a) Does the AD curve shift to the right more or less than the LRAS curve in a dynamic AD-AS model from 2006 to 2007? Explain why verbally.

b) Explain why the Federate Funds Rate declines from 2007 to 2009 using Taylor Rule. Based on the Federate Funds Rate data in the table, explain the limitation of monetary policy that is implemented through open market operation during severe recession.

c) Suppose a military operation that costs $200 billion in 2011 can help the real GDP recover to $16.2 trillion one year earlier. What is the minimal required MPC of households in the Aggregate Expenditure model if there is no tax wedge on household income? What if the tax wedge is 1/3 of the pretax household income? What is the difference between the answer based on the Aggregate Expenditure model and the answer based on the static AD-AS model.

d) There was large fiscal stimulus during 2009-2011. People believe that fiscal stimulus is more powerful in 2011 compared to 2017. Explain why this can be true using the Federal Funds Rate data.

Problem 7-17 Comparing Traditional and Activity-Based Product Margins [LO7-1, LO7-3, LO7-4, LO7-5]

Smoky Mountain Corporation makes two types of hiking boots—the Xtreme and the Pathfinder. Data concerning these two product lines appear below:

The company has a traditional costing system in which manufacturing overhead is applied to units based on direct labor-hours. Data concerning manufacturing overhead and direct labor-hours for the upcoming year appear below:

Required:

1. Compute the product margins for the Xtreme and the Pathfinder products under the company’s traditional costing system.

2. The company is considering replacing its traditional costing system with an activity-based costing system that would assign its manufacturing overhead to the following four activity cost pools (the Other cost pool includes organization-sustaining costs and idle capacity costs):

Compute the product margins for the Xtreme and the Pathfinder products under the activity-based costing system.

3. Prepare a quantitative comparison of the traditional and activity-based cost assignments.

Ross Co., Westerfield, Inc., and Jordan Company announced a new agreement to market their respective products in China on July 18, February 12, and October 7, respectively. Given the information below, calculate the cumulative abnormal return (CAR) for these stocks as a group. Assume all companies have an expected return equal to the market return. (A negative value should be indicated by a minus sign. Leave no cells blank - be certain to enter "0" wherever required. Do not round intermediate calculations. Round your answers to 1 decimal place.)

Abnormal returns (R_i-R_M)

Unsure how to set this up properly in excel?

Assignment #6

The Nimble Digits Division of Block C Enterprises manufactures computer furniture and accessories.At the present time 15 different components are being produced.Each product is some combination of steel, plastic, wood, aluminum and formica.The availability of these component materials is 980 pounds of steel alloy, 400 sq ft of plastic, 600 bd ft of wood, 2500 pounds of aluminum, 1800 bd ft of Formica and labor is limited to 1000 hours.Given the data below, determine how many of each item should be produced to maximize the profit.Also determine how the profit would change if the monthly demand for all items with an a through e prefix is eliminated.

Item a158 requires 0.4 sq ft of plastic, 0.7 bd ft of wood, 5.8 pounds of aluminum, 10.9 bd ft of Formica and 3.1 hours of labor.There is no minimum monthly demand and this item's contribution to the profit is $18.79.

Item b179 requires 4 pounds of steel, 0.5 sq ft of plastic, 1.8 bd ft of wood, 10.3 pounds of aluminum, 2.0 bd ft of Formica and 1.0 hours of labor.The minimum monthly demand is 20 and this item's contribution to the profit is $6.31.

Item c023 requires 6 pounds of steel, 1.5 bd ft of wood, 1.1 pounds of aluminum, 2.3 bd ft of Formica and 1.2 hours of labor.The minimum monthly demand is 10 and this item's contribution to the profit is $8.19.

Item d045 requires 10 pounds of steel, 0.4 sq ft of plastic, 2.0 bd ft of wood, and 4.8 hours of labor.The minimum monthly demand is 10 and this item's contribution to the profit is $45.88.

Item e388 requires 12 pounds of steel, 1.2 sq ft of plastic, 1.2 bd ft of wood, 8.1 pounds of aluminum, 4.9 bd ft of Formica and 5.5 hours of labor.There is no minimum monthly demand and this item's contribution to the profit is $63.00.

Gardems was recently hired as a financial analyst by Taylor, Inc., which is a Pennsylvania based company. His first task is to conduct a financial statement analysis of firm covering the past 2 years as in the table below:

Q:Assess the firm's liquidity position.

Gardems also developed the following industry average data for 2012:

Assume that you recently graduated and you just landed a job as a financial planner with the Cleveland Clinic. Your first assignment is to invest $100,000. Because the funds are to be invested at the end of one year, you have been instructed to plan for a one-year holding period. Further, your boss has restricted you to the following investment alternatives, shown with their probabilities and associated outcomes.

Barney Smith Investment Advisors recently issued estimates for the state of the economy and the rate of return on each state of the economy. Alta Industries, Inc. is an electronics firm; Repo Men Inc. collects past due debts; and American Foam manufactures mattresses and various other foam products. Barney Smith also maintains an "index fund" which owns a market-weighted fraction of all publicly traded stocks; you can invest in that fund and thus obtain average stock market results. Given the situation as described, answer the following questions.

a. Calculate the expected rate of return on each alternative.

b. Calculate the standard deviation of returns on each alternative.

c. Calculate the coefficient of variation on each alternative.

d. Calculate the beta on each alternative.

e. Do the SD, CV, and beta produce the same risk ranking? Why or why not?

f. Suppose you create a two-stock portfolio by investing $50,000 in Alta Industries and $50,000 in Repo Men. Calculate the expected return, standard deviation, coefficient of variation, and beta for this portfolio. How does the risk of this two-stock portfolio compare with the risk of the individual stocks if they were held in isolation?

LaFond Company analyzes its accounts receivable at December 31, 2016, and arrives at the aged categories below along with the percentages that are estimated as uncollectible.

At the beginning of the fourth quarter of 2016, there was a credit balance of $4,390 in the Allowance for Uncollectible Accounts. During the fourth quarter, LaFond Company wrote off $3,790 in receivables as uncollectible.

a. What amount of bad debts expense will LaFond report for 2016?
$Answer

Incorrect
Mark 0.00 out of 1.00

b. What is the balance of accounts receivable that it reports on its December 31, 2016, balance sheet?
$Answer

Incorrect
Mark 0.00 out of 1.00

c. Set up T-accounts for both Bad Debts Expense and for the Allowance for Uncollectible Accounts. Enter any unadjusted balances along with the dollar effects of the information described (including your results from parts a and b).

The following transactions apply to Jova Company for Year 1, the first year of operation:

1. Issued $17,500 of common stock for cash.

2. Recognized $62,500 of service revenue earned on account.

3. Collected $56,000 from accounts receivable.

4. Paid operating expenses of $36,800.

5. Adjusted accounts to recognize uncollectible accounts expense. Jova uses the allowance method of accounting for uncollectible accounts and estimates that uncollectible accounts expense will be 2 percent of sales on account

The following transactions apply to Jova for Year 2

1. Recognized $70,000 of service revenue on account.

2. Collected $64,000 from accounts receivable.

3. Determined that $850 of the accounts receivable were uncollectible and wrote them off.

4. Collected $100 of an account that had previously been written off.

5. Paid $48,000 cash for operating expenses.

6. Adjusted the accounts to recognize uncollectible accounts expense for Year 2. Jova estimates uncollectible accounts expense will be 1.0 percent of sales on account

Required

Complete the following requirements for Year 1 and Year 2. Complete all requirements for Year 1 prior to beginning the requirements for Year 2.

1. Identify the type of each transaction (asset source, asset use, asset exchange, or claims exchange).

2. Show the effect of each transaction on the elements of the financial statements, using a horizontal statements model like the one shown here. Use + for increase, − for decrease, and leave the cell blank if there is no effect. Also, in the Cash Flow column, indicate whether the item is an operating activity (OA), investing activity (IA), or financing activity (FA). The first transaction is entered as an example. (Hint: Closing entries do not affect the statements model.) (If there is no effect on the Statement of Cash Flow, leave the cell blank. Not all cells will require entry.)

3. Organize the transaction data in accounts under an accounting equation.

4. Prepare the income statement, statement of changes in stockholders’ equity, balance sheet, and statement of cash flows for Year 1.

5. Prepare the income statement, statement of changes in stockholders’ equity, balance sheet, and statement of cash flows for Year 2.

4. a. Calculate nominal GDP for 2014 and 2015.

b. Calculate the percentage change in GDP from 2014 to 2015, first using 2014 prices and then using 2015 prices.

c. Calculate the percentage change in real GDP from 2014 to 2015, using your answers from part (b).

d. What is the GDP deflator for 2015 if it equals 1.0 in 2014?

5 Given the information in the following table for three consecutive years in the U.S. economy, calculate the missing data.

6. Look at two scenarios, details of which are provided below, for monthly inventories and sales for a company producing cereal. In both scenarios, the company’s sales are the same.

a.Calculate the inventory investment during each month and the resulting stock of inventory at the beginning of the following month for both scenarios.

b.Does maintaining constant production lead to greater or lesser fluctuations in the stock of inventory? Explain.