Answer:
Mathis Company
Journal Entry:
April 10:
Debit Accounts payable (Reece Company) $2,300
Credit Cash $2,254
Credit Cash Discounts $46
To record the payment on account.
Explanation:
1) Data and Transaction Analysis:
Mathis Company
a. April 1: Inventory $3,100 Accounts payable (Reece Company) $3,100
with credit terms of 2/10, n/30.
b. April 1: Freight-in $250 Cash $250
c. April 8: Accounts payable (Reece Company) $800 Inventory $800
d. April 10: Accounts payable (Reece Company) $2,300 Cash $2,254 Cash Discounts $46
2) The payment on April 10 is for $2,300 ($3,100 - $800). The 2% cash discount is applied on the $2,300 to arrive at a Cash payment of $2,254 ($2,300 - $46).
Place each of the items listed below in the appropriate subdivision of the stockholders' equity section of a balance sheet. Common stock, $10 stated value Retained earnings 8% Preferred stock, $100 par value Paid-in capital in excess of par Paid-in capital in excess of stated value Treasury stock—common Paid-in capital from treasury stockStockholders' equityPaid-in capitalCapital stockAdditional paid-in capitalTotal additional paid-in capitalTotal paid-in capitalRetained earningsTotal paid-in capital and retained earningsTotal stockholders' equity
Answer and Explanation:
The placing of each item would be shown below:
Stockholder's Equity
Paid-in Capital
Capital Stock
8% Preferred stock, $100 par value
Common Stock, $10 stated value
Additional Paid-in Capital
In excess of par value- Preferred stock
In excess of stated Value - Common stock
Total Additional Paid-in Capital
Total Paid-in Capital
Retained Earnings
Total paid-in Capital and Retained Earnings
Less: Treasury Stock- common
Total Stockholder's Equity
Misra Inc. forecasts a free cash flow of $ 35 million in Year 3, ie, at t = 3, and it expects FCF to grow at a constant rate of 5.5% thereafter. If the weighted average cost of capital (WACC) is 10.0% and the cost of equity is 15.0%, what is the horizon, or terminal, value in millions at t = 3?
Answer:
the answer for this question is 1289.44
On January 1, 2021, the Montgomery Company agreed to purchase a building by making six payments. The first three are to be $37,000 each, and will be paid on December 31, 2021, 2022, and 2023. The last three are to be $52,000 each and will be paid on December 31, 2024, 2025, and 2026. Montgomery borrowed other money at a 11% annual rate. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Required: 1. At what amount should Montgomery record the note payable and corresponding cost of the building on January 1, 2021
Answer:
cost of the building = $183,331.14
Explanation:
we have to calculate the present value of all the future annual payments using the 11% discount rate:
$37,000 x 2.4437 (PVIFA, 11%, 3 periods) = $90,416.90
($52,000 x 2.4437) / (1 + 11%)³ = $92,914.24
total present value = $183,331.14
Over a six-month period in 2007, the price of corn increased by almost 70% as a result of increased demand for ethanol biofuel.
a. As a result of the price increase in corn, the of corn would . At the same time, the amount of acreage used in corn production would
b. Which of the following would be the most likely cause of the change in the amount of acreage used in corn production?
A. The higher price signals suppliers that corn is becoming more valuable.
B. Consumers directly inform suppliers of the increased demand for corn.
C. The government mandates that U.S. corn producers increase the acreage they devote to corn production to keep up with demand.
D. Economists publish reports in trade magazines informing farmers of the increased demand for corn.
Answer:
a. As a result of the price increase in corn, the supply of corn would increase. At the same time, the amount of acreage used in corn production would increase.
b. The most likely cause of the change in the amount of acreage used in corn production is:
A. The higher price signals suppliers that corn is becoming more valuable.
Explanation:
With corn as the major ingredient for the production of ethanol biofuel the demand and supply of corn increase to match with the increasing price. Suppliers, on their part, increase production by utilizing more acreage of land devoted for corn production. This is the typical interplay between the market forces that drive market equilibrium.
Answer:
a. As a result of the price increase in corn, the quantity supplied of corn would increase. At the same time, the amount of acreage used in corn production would increase.
The most likely cause of the change in the amount of acreage used in corn production is the higher price signals suppliers that corn is becoming more valuable.
Explanation:
Corn is an input for ethanol biofuel. An increase in demand for ethanol biofuel results in an increase in the demand for corn. As more ethanol is being produced, more corn is used in the production process.
The increase in the demand for corn increases the price of corn. As the price of corn increases, there is an increase in the quantity supplied of corn. Farmers are growing larger quantities of corn, which results in an increase in the acreage used for corn production.
An increase in price causes a movement along the supply curve. It does not cause a shift of the supply curve.
Consumers do not directly inform farmers of their increase in the demand for corn. Price serves as the market signal. Consumers are willing to pay a higher price for corn, showing that they value corn more.
The government does not generally regulate what specific crop is grown on private farmland. Furthermore, economists may publish predictions, but farmers are most responsive to changes in market price.
A wholesale distributor of cleaning products is thinking about buying 200 more cases of a floor cleaning compound than she normally does. Nilan, a senior salesperson, has convinced the distributor to buy 300 extra cases by showing him the various payment schedules offered by his company and some other visuals of the products in his laptop computer. This is an example of which of the following close?
A) Technology.
B) Factual.
C) Statistical.
D) Showmanship.
E) Ben Franklin.
Answer:
B) Factual
C) Statistical
Explanation:
Wholesale distributor has been thinking to buy 200 extra cases. Nilan has convinced the distributor to buy 300 more cases by showing him payment schedules. This is statistical data which is used to convince the buyers decision. The decision has been made based on actual facts and payments schedules.
The NASDAQ is a floor-based exchange.
t or f
Pearsall Company has a defined benefit pension plan. On December 31 (the end of the fiscal year), the company received the PBO report from the actuary. The following information was included in the report: ending PBO, $113,000; benefits paid to retirees, $14,500; interest cost, $7,500. The discount rate applied by the actuary was 10%. What was the service cost for the year
Answer:
$45,000
Explanation:
Calculation to determine the service cost for the year
PBO, $113,000
Add benefits paid to retirees, $14,500
Less interest cost ($7,500)
Less Beginning PBO ($75,000)
($7,500/0.1)
Service cost $45,000
($113,000+$14,500-$7,500-$75,000)
Therefore the service cost for the year will be $45,000
Hamlet has monotonic, strictly convex, quasilinear preferences over widgets,x, and money to spend on other goods,m, wheremis the linear term. Consider a $1 increase in the price of widgets. Hamlet knows that he if he were given $20 after the price change, his new optimal bundle would give him exactly the same utility that he had before the price change. Which of the following can be concluded from this information? (You may assume that Hamlet's income is large enough that however many widgets he might want to buy, he'll still have money left over for other goods.)
A) Hamlet's compensating variation is $20.
B) Hamlet's equivalent variation is $20.
C) Hamlet's (net) consumer surplus falls by $20 due to the price change.
D) All of the above are true.
E) None of the above are true.
Answer:
A) Hamlet's compensating variation is $20.
Explanation:
Hamlet is expecting pay rise of $20 but he thinks that his utility will remain the same. Hamlet is not getting any extra benefit due to his pay rise and his utility is same, this is compensating variation because his initial utility is not changed. Compensating variation is the extra amount of money which is needed to reach to initial utility.
An online shopping website sold many email addresses in its database to another firm for a large sum of money. The new firm now has access to data of several customers and can use them to increase its sales. What does the selling of user data highlight?
A.
violating user privacy
B.
cleansing data
C.
classifying customers
D.
applying direct marketing
E.
using multiple data sources
Answer:
A.) violating user policy
A liquid asset is one that is easy to cash in.
What is the most liquid asset?
Which is more liquid, a savings account or a loan to a business?
What are the steps to creating a query with the simple query wizard?
Answer:
1. With the database open, click the create tab.
2. In the Queries group, click Query Wizard.
3. Select the Simple Query Wizard, and click ok
4.In the Simple Query Wizard dialog box, select the tables to use, and use the arrow buttons to choose the fields to use in the query. Click Next.
5. Name the query and click finish.
Explanation:
just did it on edge
A simple query is a query that uses search with one parameter.
What do you know about Query Wizard?Query Wizard is a tool that allows you to automatically generate QueryPairs from Connections.
This is useful for Business Analysts, SMEs or other team members who have data and knowledge of business law, but who have recently participated in SQL.
A query Wizard can be created by following steps:
Click the create tab, once the database is open.Click Query Wizard in the Queries group.Select the Simple Query Wizard, and click okInside the Simple Query Wizard dialog box, select the tables to be used and use the arrow buttons to choose the fields to use in the query. Click Next.Name the query and click on finish.Thus,these are the steps for creating query wizard.
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A cost center manager: Multiple Choice often oversees divisional operations. may be involved with the sale of new marketing programs to clients. may be the manager who oversees the operations of a retail store. does not have the ability to produce revenue. would normally be held accountable for producing an adequate return on invested capital.
Answer:
does not have the ability to produce revenue.
Explanation:
Cost center managers have the responsibility to manage all the transactions within the center. Cost center budget per year and all the expenses are also managed by the manager only. The manager also takes of the costs following the given budget and does not have any responsibility regarding the revenue.
A cost center manager does not have the ability to produce revenue.
1. Descriptive research is conducted for all of the following reasons except ________. a. to describe the characteristics of relevant groups, such as consumers, salespeople, organizations, or market areas b. to determine the degree to which marketing variables are associated
Answer: c. To understand which variables are the cause and which variables are the effect of a phenomenon
Explanation:
The options include:
a. To describe the characteristics of relevant groups, such as consumers, salespeople, organizations, or market areas
b. to determine the degree to which marketing variables are associated
c. to understand which variables are the cause and which variables are the effect of a phenomenon
d. to determine the perceptions of product.
Descriptive research simply refers to a research type that is used in the description of a population that the researcher is studying.
It simply answers questions such as when, what or how in the research. The subject of the research is being described here.
From the options given, we should note that the descriptive research isn't conducted to understand which variables are the cause and which variables are the effect of a phenomenon.
A company’s production budget requires the following units of a single product for the upcoming year: 1st quarter 60,000 units 2nd quarter 80,000 units 3rd quarter 90,000 units 4th quarter 70,000 units Each unit requires two pounds of material. The company has a policy of keeping a stock of material on hand at the end of each quarter equal to 25% of the next quarter's production needs for material. A total of 30,000 pounds of material are on hand to start the year. Budgeted purchases of material for the second quarter would be:
Answer:
165,000 pounds
Explanation:
A Purchase Budget is required to determine the quantities and cost of purchases required for use in production.
Materials Purchase Budget for Second Quarter (Pounds)
Budgeted Production Materials (80,000 x 2) 160,000
Add Budgeted Closing Materials (90,000 x 2 x 25%) 45,000
Total Materials 205,000
Less Budgeted Opening Materials (80,000 x 2 x 25%) (40,000)
Budgeted Material Purchase (pounds) 165,000
Therefore,
Budgeted purchases of material for the second quarter would be 165,000 pounds
Because there isn't one single measure of inflation, the government and researchers use a variety of methods to get the most balanced picture of how prices fluctuate in the economy. Two of the most commonly used price indexes are the consumer price index (CPI) and the GDP deflator.
The GDP deflator for this year is calculated by dividing the 1) ________
a. Value of all goods and services produced in the economy in the base year.
b. Value of all goods and services produced in the economy this year.
c. cost of a given market basket of goods and services using
2) ______ a. the base year's prices
b. this year's prices by the
3) ________
a. Value of all goods and services produced in the economy in the base year
b. Value of all goods and services produced in the economy this year
c. cost of a given market basket of goods and services using
4) ______
a. the base year's prices
b. this year's prices
the CPI reflects only the prices of all goods and services 5) _______
a. produced domestically
b. bought by consumers
Which does an increase in the price of a Chinese-made car that is popular among U.S. consumers show up in?
a. GDP Deflator
b. CPI
Answer:
b
b
a
a
b
b
Explanation:
Mark and Lucy owned two stocks, Tinker Inc., and Chance Inc., that became worthless during year 8. The adjusted basis in Tinker was $300,000. Tinker was incorporated in year 2, and Mark and Lucy purchased their stock in year 4. Their adjusted basis in Chance was $200,000. Chance was incorporated in year 2, and Mark and Lucy were original stockholders. Both stocks were purchased for cash, and each corporation had total capital of $500,000. How much ordinary loss can Mark and Lucy deduct on their joint year 8 tax return as a result of these transactions
Answer:
$20,000
Explanation:
Adjusted basis in Tinker = $300,000
Tinker was incorporated in year 2 and Mark and Lucy purchased their stock in Year 4
adjusted basis in chance was $200,000, each corporation had total capital of $500,000
Determine how much ordinary loss can mark and Lucy deduct on their joint year 8 tax return
If your value of share falls and you suffer loss, due to section 1244 stock the taxpayer is allowed to deduct loss as an ordinary loss up to maximum of $50,000 for single and $100,000 if MFJ
Hence the loss to be calculated
sales consideration $---
less adjusted tax basis/ loss = ($20,000 )
based on section 1244 mark and Lucy loss of complete $20,000 will be allowed since it is below $100,000
Dhaliwal Digital categorizes its accounts receivable into three age groups for purposes of estimating its allowance for uncollectible accounts. Accounts not yet due = $121,000; estimated uncollectible = 15%. Accounts 1–45 days past due = $16,800; estimated uncollectible = 20%. Accounts more than 45 days past due = $6,700; estimated uncollectible = 25%. Before recording any adjustments, Dhaliwal has a debit balance of $30,200 in its allowance for uncollectible accounts.
Required:
1. Estimate the appropriate 12/31/2021 balance for Dhaliwal’s allowance for uncollectible accounts.
2. What journal entry should Dhaliwal record to adjust its allowance for uncollectible accounts?
EXPLANATION:
Dhaliwal Digital categorizes its accounts receivable into three age groups for purposes of estimating its allowance for uncollectible accounts. 1. Accounts not yet due $285,000; estimated uncollectible 5 % . 2. Accounts 1-45 days past due $39,600; estimated uncollectible 10 % 3. Accounts more than 45 days past due $15,800; estimated uncollectible 15 % Before recording any adjustments, Dhaliwal has a debit balance of $71,100 in its allowance for uncollectible accounts. Required: 1. Estimate the appropriate 12/31/2021 balance for Dhaliwal's allowance for uncollectible accounts. 2. What journal entry should Dhaliwal record to adjust its allowance for uncollectible accounts? Required 1 Required 2 Estimate the appropriate 12/31/2021 balance for Dhaliwal's allowance for uncollectible accounts. Balance in allowance for uncollectible accounts Required 2
Dhallwal Digital categorizes its accounts receivable into three age groups for purposes of estimating its allowance for uncollectible accounts. 1. Accounts not yet due $285,000; estimated uncollectible 5 %. 2. Accounts 1-45 days past due $39,600; estimated uncollectible 10 %. 3. Accounts more than 45 days past due $15,800; estimated uncollectible 15 % Before recording any adjustments, Dhaliwal has a debit balance of $71,100 in its allowance for uncollectible accounts. Required: 1. Estimate the appropriate 12/31/2021 balance for Dhalwal's allowance for uncollectible accounts. 2. What journal entry should Dhallwal record to adjust its allowance for uncollectible accounts? Required 1| Required 2 What journal entry should Dhaliwal record to adjust its allowance for uncollectible accounts? (If no entry is required for a transaction/event, select "No jounal entry required" in the first account field.) View transaction list Journal entry worksheet Record the adjustment to allowance for uncollectible accounts. Note: Enter debits before credits. Event General Journal Debit Credit Record entry Clear entry View general journal
Which of these production practices promotes sustainable development?
A. Bidding for government contracts
B. The use of renewable resources
C. Offshoring production
D. An assembly line
SUOMI
The production practice that will promote sustainable development is The use of renewable resources.
What is meant by the term renewable resources?Renewable resources are resources that have natural occurrence and overtime they can be replenished.
A major example of renewable resources coal, solar energy.
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d. If money demand does not depend on the interest rate, the LM curve is vertical. True False e. If money demand does not depend on income, the LM curve is horizontal. True False f. If money demand is extremely sensitive to the interest rate, the LM curve is horizontal. True False g. Suppose the government wants to change the level of output. If the LM curve is horizontal, then fiscal policy is completely ineffective, whereas monetary policy is highly effective. monetary policy
Answer:
d. True
e. False
f. True
g. True
Explanation:
Interest rate movement is based on the fiscal policy of the government. If interest rates changes there is movement in the LM curve. This is because LM curve represents money market equilibrium of real interest rates. Monetary policy is completely ineffective if the interest rates does not change since the LM curve will be horizontal.
A holiday sales flyer advertised a video game system for a significantly reduced price and
video game with purchase. Later that day, the sales associate told you that the store is out of
both items. Instead, you were offered a different system and games at full retail prices. What is this type of fraud called?
Answer: Bait and switch
Explanation:
The type of fraud here is referred to as the bait and switch fraud. This fraud occurs when customers are told about the low prices and quality of a product but aren't available when customers want to purchase such products and they're then given products that are costlier or products that are of lesser quality.
This can be seen in the question when the sales associate advertised the video game system for a reduced price which wasn't available when customers wanted to buy but were offered a game that was costlier.
At the end of April, Cavy Company had completed Jobs 766 and 765. The individual job cost sheets reveal the following information:Job Direct Materials Direct Labor Machine HoursJob 765 $6,160 $1,848 22Job 766 13,338 4,212 78Job 765 produced 132 units, and Job 766 consisted of 234 units.Assuming that the predetermined overhead rate is applied by using machine hours at a rate of $107 per hour.a. Determine the balance on the job cost sheets for each job.
Answer: See explanation
Explanation:
The balance on the job cost sheets for each job will be:
Job 765:
Direct materials = $6160
Direct labor = $1848
Overhead cost = 22 × $107 = $2354
Total job cost = $6160 + $1848 + $2354 = $10362
Job 766:
Direct materials = $13338
Direct labor = $4212
Overhead cost = 78 × $107 = $8346
Total job cost = $13338 + $4212 + $8346 = $25896
Suppose the total damage function is given as D = M2 for M ≥ 0. Suppose the total abatement cost function is given as TAC = 96M − 0.2M2, where M is emissions
Answer:
so like what is your question
Where would you rather invest and why?
A. Bonds
B. Mutual Funds
C. Stocks
D. Real Estate
E. CDs
F. others
Answer:
d
Explanation:
because you get payed more
External failure activities A. seek to prevent defects in the products or services being produced. B inspect inputs and attributes of individual units of products or services to detect whether they conform to specifications or customer expectations. C. correct defective processes or products and services before they are delivered to customers. D. are activities required after defective products or services are delivered to customers.
Answer:
D. are activities required after defective products or services are delivered to customers.
Explanation:
Six Sigma is a quality business management strategy which helps business organizations to improve the quality of processes, products and services by discovering and eliminating defects, variations or errors. It is a strategic business concept that was developed in 1986 by Motorola.
Under the six sigma approach, any process that doesn't provide customer satisfaction or causes challenges in an organisation's process should be eliminated from the system in order to produce quality products and services. It allows only 3.4 defective features for every million opportunities and as such expects processes to be defect free 99.99966 percent of the time.
The following activities are carried out in accordance with the Six Sigma model;
External failure activities are activities required after defective products or services are delivered to customers.
The other terminologies used in the manufacturing process includes;
- Prevention: seek to prevent defects in the products or services being produced.
- Appraisal: inspect inputs and attributes of individual units of products or services to detect whether they conform to specifications or customer expectations.
- Internal failure activities: correct defective processes or products and services before they are delivered to customers.
Help!!
According to the video, working as a Hotel, Motel, or Resort clerk is a good place to start if you are interested in
hotel management.
hotel cleaning services.
food preparation and support.
gaming supervision.
Answer: (A) hotel management
Explanation: just took the test
Answer:
Yea its A
Explanation:
Tar Heel Auto Parts owns a manufacturing facility that is currently sitting idle. The facility is located on a piece of land that cost $134,000 at the time Tar Heel Auto Parts bought it (several years ago). The facility itself cost $700,000 to build. The current book values of the land and the facility are $134,000 and $214,000, respectively. Tar Heel Auto Parts received a bid of $640,000 for the land and facility last week. They rejected this bid even though they were told that it is a reasonable offer in today's market. If Tar Heel Auto Parts were to consider using this land and facility in a new project, what cost, if any, should they include in the project analysis?
Answer:
Tar Heel Auto Parts
The cost that Tar Heel Auto Parts should include in their new project analysis for the land and facility should be:
= $640,000.
Explanation:
a) Data and Analysis:
Cost Book Value
Cost of a piece of land $134,000 $134,000
Cost of idle manufacturing facility $700,000 $214,000
Current market value of the land and facility = $640,000
b) The current market value of Tar Heel's land and facility is the relevant cost for project analysis. The book value and the cost prices are no longer relevant as they relate to the past and are sunk and historical costs. Sunk and historical costs do not make any difference in decision making. The fair or current market value is a future value that is useful for Tar Heel's project analysis and decision making.
Howard Enterprises, which has three departments, recently reported the following results: A B C Sales revenue $ 12,000 $ 48,000 40,000 Less: Operating costs 11,400 59,800 50,500 Operating income (loss) $ 600 $ (11,800 ) $ (10,500 ) The company incurred variable operating costs as well as $25,000 of fixed operating costs. The $25,000 amount was allocated to A, B, and C on the basis of sales revenue and is included in the cost figures noted above. Which department(s), if any, should be closed if none of the fixed operating costs can be avoided
Answer:
Department C should be closed
Explanation:
To determine whether or not it will be profitable to drop a loss making department, we compare the savings in fixed cost to the lost contribution from the division.
For Howard Enterprises, the department with a negative contribution should be closed otherwise its operation would reduce the overall profit by the amount of the negative contribution.
So lets work out the contribution for each department by adding back the apportioned fixed cost. See table below
A B C
$ $ $ Total
Sales Revenue 12,000 48,000 40,000 100,000
Operating cost 11,400 59,800 50,500
Operating income 600 (11,800) (10,500)
*Add back apportioned fixed cost 3,000 12,000 10,000
Contribution 3,600 200 (500)
*Apportioned fixed cost
A- 12,000/100,000× 25,000 = 3,000
B- 48,000/100000 × 25,000 = 12,000
C- 40,000/100,00×25,000 = 10,000
From the above analysis, Department C generates a negative contribution. It implies that it can barely cover its direct cost and so will deplete the total profit by its negative contribution. Hence, it should be closed
Department C should be closed
Before year-end adjusting entries, Dunn Company's account balances at December 31, 2010, for accounts receivable and the related allowance for uncollectible accounts were $600,000 and $45,000, respectively. An aging of accounts receivable indicated that $62,500 of the December 31 receivables are expected to be uncollectible. The net realizable value of accounts receivable after adjustment is
Answer: $537500
Explanation:
The net realizable value of accounts receivable after adjustment will be the difference between the account receivable at December 31st and the expected uncollectible. This will be:
= $600,000 - $62,500
= $537500
Therefore, the answer is $537500
Severs on has an annuity due that pays $400 per year for 20 years. What is the value of the cash flow 20 years from today if they are placed in an account that earns 7.50%
Given the following model of the economy C = + YD I = G = T = Note: Answer all parts, a-k: a) What is the equilibrium value of Y? b) What is the value of autonomous consumption (c0)? c) What is the value of MPC? d) What is the value of MPS? e) What is the value of APC? f) What is the value of APS? g) Calculate private saving, public saving and national saving. h) Calculate the multiplier. i) What happens to the equilibrium value of Y if G increases by $150? j) What happens to the equilibrium value of Y if T increases by $150, and G remains at its original value of ? k) What happens to the equilibrium value of Y if both G & T increase by $150 from their original amounts? If your answer is not a whole number, round at 2 decimal places. If your answer is negative, enter a minus sign before the number. a) The equilibrium value of Y = $ nothing b) Autonomous consumption = $ nothing c) MPC = nothing d) MPS = nothing e) APC = nothing f) APS = nothing g) Private Saving = $ nothing Public Saving = $ nothing National Saving = $ nothing h) The multiplier = nothing i) The change in the equilibrium value of Y is $ nothing , and the new equilibrium value of Y = $ nothing
Answer:
a) The equilibrium value of Y is 41,180.
b) The value of autonomous consumption (c0) is 12557.
c) The value of MPC is 0.5.
d) The value of MPS is 0.5.
e) The value of APC is 0.70
f) The value of APS is 0.30
g) Private saving is 32286; Public saving is -1305; and National saving is 30981
h) Multiplier = 2
i) The equilibrium value of Y increases by $300.
j) The equilibrium value of Y decreases by $150.
k) The equilibrium value of Y increases by $150.
Explanation:
Note: The model is not complete as the figures in it are omitted. The complete model of the economy is therefore provided before answering the question as follows:
C = 12557 + 0.5YD
I = 2281
G = 10199
T = 8894
The explanation of the answers is now given as follows:
a) What is the equilibrium value of Y?
YD = Y - T .............. (1)
Equilibrium value of Y can be obtained using the following formula:
Y = C + G + I ............................ (2)
Substituting all the values into equation (2), we have:
Y = 12557 + 0.5YD + 2281 + 10199 ………………….. (3)
Substituting equation (1) into equation (3), we have:
Y = 12557 + 0.5(Y – T) + 2281 + 10199 ……………… (4)
Substitute T = 8894 into equation (4) and solve for Y, we have:
Y = 12557 + 0.5(Y – 8894) + 2281 + 10199
Y = 12557 + 0.5Y – (0.5 * 8894) + 2281 + 10199
Y – 0.5Y = 12557 – (0.5 * 8894) + 2281 + 10199
(1 - 0.5)Y = 20590
0.5Y = 20590
Y = 20590/0.5
Y = 41,180
b) What is the value of autonomous consumption (c0)?
From C = 12557 + 0.5YD, the value of autonomous consumption (c0) is 12557.
c) What is the value of MPC?
From C = 12557 + 0.5YD, the value of MPC is 0.5.
d) What is the value of MPS?
MPS = 1 – MPC = 1 – 0.5 = 0.5
e) What is the value of APC?
YD = Y – T = 41180 – 8894 = 32286
C = 12557 + 0.5YD = C = 12557 + (0.5 * 32286) = 28,700
APC = C / Y = 28700 / 41,180 = 0.70
Note: This is not part of the answer but just additional information. Sometimes, YD is used. Then, we have:
APC = C / YD = 28700 / 32286 = 0.89
f) What is the value of APS?
APS = 1 – APC = 1 – 0.70 = 0.30
Note: This is not part of the answer but just additional information. If YD is used to calculate APC as it can be done sometimes, then we have:
APC = C / YD = 28700 / 32286 = 0.89
APS = 1 – APC = 1 – 0.89 = 0.11
g) Calculate private saving, public saving and national saving.
Private saving = Y – T = 41180 – 8894 = 32286
Public saving = T – G = 8894 – 10199 = -1305
National saving = Private saving + Public saving = 32286 -1305 = 30981
h) Calculate the multiplier.
Multiplier = 1 / MPS = 1 / 0.5 = 2
i) What happens to the equilibrium value of Y if G increases by $150?
Change in Y = Increase in G * Multiplier = $150 * 2 = $300
Since it is positive, it implies that the equilibrium value of Y increases by $300
j) What happens to the equilibrium value of Y if T increases by $150, and G remains at its original value of ?
Tax multiplier = - MPC/MPS =-0.5/0.5 = -1.0
Change in Y = Increase in T * Tax multiplier = $150 * (-1.0) = -$150
Since it is negative, it implies that the equilibrium value of Y decreases by $150.
k) What happens to the equilibrium value of Y if both G & T increase by $150 from their original amounts?
Change in Y = Change in Y as a result of change in G + Change Y as a result change in T = $300 + (-$150) = $300 - $150 = $150
Since it is positive, it implies that the equilibrium value of Y increases by $150.