5. The public debt - ownership

The following table contains approximate figures for gross domestic product (GDP) and the national debt in the United States for June 2001 and June 2010. The national debt represents the total amount of money owed by the federal government to holders of U.S. securities. All numbers are in trillions of dollars.

Source: “U.S. Treasury, Bureau of Economic Analysis.”

The net national debt is the portion of the national debt held outside the federal government (government agencies and the Federal Reserve System). In June 2001, the net national debt as a percentage of total national debt was  "50.3" "47.4" "50.8" "55.1" %?

In June 2001, the percentage of the U.S. national debt held by foreigners was "17.5" "18.9" " 18.0" "19.6" %?

The fraction of the national debt held by foreigners will eventually need to be repaid to foreigners, thereby reducing the collective purchasing power of Americans. Between 2001 and 2010, the fraction of the national debt held by foreigners "Decreased" or "Increased"

The absolute level of the debt does not necessarily provide a clear indication of a nation's debt burden. Thus, economists often look at relative measures of the national debt. One possible relative measure of the national debt is the net national debt as a percentage of GDP. In 2001, the net national debt was "26.7" "44.9" "49.7" "49.2" %   of GDP. Between 2001 and 2010, the net national debt as a percentage of GDP "Increased" or "Decreased"

In economics, we learn about production and relationship between input and output through a simple production function with two factors of production, namely, labor and capital. As simple as it is, this equation is very useful for both understanding and studying the dynamics of economic growth. For example, if we assume the production function of the whole economy is Q = f (K, L), where K is the economy’s stock of capital, L is employed labor and Q is the economy’s output,  an increase in either labor or capital or both would lead to the growth of the output. We can also grow the economy by increasing labor productivity; that is the amount of output produced by one unit of labor during one production cycle. Following the 2008 financial crisis, which led to a partial collapse of the US financial system, the US economy, as well as the economies of many other countries, went into a severe recession. Although most of these economies have been recovering, the wages of the middle-class income groups in most industrial countries have not been increasing much. In fact, in the US, for example, from the mid-1980s until very recently wages stagnated, and the wage increases of the past two years have been very modest and hardly kept up with inflation. This has resulted in some level of discontent about the state of the economy in most industrial countries. Some observers attribute this structural changes caused by free trade and globalization and technological automation. As a result in some countries, including the United States, sentiments against free trade and globalization seem to be on the rise. President Trump's trade policies appear to be reflective of such sentiments.

Do you agree that we should restrict trade and adopt protectionist policies and, possibly, discourage the development of automation technologies to protect middle-class jobs? Do you think such policies would lead to higher wages?

Clinical Trial Between 2004 and 2007, the National Institutes of Health conducted a STEP vaccine clinical trial—Phase IIB "test-ofconcept" study. The STEP study is the name of a clinical trial to test an experimental human immunodeficiency virus (HIV) vaccine. The STEP study enrolled 3,000 participants at sites in Australia, Brazil, Canada, the Dominican Republic, Haiti, Jamaica, Peru, Puerto Rico, and the United States. The study was designed to test an HIV vaccine, which aimed to stimulate production of immune system T-cells that can kill HIV-infected cells. Based on its first evaluation of vaccine efficacy, the findings showed there were 24 cases of HIV infection among the 741 volunteers who received at least one dose of the investigational vaccine compared with 21 cases of HIV infection among the 762 volunteers who were vaccinated with the placebo. In volunteers who received at least two vaccinations, there were 19 cases of HIV infection among the 672 volunteers who received the investigational vaccine and 11 instances of HIV infection among the 691 volunteers who received placebo. The study investigators of the vaccine trials have decided to cease immunizations and are contacting study volunteers to inform them of the developments.

Reference: National Institutes of Health (2007). National Institute of Allergy and Infectious Diseases: Immunizations are discontinued in two HIV vaccine trials. Retrieved from National Institute of Allergy and Infectious Diseases Pages/step_statement.aspx.

Using the South University Online Library or the Internet, research further on the STEP study, the STEP vaccine clinical trials, and their parameters. Based on your research, understanding, and above information, answer the following questions:

Prior to beginning this study, how would you have described the risks and benefits of the study to participants?

What are the ethical issues surrounding this study at the beginning and when the decision was made to terminate the study?

1. z = -1 is what percentile?

2.Assume that the readings at freezing on a batch of thermometers are normally distributed with a mean of 0°C and a standard deviation of 1.00°C.
A single thermometer is randomly selected and tested. Let ZZ represent the reading of this thermometer at freezing. What reading separates the highest 11.18% from the rest? That is, if P(z>c)=0.1118P(z>c)=0.1118, find c.

3.Assume that scores on the verbal portion of the GRE (Graduate Record Exam) follow the normal distribution with mean score 151 and standard deviation 7 points, while the quantitative portion of the exam has scores following the normal distribution with mean 153 and standard deviation 7.67. Use this information to answer the following:
a) Find the score of a student who scored in the 80th percentile on the Quantitative Reasoning section of the exam.
(please round to two decimal places)

b)Find the score of a student who scored worse than 70% of the test takers in the Verbal Reasoning section of the exam.
(please round to two decimal places)

4.The combined SAT scores for the students at a local high school are normally distributed with a mean of 1494 and a standard deviation of 299. The local college includes a minimum score of 1374 in its admission requirements.

What percentage of students from this school earn scores that satisfy the admission requirement?
P(X > 1374) = ? %

5.In the country of United States of Heightlandia, the height measurements of ten-year-old children are approximately normally distributed with a mean of 55.6 inches, and standard deviation of 4.8 inches.

A) What is the probability that a randomly chosen child has a height of less than 65.2 inches?

Answer= (Round your answer to 3 decimal places.)

B) What is the probability that a randomly chosen child has a height of more than 64.8 inches?

Answer= (Round your answer to 3 decimal places.)

As the vice president of finance for a company producing and selling electronic switchboards, you are considering a foreign investment to build a plant to assemble electronic components. A source in China advises you that a town near Shenzhen may be an excellent location for a new plant. Chinese are well educated and willing to work for reasonable wages. Projected construction costs are acceptable. Both rail lines and airports are nearby, and the current Chinese government seems politically stable. The town even has a technical college that will be an excellent source for skilled employees. The plant will ship most of the finished electronic components back to the United States.

Do you know everything you need to make an investment decision?

If not, what else do you need to know about investment in foreign countries?

What does it mean to say that law is the foundation of the private enterprise system?

Three years ago the Darden Corporation bought a thousand acres of land that borders the Potowac River in Washam County. While waiting on development opportunities, Darden cut timber to help repay the mortgage loan it took out to buy the land. On March 2, the Washam County Commission proposed an ordinance to establish a 250-foot-wide greenway along the south side of the Potowac that will effectively ban both development and timbering on nearly 80 acres of Darden’s land. The same day in an unrelated accident a Darden truck ran over a hunter who was hunting without permission on the company’s land. Darden immediately contacted an attorney in Washam City.

What is the law?

What does it mean to say that Darden has “property” in the land? That the hunter has “property” in himself?

What sources of law will the attorney have to understand in order to advise Darden about the proposed greenway?

The company’s potential responsibility to the hunter?

Pick any 2 questions and answer it ( answers should be half page long per question):

6. China is currently the world’s second largest economy. It is predicted to surpass the U.S. to become the biggest economy in the not-too-distant future. How does this development influence the strategic balance and the position of the United States?

7. In 1990, Congress imposed a luxury tax on yachts costing more than $100,000, along with similar taxes on a handful of other luxury goods. It was estimated that the new taxes would yield more than $31 million in revenue in 1991. However, the tax actually generated a bit more than half the amount, $16.6 million. Several years later, the Joint Economic Committee estimated that the tax on yachts had led to a loss of 7,600 jobs in the U.U. boating industry. Taking account of lost income taxes and increased unemployment benefits, the U.S. government actually came out $7.6 million behind in fiscal 1991 as a result of its luxury taxes- almost $ 39 million worse than the initial projection. Congress repealed the luxury tax on yachts in 1993. What went wrong?

8. What is the "invisible hand "? Explain how the invisible hand delivers an efficient market outcome.

9. How can a person argue that health care services in America are provided efficiently, but not fairly?

10. Bill Gates is a founder of Microsoft and the world's richest individual. Suppose Microsoft sells more software and Mr. Gates acquires another billion dollars in wealth. Simultaneously, suppose a burglar whose income is well below average broke into Bill Gates' house and stole a million dollars worth of antiques. Using the "it's not fair if the rules aren't fair" approach to fairness, is Mr. Gates' acquisition of additional wealth fair? Is the (poor) thief's acquisition fair?

​Americo's Earnings and the Fall of the Dollar. Americo is a​ U.S.-based multinational manufacturing firm with ​ wholly-owned subsidiaries in​ Brazil, Germany, and​ China, in addition to domestic operations in the United States. Americo is traded on the NASDAQ. Americo currently has

660,000

shares outstanding. The basic operating characteristics of the various business units is as​ follows:  ​(Click on

the   

icon to import the table into a​ spreadsheet.)

Americo must pay corporate income tax in each country in which it currently has operations.

a. After deducting taxes in each​ country, what are​ Americo's consolidated earnings and consolidated earnings per share in U.S.​ dollars?

The dollar has experienced significant swings in value against most of the​ world's currencies in recent years.

b. What would be the impact on​ Americo's consolidated EPS if all foreign currencies were to appreciate

20%

against the U.S.​ dollar?c. What would be the impact on​ Americo's consolidated EPS if all foreign currencies were to depreciate

20%

against the U.S.​ dollar?

a. After deducting taxes in each​ country, what are​ Americo's consolidated earnings and consolidated earnings per share in U.S.​ dollars?

Calculate the business performance per country​ below:  ​(Round to two decimal places. Round exchange rates to four decimal​ places.)

103.

A computer company salesperson invites the IT managers of its top 10 customers (in terms of dollar sales) to view a demonstration of the firm's new product line, so the salesperson can obtain their opinions regarding various options and configurations that could be offered. These IT managers are most likely to be the __________ of their organizations' buying centers.

users

reciprocity arrangers

gatekeepers

buyers

influencers

105

is/are responsible for establishing the organization's mission and objectives.

Other organizations

Suppliers

Senior management

Shareholders

Customers

Top of Form

107.

The __________ for the American Red Cross is "to prevent and alleviate human suffering in the face of emergencies by mobilizing the power of volunteers and the generosity of donors."

mission statement

business definition

sustainability doctrine

core benefit proposition

customer value proposition

Bottom of Form

112.

Cassidy is part of the buying center for a large manufacturer. Her field of expertise is logistics and she is responsible for choosing transportation providers for the company. A sales representative for Yellow Roadway, a successful trucking firm, regularly buys Cassidy's secretary lunch. The representative does this because she views the secretary as __________ and wants to be sure that information about her company reaches Cassidy.

a decider

a power broker

an influencer

an obstructionist

a gatekeeper

8.

If an organization's 2015 sales for the entire United States were $50 million and its 2014 U.S. sales were $30 million, what is the annual percentage sales change?

67

40

125

100

133

17.

Discovering consumer needs leads to

sales and manufacturing department outcomes.

purchases by customers.

supplier and distributor outcomes.

concepts for new products.

stakeholder rewards.

25.

Considering the classification of consumer products, which of the following products will have the most limited distribution?

Sony HDTV

Marchesa wedding gown

BP gasoline

Secret antiperspirant

Fuji disposable camera

​Americo's Earnings and the Fall of the Dollar. Americo is a​ U.S.-based multinational manufacturing firm with ​ wholly-owned subsidiaries in​ Brazil, Germany, and​ China, in addition to domestic operations in the United States. Americo is traded on the NASDAQ. Americo currently has

641,000

shares outstanding. The basic operating characteristics of the various business units is as​ follows:  ​(Click on

the   

icon to import the table into a​ spreadsheet.)

Americo must pay corporate income tax in each country in which it currently has operations.

a. After deducting taxes in each​ country, what are​ Americo's consolidated earnings and consolidated earnings per share in U.S.​ dollars?

The dollar has experienced significant swings in value against most of the​ world's currencies in recent years.

b. What would be the impact on​ Americo's consolidated EPS if all foreign currencies were to appreciate

21%

against the U.S.​ dollar?c. What would be the impact on​ Americo's consolidated EPS if all foreign currencies were to depreciate

21%

against the U.S.​ dollar?

a. After deducting taxes in each​ country, what are​ Americo's consolidated earnings and consolidated earnings per share in U.S.​ dollars?

Calculate the business performance per country​ below:  ​(Round to two decimal places. Round exchange rates to four decimal​ places.)

The Mysterious Case of the Loaded Leprechaun

The Loaded Leprechaun (hereafter, the Leprechaun) is a popular chain of Irish-themed restaurants with locations in tourist hotspots across the United States, including Boston, Chicago, Las Vegas and New York. The bills itself as “America’s Greatest Brew Pub” and specializes in excellent steaks and six varieties of beer that are brewed in-house at each location.

The Leprechaun has been owned and operated as a private company since its founding in 1948 by the O’Shaughnessy family (for the purpose of the study, assume the company applies IFRS). One of the great traditions at the Leprechaun is the “Dollar Holler.” Patrons (i.e., customers) personalize dollar bills by writing a message or drawing a picture with a permanent marker and then staple the dollar to the ceiling, wall, banister, or any other available surface in the restaurant. As each dollar goes up, the employees let out an appreciative yell. Patrons supply the dollar bills themselves, although the wait staff will make change for customers who need dollar bills. Each customer is allowed to place as many dollar bills as they like on the walls, and most place at least one dollar bill on the wall per visit.

Over the years, this tradition has grown in popularity, and the O’Shaughnessy family estimates that the average restaurant has accumulated more than $1 million in personalized dollar bills. The dollars are not regularly counted, and the wait staff does not participate in any accounting for dollar bills, other than by asking the customers not to remove existing dollar bills, a problem that the company frequently encounters.

Discuss the financial reporting issues focusing on:
(1) How should the management account for these “Dollar Holler” dollars? (What are the journal entries?)
(2) How should the company account for the theft of “Dollar Holler” dollars?
(3) How should the company report the “Dollar Holler” dollars in the financial statements?