by companies, particularly in the US. The fear now is that deflation would prompt markets into forcing under-investment, as companies tried to make their stocks look like bonds. John Authers Central banks: Eye on the target Over the past two decades, many central banks around the world have adopted inflation targets, meaning their decision to cut or raise interest rates depends on how indices of prices are moving. Their key measure is typically“headline” inflation, which includes all goods and services. As a result, sharp drops in the cost of volatile products, such as oil, can lead to steep deviations from a central bank’s target. Policy makers try to ignore such swings and concentrate on “core inflation”, a measure that excludes volatile energy and food prices. And since central bankers are normally interested in maintaining price stability over the medium term, this allows them to avoid knee-jerk reactions to temporary swings.

The risk for the monetary authorities, however, is that even a temporary bout of deflation can alter consumers’ expectations, changing their spending behaviour and the wages they demand from their employers. At that stage, it becomes very hard for the central bank to lift inflation back to its target: the Bank of Japan has kept interest rates near zero for the past 15 years, but this has largely failed to prompt a sustained rise in the price level.

In an environment of persistent deflation, monetary policy makers face an uphill battle. Central bankers stimulate the economy by reducing the so-called real interest rate, a way of encouraging households and companies to invest instead of save. When prices are falling, nominal interest rates must be pushed to extremely low levels to boost output.

But sometimes even this is not enough. When demand is extremely weak, central bankers need to slash nominal interest rates below zero to give enough of a boost to demand. But this is impossible, as savers would take their money out of the bank. Central bankers then have to implement unorthodox measures, which could include quantitative easing.

This lab uses a Student class with the following fields:

private final String firstName;
private final String lastName;
private final String major;
private final int zipcode;
private final String studentID;
private final double gpa;

A TestData class has been provided that contains a createStudents() method that returns an array of populated Student objects.

Assignmen

The Main method prints the list of Students sorted by last name. It uses the Arrays.sort() method and an anonymous Comparator object to sort the array by the student’s last name.

Using the Arrays.sort() method and anonymous Comparator objects print out the array of students using the following three sorting criteria:

1. Sorted in order of major (A-Z)
2. Sorted by zip code (increasing)
3. Sorted by Grade Point Average (GPA) (decreasing)

Note: when sorting by GPA, you will need to be clever to correctly sort GPA’s such as 3.1, 3.2, 3.4 in the correct order.

Note: In this assignment the Comparator class will be instantiated as:

                new Comparator<Student>()

The <Student> type argument means that the Comparator operates on Student objects. You will learn more about this in the next lesson on Generics.

Example Output

Students Sorted By LastName

First Name   Last Name    Major              Zip Code     GPA        

Penny        Adiyodi      Finance            90304        3.1        

Marina       Andrieski    Marketing          76821        3.4        

Quentin      Coldwater    Biology            43109        2.7        

Henry        Fogg         Botany             49022        3.8        

Margo        Hanson       Psychology         56231        2.91       

Josh         Hoberman     Astronomy          33021        2.5        

Kady         Orloff-Diaz English            65421        3.2        

Alice        Quinn        Math               89123        4.0        

Eliot        Waugh        Chemistry          12345        2.1        

Julia        Wicker       Computer Science   43210        4.0        

==============================================================

Students Sorted By Major

First Name   Last Name    Major              Zip Code     GPA        

Josh         Hoberman     Astronomy          33021        2.5        

Quentin     Coldwater    Biology            43109        2.7        

Henry        Fogg         Botany             49022        3.8        

Eliot        Waugh        Chemistry          12345        2.1        

Julia        Wicker       Computer Science   43210        4.0        

Kady         Orloff-Diaz English            65421        3.2        

Penny        Adiyodi      Finance            90304        3.1   

==============================================================

Students Sorted By Zip Code

First Name   Last Name    Major              Zip Code     GPA        

Eliot        Waugh        Chemistry          12345        2.1        

Josh         Hoberman     Astronomy          33021        2.5        

Quentin      Coldwater    Biology            43109        2.7        

Julia        Wicker       Computer Science   43210        4.0        

Henry        Fogg         Botany             49022        3.8        

Margo        Hanson       Psychology         56231        2.91       

Kady         Orloff-Diaz English            65421        3.2        

==============================================================

Students Sorted By GPA

First Name   Last Name    Major              Zip Code     GPA        

Julia        Wicker       Computer Science   43210        4.0        

Alice        Quinn        Math               89123        4.0        

Henry        Fogg         Botany             49022        3.8        

Marina       Andrieski    Marketing          76821        3.4        

Kady         Orloff-Diaz English            65421        3.2   

Coding:

package home;

import java.util.Arrays;
import java.util.Comparator;

public class Main {

public static void main(String[] args) {
Student[] students = TestData.createStudents();
Arrays.sort(students,new Comparator<Student>() {
public int compare(Student s1,Student s2) {
String lastname1 = s1.getLastName();
String lastname2 = s2.getLastName();
return lastname1.compareTo(lastname2);
}
});
printStudentList("Students Sorted By LastName",students);

// TODO - sort students by major
printStudentList("Students Sorted By Major",students);

// TODO - sort students by zip code
printStudentList("Students Sorted By Zip Code",students);

// TODO - sort students by GPA
printStudentList("Students Sorted By GPA",students);
}

public static void printStudentList(String title,Student[] list) {
final String format = "%-12s %-12s %-18s %-12s %-12s\n";
System.out.println(title);
System.out.printf(format,"First Name","Last Name","Major","Zip Code","GPA");
for (Student s : list) {
System.out.printf(format,s.getFirstName(),s.getLastName(),s.getMajor(),s.getZipcode(),s.getGpa());
}
System.out.println("==============================================================\n");
}
}

package home;

/**
* Student class (immutable)
*/
public final class Student {
private final String firstName;
private final String lastName;
private final String major;
private final int zipcode;
private final String studentID;
private final double gpa;

public Student(String firstName, String lastName, String major, int zipcode, String studentID, double gpa) {
this.firstName = firstName;
this.lastName = lastName;
this.major = major;
this.zipcode = zipcode;
this.studentID = studentID;
this.gpa = gpa;
}

public String getFirstName() {
return firstName;
}

public String getLastName() {
return lastName;
}

public String getMajor() {
return major;
}

public int getZipcode() {
return zipcode;
}

public String getStudentID() {
return studentID;
}

public double getGpa() {
return gpa;
}
}

package home;

public class TestData {
public static Student[] createStudents() {
Student[] students = {
new Student("Julia","Wicker","Computer Science",43210,"A0123",4.0),
new Student("Quentin","Coldwater","Biology",43109,"D3902",2.7),
new Student("Eliot","Waugh","Chemistry",12345,"Z0101",2.1),
new Student("Penny","Adiyodi","Finance",90304,"M2030",3.1),
new Student("Margo","Hanson","Psychology",56231,"L9832",2.91),
new Student("Alice","Quinn","Math",89123,"U8932",4.0),
new Student("Kady","Orloff-Diaz","English",65421,"K3949",3.2),
new Student("Henry","Fogg","Botany",49022,"R9392",3.8),
new Student("Josh","Hoberman","Astronomy",33021,"H3021",2.5),
new Student("Marina","Andrieski","Marketing",76821,"J3491",3.4)
};
return students;
}
}

CVD Sdn Bhd (CVDSB) is a company located at Kedah. The company produces picture frames. Traditionally, all frames are hand-made, which require one hour of direct labor to finish producing one frame. With the increasing demand on their products, the company plans to switch their manufacturing layout to the automated production facility by installing a new automated production machine which will save the direct labor hour used by 25% per frame. The company plans to install a new machine on 1 March 2021.

In preparing the proposal for approval from top management regarding to the plan, the company is now preparing budget for the first quarter of year 2021. The following information are collected by the manager:

i. The labor related costs are as followings: a. Pension contributions of RM0.50 per hour b. Workers compensation insurance of RM0.20 per hour c. Employee medical insurance of RM0.80 per hour d. EPF contribution of 7% of direct labor wages.

ii. The cost of employee benefits paid by the company is treated as a direct labor cost.

iii. The company has a labor contract that calls for wage increase from RM16 to RM18 per hour in April 2021.

iv. The company is expecting to have 8,000 frames on hand on December 2020. The company policy is to have ending inventory equal to 100% of the following month’s sales plus 50% of the second month following sales.

v. The estimated unit sales are as follows:

January February March April May 5,000 6,000 4,000 4,500 4,500

vi. The selling price is expected to reduce from RM50 in January 2021 to RM47.50 for the remaining month in year 2021.


REQUIRED:

(a) Prepare the production budget for CVDSB for the first quarter of 2021.

(b) Prepare the direct labor budget for CVDSB for the first quarter of 2021. The budget must show the detail of each category of direct labor cost.

(c) Discuss ONE (1) reason why it is important for CVDSB to prepare a flexible budget apart of preparing a master budget. .

Production Budget and Direct Materials Purchases Budgets

Peanut Land Inc. produces all-natural organic peanut butter. The peanut butter is sold in 12-ounce jars. The sales budget for the first four months of the year is as follows:

Company policy requires that ending inventories for each month be 15% of next month's sales. At the beginning of January, the inventory of peanut butter is 37,000 jars.

Each jar of peanut butter needs two raw materials: 24 ounces of peanuts and one jar. Company policy requires that ending inventories of raw materials for each month be 20% of the next month's production needs. That policy was met on January 1.

1. Prepare a production budget for the first quarter of the year. Show the number of jars that should be produced each month as well as for the quarter in total.

2. Prepare a direct materials purchases budget for jars for the months of January and February.

Prepare a direct materials purchases budget for peanuts for the months of January and February.

I started on it, I am just getting caught up because there are so many numbers. Any help would be appreciated!

Applying and Analyzing Inventory Costing MethodsAt the beginning of the current period, Chen carried 1,000 units of its product with a unit cost of $32. A summary of purchases during the current period follows.

Units Unit Cost Cost

Beginning Inventory .... 1,000 $32 $32,000

Purchases: #1 ......... 1,800 34 61,200

#2 ......... 800 38 30,400

#3 ......... 1,200 41 49,200

During the current period, Chen sold 2,800 units.

a. Assume that Chen uses the first-in, first-out method. Compute both cost of goods sold for the current period and the ending inventory balance. Use the financial statement effects template to record costof goods sold for the period.

b. Assume that Chen uses the last-in, first-out method. Compute both cost of goods sold for the current period and the ending inventory balance.

c. Assume that Chen uses the average cost method. Compute both cost of goods sold for the current period and the ending inventory balance.

d. Which of these three inventory costing methods would you choose to:

1. Reflect what is probably the physical flow of goods? Explain.

2. Minimize income taxes for the period? Explain.

3. Report the largest amount of income for the period? Explain.