Bullseye Company manufactures dartboards. Its standard cost information follows:

Bullseye has the following actual results for the month of September:

Required:
1. Calculate the direct materials price, quantity, and total spending variances for Bullseye.
2. Calculate the direct labor rate, efficiency, and total spending variances for Bullseye.
3. Calculate the variable overhead rate, efficiency, and total spending variances for Bullseye.

The economy of Newland is in short-run macroeconomic equilibrium. The current real output is $400 billion, and the full employment output is $500 billion. The marginal propensity to consume is 0.8.

(a) Is the economy experiencing a recessionary output gap or an inflationary output gap? Explain.

(b) Assume Newland’s government is considering taking action to close the output gap identified in part (a).

(i) Calculate the minimum change and indicate the direction of change in government spending required to shift the aggregate demand curve to close the output gap.  Show your work.

(ii) If instead Newland’s government changes taxes without changing government spending, calculate the minimum change and indicate the direction of change in taxes required to shift the aggregate demand curve to close the output gap.  Show your work.

(c) Which fiscal policy action, changing government spending or changing taxes, is more effective in closing the output gap? Explain.

(d) Assume instead Newland’s government decides not to take any policy action. Will short-run aggregate supply increase, decrease, or stay the same in the long run? Explain.

3. The components of planned aggregate spending in a certain economy are given by Consumption Function: C = 800 + 0.75(Y - T) – 2000r Planned Investment: I p = 400–3000r Government Revenue and Spending: T = 300 and G = 450 Net Export: NX = 75 where r is the real interest rate (For example, r = 0.01 means that the real interest rate is 1 percent). (1) Find the level of public saving. (2) Suppose that the real interest rate is 5%. Show the autonomous consumption level and the autonomous expenditure level. (3) How does a two percentage point decrease in the real interest rate affect the short-run equilibrium output? 7 (4) Suppose that the potential output of this economy equals 4800. Find the short-run equilibrium real interest rate that brings the economy to full employment. (5) Suppose Government Revenue T = tY (0< t <1); r stays at the initial level (5%), Please calculate the multiplier effect of the government spending increase on the output change (ΔY/ΔG).

Part 5

Assume an economy is in recession and the government is considering using fiscal stimulus measures to boost spending, production and employment.

a) Using the IS-LM curve diagram, illustrate the crowding out problem that could occur as a result of increased government spending. Make sure to clearly indicate the new equilibrium position including showing how both the interest rate and level of Y change.

b)  Explain how 'crowding out' can harm productivity growth.

c)  Explain how the 'crowding out' problem associated with increased government spending can be avoided. In your answer identify any additional policy that is needed.

At the end of your answer to Part 5 state the combined word count for sub-parts b and c. Your answer to Part 5 sub-part b and c should not exceed 150 words.

(3 marks for sub-part a, 1.5 marks each for sub-parts b and c plus 0.25 marks for satisfying the word count requirements - Part 5 worth 6.25 marks)

11. When the Bank of Canada buys bonds from a chartered bank, chartered bank reserves

A) decrease and chartered banks make additional loans.

B) increase and chartered banks reduce loans.

C) decrease and chartered banks reduce loans.

D) decrease and interest rates fall.

E) increase and chartered banks make additional loans.

12. If Canadian interest rates rise, the value of the Canadian dollar ________ and net exports ________.

A) appreciates; increase

B) appreciates; decrease

C) depreciates; increase

D) depreciates; decrease

E) appreciates only if U.S. interest rates also fall; decrease

13. Which government fiscal policy is a negative demand shock?

A) decreasing taxes

B) increasing transfer payments

C) increasing government spending

D) all of the above

E) none of the above

14. Which government fiscal policy is a positive supply shock?

A) increasing taxes

B) decreasing transfer payments

C) decreasing government spending

D) increasing government spending

E) none of the above

Studies indicate that variations in spending on health care are related to per capita national income levels, not entirely the health care needs of individuals. This finding is true across nations depending upon average level of income, or within nations, depending upon level of economic activity. Health care spending is lower in recessionary times and higher in times of robust business activity.

In other words, wealthy nations typically will spend fewer dollars, not only in total, but as a percentage of income in times of economic downturns or recessions, and larger sums in times of higher output and incomes. Research has also shown that health outcomes are not necessarily linked to the quantity of health care purchased.

However, the United States is a huge outlier in terms of cost relative to population health. Global health care travel is a private option that the wealthy in many countries use. Looking at the public and private options in different nations, discuss how reforms proposed for the United States may impact consumer and government spending on health care, availability of health care and perceived value of health care.

The accountants at Value Vases developed the following standards for producing exquisite vases from a liquid silicate:

Direct materials                                    2.5 gallons @ $5 per gallon

Direct labor                                          3.5 hours @ $15 per hour

Variable overhead                               $10.00 per direct labor hour

Fixed overhead                                    $5.00 per direct labor hour

            Value’s volume of direct labor hours for normal costing is 1,680 each month. In a recent month, Value produced 500 vases and incurred the following costs:

Direct materials purchased & used      1,200 gallons @ $6 per gallon

Direct labor                                          1,700 hours @ $14 per hour

Variable overhead                               $15,000

Fixed overhead                                    $8,500

a.   Calculate the following eight variances.

Variable overhead spending variance

Variable overhead efficiency variance

Fixed overhead spending variance

Fixed overhead production volume variance

b.   Suggest one possible cause for each of the following variances calculated in part (a):

Direct material price variance

Direct labor efficiency variance

Fixed overhead spending variance

1) “Demand” is best defined as the relationship between:

1. the price of a good and the quantity consumers are willing and able to buy at each price level.
2. the current price of a good and the quantity demanded at that price.
3. the quantity supplied and the price people are willing to pay for a good.
4. the amount of income someone has and the price he is willing to pay for a good.

2) A home theater system and an HD television would be considered an example of:

A) substitute goods.

2. giffen goods.
3. inferior goods.
4. complementary goods.

3) Many people consider hot dogs to be an inferior good. For such people, all else held constant, a decrease in income would cause their demand for hot dogs to:

1. increase.
2. stay the same.
3. decrease.
4. cannot be determined with the information given.

4) If movies on DVD for home rental and movies seen at a theater are substitutes, and the price of movies seen at a theater increases, the demand for movies on DVD will:

A) increase.

2. stay the same.
3. decrease.
4. cannot be determined.

5) Which of the following is not considered a factor that influences supply?

A) Technology.

2. Production taxes and subsidies.
3. The number of buyers.
4. Resource prices.

6) For the U.S. economy, the largest expenditure category is:

A) government expenditures.

2. net export expenditures.
3. personal consumption expenditures.
4. investment expenditures.

7) Greater consumer confidence, wealth, available consumer credit, and disposable income ________ personal consumption expenditures.

1. increase
2. decrease
3. have no effect on
4. none of the above

8) Higher expected profits and business confidence ________ investment spending.

A) decrease

2. increase
3. do not affect
4. none of the above.

9) Appreciation of the U.S. dollar will ________ exports and ________ imports, other things equal.

1. increase; increase
2. increase; decrease
3. decrease; decrease
4. decrease; increase

10) The reserve requirement is 0.20. What is the simple deposit multiplier?

A) 1

2. 5
3. 0.10
4. 100

11) The interest rate that commercial banks charge each other for loans of reserves to meet their minimum reserve requirements is called:

A) treasury bill rate.

2. federal funds rate.
3. prime interest rate.
4. none of the above.

12) An increase in the reserve requirement would:

1. decrease excess reserves and reflect an expansionary monetary policy.
2. decrease excess reserves and reflect a contractionary monetary policy.
3. increase excess reserves and reflect an expansionary monetary policy.
4. increase excess reserves and reflect a contractionary monetary policy.

(Exponential Distribution) The life, in years, of a certain type of electrical switch has an exponential distribution with an average life of ?? = 2 years. i) What is the probability that a given switch is still functioning after 5 years? ii) If 100 of these switches are installed in different systems, what is the probability that at most 30 fail during the first year?(also Binomial Distribution

Speaking of research designs, what are the key distinguishing features of the different research designs we discussed in class (e.g., experimental, quasi-experimental, correlational, archival, survey research)? Can you identify the IV, DV, and research design for a given scenario, similar to the first exercise we completed in class? Which design is most popular in I/O psychology?