24.
Consider an economy that implements an expansionary fiscal policy of increased government spending by $X amount. Which of the following by itself would tend to make the change in aggregate demand different from $X?
a. both the multiplier effect and the crowding-out effect
b. the multiplier effect, but not the crowding-out effect
c. the crowding-out effect, but not the multiplier effect
d. neither the crowding out effect nor the multiplier effect
25.
If the multiplier is 2 and if there is no crowding-out effect, then a $60 billion increase in government expenditures causes aggregate demand to:
increase by $250 billion.
increase by $120 billion.
increase by $360 billion.
None of the above are correct.
27.
Consider an economy that spends 60 percent of every additional dollar of income earned. Assume there are no crowding out or investment accelerator effects. If the government increases expenditures by $200 billion, then by how much does aggregate demand shift to the right? If the government decreases taxes by $200 billion, then by how much does aggregate demand shift to the right?
$300 billion and $180 billion
$300 billion and $300 billion
$500 billion and $300 billion
$500 billion and $500 billion
In: Economics
Donald Trump promised a more aggressive fiscal policy with a large increase in spending and significant tax cuts leading to a much larger government (budget) deficit. The US economy was at near the full employment (the unemployment rate in the US was low below 5%), what do you expect will be the response of the US Central Bank in terms of changes to the cash rate? Explain.
In: Economics
In: Finance
Fred Footloose is at it again. In 2019, he returned to his Waterloo home after spending three (3) years in Moose Jaw. When he moved to Moose Jaw in 2016, he had leased his house to a group of university students — you know, the really responsible accounting students. It was good to be back in the Waterloo home that was purchased in 2011 for $200,000. To live in Moose Jaw, he had purchased a house in the “nice” part of town for $80,000 since real estate is so inexpensive there. In 2019, he not only sold the house in Moose Jaw, but he also sold the farmhouse he had inherited from his parents in 2008 (the actual farm acreage was given to his brother). Being a big old farm in the middle of the country, the house was valued at $75,000 at that time. Fred’s family had liked vacationing in the country each summer for as long as anyone could remember. The family was older now and preferred to vacation at the beach, and the local town had sprawled into a city that would shortly engulf the farm property. So, the Moose Jaw property was sold for $95,000, and the farm property was sold for $155,000 to buy a cottage in northern Ontario for $250,000. The only out-of-pocket costs were the $5,500 for real estate fees on the Moose Jaw sale and legal fees of $500 on each sale. A review of Fred’s files shows that a real estate agent had tried to get him to sell his Waterloo house in 2016 when he had moved. The agent had assured him that the house was worth at least $300,000. Now, it appears that the house is only worth $285,000.
Required: Assume that the FMV (Fair market value) of the home is $285,000, and the home is to be sold in 2019. What is the minimum taxable capital gain (TCG) that would need to be reported on the sale of the three (3) properties by considering whether a 45(2) election concerning Principal Residence (PR) should be be made or not. Show all calculations, whether or not directly important to the final answer.
In: Accounting
Suppose a war causes a sudden, large increase in government spending. (a) What happens to both prices and GDP in the short-run Classical Model? Do they increase decrease or stay the same? Explain. (b) What happens to both prices and GDP in the short-run Keynesian model? Do they increase decrease or stay the same? Explain in 200 words or more.
In: Economics
Suppose that 590 people were surveyed and a 95% confidence
interval for the mean spending amount by U.S. citizens on summer
vacations was calculated to be ($1980, $2040).
a. If a 99% confidence interval was calculated instead, would it be
wider or narrower? __________________
b. If 1,000 people were sampled instead of 590, would the interval
be wider or narrower? ___________________
c. BONUS: what is the margin of error for this confidence interval?
______________
In: Statistics and Probability
Q5) A real estate corporation is planning on spending $40,000 on maintenance now, and $28,000 four years from now, using a real interest rate of 15% per year and inflation of 4% per year. What is the equivalent annual worth of the cost over a period starting year 1 through year 6?
In: Economics
You are spending the summer working for a local wholesale furniture company, Samson Furniture, Inc. The company is considering a proposal from a local financial institution, Old Reliant Financial, to factor Samson’s receivables. The company controller is unfamiliar with the prevailing GAAP that deals with accounting for the transfer of financial assets and has asked you to do some research.
The controller wants to make sure the arrangement with the financial institution is structured in such a way as to allow the factoring to be accounted for as a sale. Old Reliant has offered to factor all of the company’s receivables on a “without recourse” basis. Old Reliant will remit to Samson 90% of the factored amount, collect the receivables from Samson’s customers, and retain the remaining 10% until all of the receivables have been collected. When Old Reliant collects all of the receivables, it will remit to Samson the retained amount, less a 4% fee (4% of the total factored amount).
Required:
1. Access the relevant authoritative literature on accounting for the transfer of financial assets using the FASB Accounting Standards Codification. You might gain access at the FASB website (www.fasb.org), from your school library, or some other source. What conditions must be met for a transfer of receivables to be accounted for as a sale (or in accounting terms, “derecognized”)? What is the specific seven-digit Codification citation (XXX-XX-XX) that Samson would rely on in applying that accounting treatment?
2. Assuming that the conditions for treatment as a sale are met, prepare Samson’s journal entry to record the factoring of $400,000 of receivables. Assume that the fair value of the last 10% of Samson’s receivables is equal to $25,000.
3. An agreement that both entitles and obligates the transferor, Samson, to repurchase or redeem transferred assets from the transferee, Old Reliant, maintains the transferor’s effective control over those assets and the transfer is accounted for as a secured borrowing, not a sale, if and only if what conditions are met?
In: Accounting
Would you favor spending more federal tax money on the arts? Of a random sample of n1 = 94 politically conservative voters, r1 = 17 responded yes. Another random sample of n2 = 84 politically moderate voters showed that r2 = 22 responded yes. Does this information indicate that the population proportion of conservative voters inclined to spend more federal tax money on funding the arts is less than the proportion of moderate voters so inclined? Use α = 0.05.
(a) What is the level of significance?
state null and alternate hypothesis
What sampling distribution will you use? What assumptions are you making?
What is the value of the sample test statistic? (Test the
difference p1 − p2. Do not
use rounded values. Round your final answer to two decimal
places.)
(c) Find (or estimate) the P-value. (Round your answer to
four decimal places.)
Sketch the sampling distribution and show the area corresponding to the P-value.
(d) Based on your answers in parts (a) to (c), will you reject or
fail to reject the null hypothesis? Are the data statistically
significant at level α?
(e) Interpret your conclusion in the context of the application.
In: Statistics and Probability
Congress just passed close to a $500 billion increase in government spending:
B. How will this impact U.S. national savings, investment, capital per worker, output per worker and the steady state in Solow’s Growth Model. Make sure to include an intuitive and graphical analysis as well as the policy recommendations in Solow’s growth model.
In: Economics