1.

An increase in aggregate demand will increase

Group of answer choices

Both real output and the price level

The real domestic output and have no effect on the price level

The price level and have no effect on real domestic output

The price level and decrease the real domestic output

2.

The aggregate supply curve shows:

Group of answer choices

The quantity of goods and services that will be produced at various price levels.

The relative price of goods in one country compared to another.

The amount of expenditures at a given GDP level.

The price and quantity of good produced in a market.

3.

An increase in taxes will most likely

Group of answer choices

Decrease aggregate demand

Increase aggregate supply

Decrease aggregate supply

Increase aggregate demand

4.

Expansionary fiscal policy includes:

Group of answer choices

Increasing government spending

Reducing taxes

Increasing money supply

Both reducing taxes and increasing government spending

Conlin, O’Donoghue and Vogelsang (2007) looked at catalog orders from an apparel and gear company that sells weather-related items. They found that if the temperature on the date a cold weather is purchased is 30 degrees F lower, the probability of returning the item increases by 3.95%. They view this as evidence in support of projection bias. Why?

3) Consider buyers’ demand for durable goods. How might projection bias and the endowment effect impact the price they are willing to pay?

Please read the following short case carefully and provide your answer after analyzing question based on the appropriate open market models/diagrams.

Case: Offshore Outsourcing and Imports

Imagine that you are an economist working for the Congressional Budget Office (CBO). You receive a letter from the chair of the Senate Budget Committee:

Dear CBO economist,

Congress is about to consider the president’s request to cut our country’s offshore outsourcing by 50 percent and imports of durable goods by 40 percent. Before deciding whether to endorse the request, my committee would like your analysis. I wonder if you would advise us:

1. How cutting offshore outsourcing and imported durable goods will affect the domestic investment, domestic interest rate, NCO, exchange rate, and net export in our country?
2. What do you think will happen to real GDP, unemployment, and the price level in our country?
3. Is there any chance of this new policy to trigger stagflation in our economy? In case, if that happens, what kind of coordinated fiscal and monetary policy would be recommended to change the situation?

Sincerely

Committee Chair

Please do not plagiarize or copy-paste from other sources.

Emden Capital Company offers financial services to its clients.​ Recently, Emden has experienced rapid growth and has increased both its client base and the variety of services it offers. The company is becoming concerned about its rising​ costs, however, particularly related to technology overhead. The technology budget for Emden and its actual results for the first quarter of 2017 are given​ below:

Client interations 18,000 Fixed Overhead $59,400 Variable Overhead 5,400 CPU units @ $1.80 per CPU unit Client interactions 20,000 Fixed Overhead $58,000 Variable Overhead $20,800 CPU Units used 8,000

1. Calculate the variable overhead spending and efficiency​ variances, and indicate whether each is favorable​ (F) or unfavorable​ (U). 2. Calculate the fixed overhead spending and​ production-volume variances, and indicate whether each is favorable​ (F) or unfavorable​ (U). 3. Comment on Emden ​Capital's overhead variances. In your​ view, is the firm right to be worried about its control over technology​ spending?

Derive an expression for the power going into the braking system when a car is decelerated from a speed u to a standstill with constant deceleration a (Remember using v = u-at = 0, where a is the magnitude of the deceleration) on a level road. Include the force required to overcome aerodynamic drag (1 ??2???) and rolling 2 friction (μmg). (2) Hence, derive an expression to allow the energy dissipated during the deceleration period to be calculated. (3) The car has a total, fully loaded, mass of 1050 kg. The requirements state that the car must be able to brake from a speed of 100 km/h to a standstill on a level road within one minute. The rolling coefficient of friction of the tyres is 0.02 and the drag coefficient is 0.8. The frontal area of the car is 1.9 m2 and the density of air is 1.2 kg/m3. Calculate the energy dissipated from the engine for the car to brake under constant deceleration and the other given conditions.

Optima Company is a high-technology organisation that produces a mass-storage system. The design of Optima’s system is unique and represents a breakthrough in the industry. The units Optima produces combine positive features of both compact and hard disks. The company is completing its fifth year of operations and is preparing to build its master budget for the coming year (2017). The budget will detail each quarter’s activity and the activity for the year in total. The master budget will be based on the following information:

a Fourth-quarter sales for 2016 are 65 000 units.

b Unit sales by quarter (for 2017) are projected as follows:

The selling price is $500 per unit. All sales are credit sales. Optima collects 85% of all sales within the quarter in which they are realised; the other 15% is collected in the following quarter. There are no bad debts.

c There is no beginning inventory of finished goods. Optima is planning the following ending finished goods inventories for each quarter:

d Each mass-storage unit uses five hours of direct labour and three units of direct materials. Workers are paid $25 per hour, and one unit of direct materials costs $80.

e There are 65 700 units of direct materials in beginning inventory as at 1 January 2017. At the end of each quarter, Optima plans to have 30% of the direct materials needed for next quarter’s unit sales. Optima will end the year with the same amount of direct materials found in this year’s beginning inventory.

f Optima buys direct materials on account. Half of the purchases are paid for in the quarter of acquisition and the remaining half are paid for in the following quarter. Wages and salaries are paid on the 15th and 30th of each month.

g Fixed overhead totals $1 million each quarter. Of this total, $350 000 represents depreciation. All other fixed expenses are paid for in cash in the quarter incurred. The fixed overhead rate is computed by dividing the year’s total fixed overhead by the year’s budgeted production in units.

h Variable overhead is budgeted at $6 per direct labour hour. All variable overhead expenses are paid for in the quarter incurred.

i Fixed selling and administrative expenses total $250 000 per quarter, including $50 000 depreciation.

j Variable selling and administrative expenses are budgeted at $10 per unit sold. All selling and

administrative expenses are paid for in the quarter incurred.

k The balance sheet as at 31 December 2017 is as follows:

* For purchase of direct materials only.

l Optima will pay quarterly dividends of $300 000. At the end of the fourth quarter, $2 million of equipment will be purchased.

REQUIRED:

Prepare a master budget for Optima Company for each quarter of 2017 and for the year in total. The following component budgets must be included:

1 Sales budget

2 Production budget

3 Direct materials purchases budget

4 Direct labour budget

5 Overhead budget

6 Selling and administrative expenses budget

7 Ending finished goods inventory budget

8 Cost of goods sold budget (Note: Assume that there is no change in work in process inventories.)

9 Cash budget

10 Pro forma income statement (using absorption costing) (Note: Ignore income taxes.)

11 Pro forma balance sheet (Note: Ignore income taxes.)

Optima Company is a high-technology organisation that produces a mass-storage system. The design of Optima’s system is unique and represents a breakthrough in the industry. The units Optima produces combine positive features of both compact and hard disks. The company is completing its fifth year of operations and is preparing to build its master budget for the coming year (2017). The budget will detail each quarter’s activity and the activity for the year in total. The master budget will be based on the following information:
a Fourth-quarter sales for 2016 are 65 000 units.
b Unit sales by quarter (for 2017) are projected as follows:
First quarter 75 000
Second quarter 80 000
Third quarter 85 000
Fourth quarter 95 000
The selling price is $500 per unit. All sales are credit sales. Optima collects 85% of all sales within the quarter in which they are realised; the other 15% is collected in the following quarter. There are no bad debts.
c There is no beginning inventory of finished goods. Optima is planning the following ending finished goods inventories for each quarter:
First quarter 13 000 units
Second quarter 15 000 units
Third quarter 20 000 units
Fourth quarter 10 000 units

d Each mass-storage unit uses five hours of direct labour and three units of direct materials. Workers are paid $25 per hour, and one unit of direct materials costs $80.

e There are 65 700 units of direct materials in beginning inventory as at 1 January 2017. At the end of each quarter, Optima plans to have 30% of the direct materials needed for next quarter’s unit sales. Optima will end the year with the same amount of direct materials found in this year’s beginning inventory.

f Optima buys direct materials on account. Half of the purchases are paid for in the quarter of acquisition and the remaining half are paid for in the following quarter. Wages and salaries are paid on the 15th and 30th of each month.

g Fixed overhead totals $1 million each quarter. Of this total, $350 000 represents depreciation. All other fixed expenses are paid for in cash in the quarter incurred. The fixed overhead rate is computed by dividing the year’s total fixed overhead by the year’s budgeted production in units.
HVariable overhead is budgeted at $6 per direct labour hour. All variable overhead expenses are paid for in the quarter incurred.
i Fixed selling and administrative expenses total $250 000 per quarter, including $50 000 depreciation.
j Variable selling and administrative expenses are budgeted at $10 per unit sold. All selling and administrative expenses are paid for in the quarter incurred.
k The balance sheet as at 31 December 2017 is as follows:

ASSETS

Cash

$ 250 000

Direct materials inventory

5 256 000

Accounts receivable

3 300 000

Plant and equipment, net

33 500 000

Total assets

$42 306 000

LIABILITIES AND SHAREHOLDERS’ EQUITY

Accounts payable

$ 7248000*

Capital share

27 000 000

Retained earnings

8 058 000

Total liabilities and shareholders’ equity

$42 306 000

* For purchase of direct materials only.

l Optima will pay quarterly dividends of $300 000. At the end of the fourth quarter, $2 million of equipment will be purchased.

REQUIRED:

Prepare a master budget for Optima Company for each quarter of 2017 and for the year in total. The following component budgets must be included:

1 Sales budget
2 Production budget
3 Direct materials purchases budget
4 Direct labour budget
5 Overhead budget
6 Selling and administrative expenses budget
7 Ending finished goods inventory budget
8 Cost of goods sold budget (Note: Assume that there is no change in work in process inventories.)
9 Cash budget
10 Pro forma income statement (using absorption costing) (Note: Ignore income taxes.)
11 Pro forma balance sheet (Note: Ignore income taxes.)

Jacob Long, the controller of Arvada Corporation, is trying to prepare a sales budget for the coming year. The income statements for the last four quarters follow:

Historically, cost of goods sold is about 60 percent of sales revenue. Selling and administrative expenses are about 10 percent of sales revenue.

Fred Arvada, the chief executive officer, told Mr. Long that he expected sales next year to be 8 percent for each respective quarter above last year’s level. However, Rita Banks, the vice president of sales, told Mr. Long that she believed sales growth would be only 5 percent.

Required

Prepare a pro forma income statement including quarterly budgets for the coming year using Mr. Arvada’s estimate.

Prepare a pro forma income statement including quarterly budgets for the coming year using Ms. Banks’ estimate.