1. In an English? auction, the dominant strategy is to:

A. Bid when the price is higher than your value

B. Bid until the price is above your value

C. Bid until the price is lower than your value

D. Bid when the price is equal to your value

In? equilibrium, the winning bidder will believe the item to have_____(the lowest value/ the highest value/ no value)

and will pay a price equal to the____ (lowest bidder/ highest bidder/ second-highest bidder)

2.Auctions help in price discovery by? ____________.

A.giving consumers the thrill of competing for a? good, since the highest bidder wins.

B.creating increased demand for ordinary? goods, such as the Apple iPad.

C.increasing? supply, especially with Internet? auctions, since goods can be sold faster.

D.finding the appropriate price for unique? goods, such as a? painting, that may not have a? well-established price.

3. The percentage of U.S. adults that have participated in an online auction has____ (stayed the same/ decreased/ increased)over the last decade.

Which of the following goods would be most suitable for an? auction?

A.An original abstract sculpture.

B.A box of Cracker Jack.

C.A Swedish massage.

D.A pair of Nike tennis shoes.

4. Risk neutrality is? ____________.

A.adverse to any risk.

B.neither risk averse nor risk loving.

C.risk loving.

D.risk averse.

QUESTION: Paraphrase this article into your own words.

Article: Ghost Goods: How to Spot Phantom Inventory by JOSEPH T. WELLS

In this article “Ghost Goods: How to Spot Phantom Inventory” by JOSEPH T. WELLS examines
the inventory’s manipulations. The valuation of inventory involves two separate elements:
quantity and price. Determining the quantity of inventory on hand is often difficult. Goods are
constantly being bought and sold, transferred among locations and added during a manufacturing
process. Figuring the unit cost of inventory can be problematic, too; FIFO, LIFO, average cost
and other valuation methods can routinely make a material difference in what the final inventory
is worth. As a result, the complex inventory account is an attractive target for fraud.
The obvious way to increase inventory asset value is to create various records for items that do
not exist: unsupported journal entries, inflated inventory count sheets, bogus shipping and
receiving reports and fake purchase orders. Since it can be difficult for the auditor to spot such
phony documents, he or she normally uses other means to substantiate the existence and value of
inventory.
Observation of physical inventory. The most reliable way to validate inventory quantity is to
count it in its entirety.
Analytical procedures. Ghost goods throw a company’s books out of kilter. Compared with
previous periods, the cost of sales will be too low; inventory and profits will be too.

3 Fraley Chemical Company accounts for its production activities using first-in, first-out (FIFO) process costing. Inventory records for the process show a January 1 work-in-process inventory of 10,000 gallons, 80 percent complete as to materials and 40 percent complete as to conversion. The January 31 inventory consisted of 15,000 gallons, 60 percent complete as to materials and 20 percent complete as to conversion. In January, 40,000 gallons were completed and transferred to the finished goods inventory. Costs in the Work-in-Process Inventory account in January are as follows: Materials Conversion Total Costs in beginning inventory $ 1,920 $ 672 $ 2,592 Costs added this period 8,405 5,694 14,099 Total cost to be accounted for $10,325 $6,366 $16,691 a. Using first-in, first-out (FIFO) process costing, calculate the equivalent units (in gallons) for January. b. Using first-in, first-out (FIFO) process costing, calculate the cost per equivalent unit for January. (keep answers to 3 decimal points for calculation of part c) c. Using first-in, first-out (FIFO) process costing, calculate the cost of the 40,000 gallons that were completed and transferred out in January. Show your calculations.

Consider the simple spending multiplier where there are no taxes. This multiplier:

a. is less than 1

b. is smaller than the tax multiplier in absolute value

c. is greater than 1

d. is equal to 1

A decrease in government spending will, in the long-run, cause no change in

A. output.

• B. the real interest rate.

• C. the price level.

• D. all of the above.

• E. both (a) and (b) of the above.

Use the AD-AS framework and suppose the economy is in equilibrium at the full-employment level of output. If the Federal Reserve increases the money supply, the long-run final effect would be:

A. an increase in output.

• B. a decrease in the real interest rate.

• C. an increase in the price level.

• D. all of the above.

• E. none of the above.

According to IS-LM model, a contractionary fiscal policy (combined with an expansionary monetary policy) will cause, in the short run:

A. both output and interest rate to rise

• B. both output and interest rate to fall.

• C. output to rise and interest rate to fall.

• D. interest rate to fall but the effect on output is ambiguous.

1. Assume GDP in the economy is $325,000. Show the effect an increase in investment spending of $17,950 would have on the economy if the MPC is 0.12. Graphically show this affect in the aggregate expenditure model making sure to include the value for your new GDP. (3 points)

5. How is it possible for investment spending to increase even in a period in which the real interest rate rises? Explain three reasons for this ( answer in your own words)

Is the relationship between changes in spending and changes in real GDP in the multiplier effect a direct (positive) relationship or is it an inverse (negative) relationship? How does the size of the multiplier relate to the size of the MPC? The MPS? What is the logic of the multiplier-MPC relationship?  (answer in your own words)

For a given economy, investment is 100, government spending is 150 and taxes are 90. the consumption function is C=120+.75 YD

Calculate the government expenditure multiplier and the tax multiplier.

A. 3, 4

B. -3, 4

C. 4, -3

D. 4, 3

Explain how an initial change in spending results in an increase in GDP that exceeds this change. Indicate the formula for both the expenditure multiplier and the tax reduction multiplier and explain why they are different. Explain how crowding out influences the expenditure multiplier. Explain how the multiplier concept is used in the banking system. Please answer these questions in 3 to 5 paragraphs.