The Financial Crisis and the Great Depression of 2008 and 2009. (ECON 4030- Macroeconomics)

During 2008, the U.S. economy experienced a financial crisis and economic downturn that to some observers mirrored events from the 1930s. The crisis began with a boom in the housing market a few years earlier, the result of low interest rates that made buying a home more affordable. Increased use of securitization in the mortgage market further fueled the housing boom by making is easier for subprime borrowers to obtain credit. These borrowers had a higher risk of default that may not have been fully appreciated by the purchasers of mortgage backed securities (banks and insurance companies). The high level of house prices proved unsustainable and prices fell by 30 % from 2006-2009. This decline had several repercussions that intensified what was a moderate to severe house price correction into a full blown crisis.

First, mortgage defaults and home foreclosures increased sharply, in large part due to lose mortgage lending standards that had permitted little or no money down on home purchases. As prices fell, these homeowners were "under water", and many decided to stop paying on thier mortgages. Overall, there was a significant reduction in residential spending. Second, numerous financial institutions suffered heavy losses on the mortgage backed securities that they owned. As a result, banks cut back on lending to other banks out of fear and distrust that they might not be repaid. Third, companies that rely on the financial system for funds to run thier business found it difficult to obtian short term loans for investment. There were concerns about the expected profitability of these companies. Finally, gyrations in stock prices, in turn, led to a sharp decline in consumer confidence and resulted in a huge drop in consumer spending.

Government responded strongly to the crisis. The Fed lowered its target for the federal funds rate from 5.25 % in September 2007 to approximately zero in December 2008. Congress appropriated $700 billion for the Treasury to use to stabilize the financial system by providing funds for banks in return for a temporary ownership stake in these institutions. The Obama administration proposed, and Congress passed a fiscal stimulus program to expand aggregate demand. And the Fed implemented a number on unconventional monetary policies, such as purchasing long term bonds, to lower long term interest rates and thereby support borrowing and private spending. These forceful policy actions were taken in the hope of preventing the downturn from becoming another depression, and they seem to have succeeded. By the end of 2009, the economy was growing once again, and the unemployment rate had begun to decline, although the recovery remained sluggish for several years. Policy makers certaintly can take credit for avoiding another Great DEpression. The unemployment rate peaked at 10%, comapred with 25% in 1933, and industrial production fell by 17% over a period of 18 months during the Great Depression, compared with a decline of more than 50% over 3 years during the Great Depression.

a) Identify the type of shock(s)

b) Identify what phase of the business cycle the economy was in after the shock. State what happened to unemployment, Real GDP, output gap.

c) Explain the impact of the shock on the economy using the ISLM model, use both the goods and money market to supplement your answer. (graoh)

d) According to the passage, what steps (policies) did the government and the Federal Reserve take?

e) Explain the impact of the policies on the economy using the ISLM model. (graph)

Alberta Gauge Company, Ltd., a small manufacturing company in Calgary, Alberta, manufactures three types of electrical gauges used in a variety of machinery. For many years the company has been profitable and has operated at capacity. However, in the last two years, prices on all gauges were reduced and selling expenses increased to meet competition and keep the plant operating at capacity. Second-quarter results for the current year, which follow, typify recent experience.

Alice Carlo, the company’s president, is concerned about the results of the pricing, selling, and production prices. After reviewing the second-quarter results, she asked her management staff to consider the following three suggestions:

Discontinue the R-gauge line immediately. R-gauges would not be returned to the product line unless the problems with the gauge can be identified and resolved.

Increase quarterly sales promotion by $100,000 on the Q-gauge product line in order to increase sales volume by 15 percent.

Cut production on the E-gauge line by 50 percent, and cut the traceable advertising and promotion for this line to $20,000 each quarter.

Jason Sperry, the controller, suggested a more careful study of the financial relationships to determine the possible effects on the company’s operating results of the president’s proposed course of action. The president agreed and assigned JoAnn Brower, the assistant controller, to prepare an analysis. Brower has gathered the following information.

All three gauges are manufactured with common equipment and facilities.

The selling and administrative expense is allocated to the three gauge lines based on average sales volume over the past three years.

Special selling expenses (primarily advertising, promotion, and shipping) are incurred for each gauge as follows:

The unit manufacturing costs for the three products are as follows:

The unit sales prices for the three products are as follows:

The company is manufacturing at capacity and is selling all the gauges it produces.

Required:

2. Use the operating data presented for Alberta Gauge Company and assume that the president’s proposed course of action had been implemented at the beginning of the second quarter.

a. Calculate the net impact on income before taxes for each of the three suggestions.

b-1. Calculate contribution margin for R-gauge

b-2. Was the president correct in proposing that the R-gauge line be eliminated?

c-1. Calculate the contribution per direct-labor dollar for Q-gauge and E-gauge.

c-2. Was the president correct in promoting the Q-gauge line rather than the E-gauge line?

Alberta Gauge Company, Ltd., a small manufacturing company in Calgary, Alberta, manufactures three types of electrical gauges used in a variety of machinery. For many years the company has been profitable and has operated at capacity. However, in the last two years, prices on all gauges were reduced and selling expenses increased to meet competition and keep the plant operating at capacity. Second-quarter results for the current year, which follow, typify recent experience.

Alice Carlo, the company’s president, is concerned about the results of the pricing, selling, and production prices. After reviewing the second-quarter results, she asked her management staff to consider the following three suggestions:

• Discontinue the R-gauge line immediately. R-gauges would not be returned to the product line unless the problems with the gauge can be identified and resolved.
• Increase quarterly sales promotion by $420,000 on the Q-gauge product line in order to increase sales volume by 15 percent.
• Cut production on the E-gauge line by 50 percent, and cut the traceable advertising and promotion for this line to $120,000 each quarter.

Jason Sperry, the controller, suggested a more careful study of the financial relationships to determine the possible effects on the company’s operating results of the president’s proposed course of action. The president agreed and assigned JoAnn Brower, the assistant controller, to prepare an analysis. Brower has gathered the following information.

• All three gauges are manufactured with common equipment and facilities.
• The selling and administrative expense is allocated to the three gauge lines based on average sales volume over the past three years.
• Special selling expenses (primarily advertising, promotion, and shipping) are incurred for each gauge as follows:

• The unit manufacturing costs for the three products are as follows:

• The unit sales prices for the three products are as follows:

• The company is manufacturing at capacity and is selling all the gauges it produces.

Required:

1. 2. Use the operating data presented for Alberta Gauge Company and assume that the president’s proposed course of action had been implemented at the beginning of the second quarter.

2. a. Calculate the net impact on income before taxes for each of the three suggestions.

3. b-1. Calculate contribution margin for R-gauge

4. b-2. Was the president correct in proposing that the R-gauge line be eliminated?

5. c-1. Calculate the contribution per direct-labor dollar for Q-gauge and E-gauge.

6. c-2. Was the president correct in promoting the Q-gauge line rather than the E-gauge line?

Alberta Gauge Company, Ltd., a small manufacturing company in Calgary, Alberta, manufactures three types of electrical gauges used in a variety of machinery. For many years the company has been profitable and has operated at capacity. However, in the last two years, prices on all gauges were reduced and selling expenses increased to meet competition and keep the plant operating at capacity. Second-quarter results for the current year, which follow, typify recent experience.

Alice Carlo, the company’s president, is concerned about the results of the pricing, selling, and production prices. After reviewing the second-quarter results, she asked her management staff to consider the following three suggestions:

• Discontinue the R-gauge line immediately. R-gauges would not be returned to the product line unless the problems with the gauge can be identified and resolved.
• Increase quarterly sales promotion by $420,000 on the Q-gauge product line in order to increase sales volume by 15 percent.
• Cut production on the E-gauge line by 50 percent, and cut the traceable advertising and promotion for this line to $120,000 each quarter.

Jason Sperry, the controller, suggested a more careful study of the financial relationships to determine the possible effects on the company’s operating results of the president’s proposed course of action. The president agreed and assigned JoAnn Brower, the assistant controller, to prepare an analysis. Brower has gathered the following information.

• All three gauges are manufactured with common equipment and facilities.
• The selling and administrative expense is allocated to the three gauge lines based on average sales volume over the past three years.
• Special selling expenses (primarily advertising, promotion, and shipping) are incurred for each gauge as follows:

• The unit manufacturing costs for the three products are as follows:

• The unit sales prices for the three products are as follows:

• The company is manufacturing at capacity and is selling all the gauges it produces.

Required:

1. 2. Use the operating data presented for Alberta Gauge Company and assume that the president’s proposed course of action had been implemented at the beginning of the second quarter.

2. a. Calculate the net impact on income before taxes for each of the three suggestions.

3. b-1. Calculate contribution margin for R-gauge

4. b-2. Was the president correct in proposing that the R-gauge line be eliminated?

5. c-1. Calculate the contribution per direct-labor dollar for Q-gauge and E-gauge.

6. c-2. Was the president correct in promoting the Q-gauge line rather than the E-gauge line?

Indicate whether the following statements are most true for elliptical or spiral galaxies.
(Select S-Spiral, E-Elliptical. If the first is S and the rest E, enter
SEEEEE).  
PLEASE ANSWER ONLY IF YOU ARE 100% POSITIVE. THIS IS MY SECOND TIME POSTING IT BECUSE BOTH ANSWERS I HAVE RECIEVED ARE WRONG
A) Are rare in the central regions of galaxy clusters.
B) Most numerous type in the Universe.
C) Contain abundant clouds of cool gas and dust.
D) Has a very large range in size and mass.
E) Has no current star formation.
F) Contain no hot, massive stars.
G) Are more reddish in color.

Many development plans have been implemented in Ghana since the first development plan was launched by Sir Gordon Guggisberg in 1919. Most recently, Ghana launched a 40-year development plan by the Mahama-led administration and also a 7 – year development plan was launched by the Akuffo Addo-led administration. Most of these development plans have however failed to live up to their billing.

a. Discuss five major reasons why development plans have performed poorly over the post-independence era in Ghana.
b. Suggest any five practical measures that are needed to ensure the smooth operation of development plans in Ghana in the future.

Clopack Company manufactures one product that goes through one processing department called Mixing. All raw materials are introduced at the start of work in the Mixing Department. The company uses the weighted-average method of process costing. Its Work in Process T-account for the Mixing Department for June follows (all forthcoming questions pertain to June):

The June 1 work in process inventory consisted of 5,000 units with $16,000 in materials cost and $12,000 in conversion cost. The June 1 work in process inventory was 100% complete with respect to materials and 50% complete with respect to conversion. During June, 37,500 units were started into production. The June 30 work in process inventory consisted of 8,000 units that were 100% complete with respect to materials and 40% complete with respect to conversion.

1 .Prepare the journal entries to record the raw materials used in production and the direct labor cost incurred. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

2. Prepare the journal entry to record the overhead cost applied to production. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

3. How many units were completed and transferred to finished goods during the period?

4. Compute the equivalent units of production for materials.

5. Compute the equivalent units of production for conversion.
6. What is the cost of beginning work in process inventory plus the cost added during the period for materials?

7. What is the cost of beginning work in process inventory plus the cost added during the period for conversion?

8. What is the cost per equivalent unit for materials? (Round your answer to 2 decimal places.)

9. What is the cost per equivalent unit for conversion? (Round your answer to 2 decimal places.)

10. What is the cost of ending work in process inventory for materials? (Round your intermediate calculations to 2 places.)

11. What is the cost of ending work in process inventory for conversion?

12. What is the cost of materials transferred to finished goods? (Round your intermediate calculations to 2 places.)

13. What is the amount of conversion cost transferred to finished goods?

14. Prepare the journal entry to record the transfer of costs from Work in Process to Finished Goods. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

15.

15-a. What is the total cost to be accounted for?

15-b. What is the total cost accounted for?

Clopack Company manufactures one product that goes through one processing department called Mixing. All raw materials are introduced at the start of work in the Mixing Department. The company uses the weighted-average method of process costing. Its Work in Process T-account for the Mixing Department for June follows (all forthcoming questions pertain to June):

The June 1 work in process inventory consisted of 5,000 units with $16,000 in materials cost and $12,000 in conversion cost. The June 1 work in process inventory was 100% complete with respect to materials and 50% complete with respect to conversion. During June, 37,500 units were started into production. The June 30 work in process inventory consisted of 8,000 units that were 100% complete with respect to materials and 40% complete with respect to conversion.

1. Prepare the journal entries to record the raw materials used in production and the direct labor cost incurred. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

2. Prepare the journal entry to record the overhead cost applied to production. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

3. How many units were completed and transferred to finished goods during the period?

4. Compute the equivalent units of production for materials.

5. Compute the equivalent units of production for conversion.

6. What is the cost of beginning work in process inventory plus the cost added during the period for materials?

7. What is the cost of beginning work in process inventory plus the cost added during the period for conversion?

8. What is the cost per equivalent unit for materials? (Round your answer to 2 decimal places.)

9. What is the cost per equivalent unit for conversion? (Round your answer to 2 decimal places.)

10. What is the cost of ending work in process inventory for materials? (Round your intermediate calculations to 2 places.)

11. What is the cost of ending work in process inventory for conversion?

12. What is the cost of materials transferred to finished goods? (Round your intermediate calculations to 2 places.)

13. What is the amount of conversion cost transferred to finished goods?

14. Prepare the journal entry to record the transfer of costs from Work in Process to Finished Goods. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

15-a. What is the total cost to be accounted for?

15-b. What is the total cost accounted for?

1. why is wine and beer complementary goods? explain.

2. is spirit and wine complementary goods or substitutes? explain