Suppose the US economy is in recession. The unemployment rate is 7% and the Federal Reserve Bank is considering using monetary policy to expand output. Assume the bank knows, with certainty, that:

i.             absent changes in monetary policy, unemployment will still be 7% next year;

ii.           the natural rate of unemployment is 5%;

iii.          from Okun's law, 1% more output growth for a year leads to a 0.4% reduction in the unemployment rate.

Also assume the bank can effectively use monetary policy to increase output growth rates as desired, i.e., the interest rate is sufficiently far away from the zero lower bound. However, the bank is uncertain about the effect that changes in its policy rate, the Official Cash Rate (OCR), have on output growth. To inform its decisions, the monetary policy committee summons the research department to produce predictions of the one-year response of US output growth to a decrease of 1% in the OCR. The research department, using three different macroeconometric models, presents the results from three different models:

Model (a): output growth is predicted to increase by 1.0% (moderate monetary transmission channel)

Model (b): output growth is predicted to increase by 0.6% (weak monetary transmission channel)

Model (c): output growth is predicted to increase by 2.0% (strong monetary transmission channel)

The research department further informs that each model prediction is equally likely, and that effects for OCR changes different than -1% are proportional to these predictions, e.g.: a decrease of 2% in the OCR is predicted to increase output growth by 2% according to model (a), 1.2% according to model (b), and 4% according to model (c), and so on.

Using the scenario information above answer the following questions.

Note: for the numerical questions, please provide a numerical answer in percentage points, e.g., 1 for 1%, -2 for -2%, etc.

What is the output growth rate needed to lower the unemployment rate to the natural rate of unemployment?

Santana Rey expects second-quarter 2020 sales of Business Solutions’s line of computer furniture to be the same as the first quarter’s sales (reported below) without any changes in strategy. Monthly sales averaged 39 desk units (sales price of $1,200) and 15 chairs (sales price of $450).

* Reflects revenue and expense activity only related to the computer furniture segment.
† Revenue: (117 desks × $1,200) + (45 chairs × $450) = $140,400 + $20,250 = $160,650
‡ Cost of goods sold: (117 desks × $700) + (45 chairs × $200) + $28,500 = $119,400

Santana Rey believes that sales will increase each month for the next three months (April, 47 desks, 27 chairs; May, 51 desks, 30 chairs; June, 55 desks, 33 chairs) if selling prices are reduced to $1,080 for desks and $400 for chairs and advertising expenses are increased by 10% and remain at that level for all three months. The products’ variable cost will remain at $700 for desks and $200 for chairs. The sales staff will continue to earn a 10% commission, the fixed manufacturing costs per month will remain at $9,500 and other fixed expenses will remain at $5,500 per month.

Required:
1. Prepare budgeted income statements for the computer furniture segment for each of the months of April, May, and June that show the expected results from implementing the proposed changes. Use a three-column format, with one column for each month.
2. Recommend whether Santana should implement the proposed changes. Hint: Compare quarterly income for the proposed April-May-June period to the quarterly income for the January-February-March period.

Tamara has 80 hours per week that she can allocate to work or leisure. Her job pays a wage rate of $20 per hour, but Tamara is being taxed on her income in the following way. On the first $400 that Tamara makes, she pays no tax. That is, for the first 20 hours she works, her net wage (what she takes home after taxes) is $20 per hour. On all income above $400, Tamara pays a 75% tax. That is, for all hours above the first 20 hours, her net wage rate is only $5 per hour. Tamara decides to work 30 hours. Her indifference curves have the usual shape.

The government changes the tax scheme in a few ways. First, now only the first $100 of income is tax-exempt. That is, for the first 5 hours she works, Tamara's net wage rate is $20 per hour. Second, the government reduces the tax rate on all other income to 50%. That is, for all hours above the first 5 hours, Tamara's net wage rate is now $10. After these changes, Tamara finds herself just as well off as before so that her new optimal choice is on the same indifference curve as her initial optimal choice.

Draw Tamara's new time allocation budget line on the same diagram as her initial time allocation budget, with income on the vertical axis. Also illustrate her optimal choice. Bear in mind that she is equally as well off (on the same indifference curve) as before the tax changes occurred. Choose the correct statement.

A. At her new optimal choice, Tamara consumes less leisure and has more income.

B. At her new optimal choice, Tamara consumes less leisure and has less income.

C. At her new optimal choice, Tamara consumes more leisure.

D. At her new optimal choice, Tamara consumes the same amount of leisure.

Consider a block of size 30 mm x 20 mm x 10 mm made of two metallic materials, the stronger material for the bottom half of the block and the weaker material for the top half. The displacements of 8 material points of the block have been measured after certain loading and they are given in the Table below.

(a) Determine the distributions of displacements, strains and stresses in the block, in the xyz co-ordinate system. Choose two suitable isotropic materials.

(b) Determine the stresses at the corner points of the plane at the interface of the two materials. Using these values, determine the stress distributions over that plane, and determine the maximum value of all these stresses (and its type and direction of action). Also determine the maximum value of the principal stress on this plane.

(c) Determine the stresses and strains in the directions of any two diagonals of the block, at each of the corner points of the block. Calculate also the changes in the lengths of these two diagonals.

Determine the changes in the maximum shear stress and octahedral shear stress at each of the corner points of the interface plane, and the changes in the lengths of the two diagonals after deformation due to a +10% change in material properties. Which property has more influence on the octahedral shear stress at each corner point of the interface?

Check whether the interface will fail using Tresca and von Mises failure criteria.

The elasticity of the top material is 105 GPa, G = 39 GPa, v=0.346. Bottom material E = 195 GPa, G = 77 GPa, v = 0.27

1. Knowing what you know about the functions of money and other desirable properties, including liquidity and acceptability, differentiate the Rai stone of the island of Yap from the bitcoin. (4)

2. Describe the three basic tools used by the Fed to change the money supply. Which of these tools is most relied on in practice? Least relied on? Why? (3)

3. How can the Fed increase the money supply? How can the Fed decrease the money supply? Be specific by explaining why the Fed would make these changes and what the over-all effect is. (3)

4. Discuss the determinants of the equilibrium interest rate and how it may change. What can the Fed do to change the interest rate? (3)

5. If the required reserve ratio = 20% and you deposit $500 into your bank account, how much of it will the bank have to set aside in its required reserve account?__________ How much will be left over to place into excess reserves (ER)?__________. Now, once ER changes occur, how much money can ultimately be created by our banking system? __________. (3)

6. Now what if the required reserve ratio is changed to 10% and you deposit $500 into your bank account, how much of it will the bank have to set aside in its required reserve account?__________ How much will be left over to place into excess reserves (ER)?__________. Now, once ER changes occur, how much money can ultimately be created by our banking system? __________. (3)

7.  Address the inside and outside lags associated with fiscal and monetary policy.  If one policy suffers more significant lags, why use it? (3)

8.  Read "Did the Fed Cause the Great Recession?" (Pages 454-455).  Provide your thoughts on this historical downturn in our economy.  Distinguish the culprit(s).  How is the banking crisis a strong case for moral hazard? (3)

The Allied Group intends to expand the company's operation by making significant investments in several opportunities available to the group. Accordingly, the group has identified a need for additional financing in preferred and new common stock and new bond issues. The (Krf) risk-free rate for the company is 7%, and the appropriate tax rate is 40%. Also, the beta coefficient for the company is 1.3 and the market risk premium (Km) is 12%. New Debt (Kd) The company has been advised that new bonds can be sold on the market at par ($1000) with an annual coupon of 8%, for 30 years. New Common Stock Market analysis has determined that given the positive history of the firm, new common stock can be sold at $29 per share, with the last dividend being paid of $2.25 per share. The growth rate on any new delete the words highlighted in yellow common stock has been estimated at a constant rate of 15% per year for the next 3 years. Preferred Stock New Preferred Stock can be issued with an annual dividend of 10% of par and is paid annually and currently would sell for $90 per share. Tasks: Using the Capital Asset Pricing Model (CAPM), discuss and calculate the cost of new common stock (Ks). What would the dividend yield as a percentage (i.e., per dividend payment divided by the book value of a share of stock) today and a year from now if the dividend growth rate is 12%? What is the after-tax cost as a percentage (e.g., interest rate) of new debt today? What are your recommendations for raising capital based on your answers to the above questions plus considering other factors (e.g., current and potential changes in the economy locally, regionally, nationally and worldwide, changes in the demand and/or supply plus cost of materials, skilled labor, management and/or leadership, changes in interest, tax, inflation and/or supply of investment capital)?

CPR

Now that you have taken the time to evaluate your lifestyle by completing the Healthy Lifestyles Awareness Inventory, you may be able to identify behaviors that could lead to injury or illness, now or in the future. Identifying these behaviors is the first step to leading a healthier life. By using this contract as a tool, it will help you focus on working towards a specific goal to make your lifestyle healthier.

Behavior Modification Contract

Now that you have taken the time to evaluate your lifestyle by completing the Healthy Lifestyles Awareness Inventory, you may be able to identify behaviors that could lead to injury or illness, now or in the future. Identifying these behaviors is the first step to leading a healthier life. By using this contract as a tool, it will help you focus on working toward one specific goal to make your lifestyle healthier.

Goal:

Complete the sentence below. Be as specific as you can.

In the _____ weeks of this course, my goal is to—.......

Objectives Make a list of the lifestyle changes that are necessary to accomplish your goal. For instance, if your goal is to lose 10 pounds, you might want to make these changes in lifestyle: lower the fat intake in your diet, exercise at least three times a week and start eating a nutritious breakfast daily.

1.

2.

3.

4.

5.

Potential Roadblocks Try to anticipate any roadblocks or difficulties you may face in meeting your goal. Then think about how you will overcome these roadblocks to meet your goal.

1.

2.

3.

Evaluation To realize your goals, it is important to measure your progress at regular intervals. Make a list of the ways in which you will track your progress.

1.

2.

3.

4.

5.

Reward Rewarding positive changes in behavior is important. When I meet my goal, I will reward myself by .......

I agree to do my best to accomplish the goal of this contract during the time allotted.

name:

witness:

date:

Consider the following situations, and answer each of the following multiple-choice questions. Indicate your answer next to each question. Possible answers are: A = it increases; B = it decreases; C = it stays the same; D = not enough information to say for sure. “Increase” or “decrease” refers to the numerical value of a variable, not its interpretation as stringent or lenient. Assume that nothing else about the data changes besides the factor(s) listed in the problem. No need to explain or justify your answers.F. What happens to the likelihood of rejecting the null hypothesis for any F test when S_W² increases?

F. What happens to the likelihood of rejecting the null hypothesis for any F test when S_W² increases?

G. What happens to c²_crit when alpha decreases in value from .05 to .01?

H. What happens to c²_obt as the observed frequencies in each cell diverge less and less from the expected counts?

I. What happens to c²_crit when the number of levels of both independent variables increase?

J. What happens to the power of an analysis when a non-parametric rank-order back-up test (like the Mann-Whitney U test) is used instead of its parametric counterpart (like an unpaired t test), assuming the assumptions of the parametric test were met?

K. If a Pearson correlation coefficient is negative, what happens to r² when the Pearson r becomes even more negative?

L. When only the units used to measure X and Y change (like from inches to centimeters) – but not the actual data – what happens to the value of the Pearson r?

M. In simple linear regression, if the Pearson correlation changes from 0 to a positive number, what happens to the slope of the best-fit line?

N. In simple linear regression, if the Pearson correlation changes from 0 to a negative number, what happens to the slope of the best-fit line?

1. Activity Based Costing

Duncan Company recently introduced a markers to complement their other product, pencils. Accountants accumulate all overhead in a single cost pool and allocate it based on machine-hours. With the recent addition of an expanded computer system, Duncan decided to begin implementing ABC. A study reveals much overhead cost related to machine setups and batch changes. They select the number of setups and the number of batch changes as the activity driers for the two new cost pools. They will continue to use machine-hours as the base for allocating all remaining overhead. Accountants provide the following information about Duncan Company’s most recent year of operations:

                                                                Pencils                      Markers                              Total

Units produced                                           5,000 1,000                            6,000

Direct material cost per unit               $            5 $      3                  

Direct labor cost                                    200,000 $300,000                     $500,000

Machine hours                                           4,000 6,000                          10,000

Machine setups                                               30 50                                 80

Batch changes                                               300 700                            1,000

Overhead:

            Machine setup-related                                                                                     $   200,000

            Batch-related                                                                                                        500,000

            Other                                                                                                               1,500,000

                                                                                                                                    $2,200,000

                                                                                                                                    ========   

Required:

Using the current costing system (Absorption costing), determine the total and unit cost for each product line.

Using the ABC costing system, determine the total and unit cost for each product line.

If you were the manager of the pencil department, which method would you prefer and why?

Product Costs using the Current Costing System

(Absorption Costing)

OHR =

                                 Pencils Markers Total

Direct Material       $                                              $ $

Direct Labor

Overhead                                         

(OHR x AV)

Total Cost            $ $ $

                                                                                      =======

÷Units produced                                          

Cost per unit

                             =======             =======            

Product Costs using the ABC Costing System

         OHR #1 = ____________ =                               

OHR #2 = ____________ =                               

OHR #3 = ____________ =                               

                                 Pencils              Markers               Total

Direct Material       $                                              $                                              $

Direct Labor

Overhead                                         

(OHR x AV)

Total Cost            $                           $                           $

÷Units produced =======

Cost per unit

       =======             =======