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2 years ago

The proposition that increases in the government budget deficit has no effect on aggregate demand is called the

1 answer:

3 0

The proposition that increases in the government budget deficit has no effect on aggregate demand is called the Ricardian Equivalence Theorem.

<h3><u>What is Ricardian Equivalence Theorem?</u></h3>

According to the economic principle known as Ricardian equivalence, paying government expenditures with current taxes or future taxes (as well as current deficits) will have similar impacts on the overall state of the economy.
Therefore, increased government expenditure that is financed by debt will not be able to stimulate the economy since investors and consumers are aware that the loan would eventually need to be repaid through future taxes.

The hypothesis contends that consumers will save because they anticipate paying higher taxes in the future to reduce the debt, which will counteract the rise in aggregate demand brought on by higher government spending.

Therefore, The proposition that increases in the government budget deficit has no effect on aggregate demand is called the Ricardian Equivalence Theorem.

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A disadvantage of the rate of return method is that it:________.

vodomira [7]

Answer:

Opposite of C.

Explanation:

A disadvantage there should be that it does not take into account the time value of money

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3 years ago

During October, Dorinirl Corporation incurred $66,700 of direct labor costs and $9,300 of indirect labor costs. The journal entr

Papessa [141]

Answer:

d. debit to Work in Process of $66,700

Explanation:

The journal entries for recording the given transactions are as follow

1. Work in process Dr $66,700

To Wages $66,700

(Being direct labor transferred to Work in process account)

2. Factory overhead Dr $9,300

To indirect labor cost $9,300

(Being indirect labor transferred)

These entries are recorded for recording the wages and the indirect labor cost

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3 years ago

Whiteville Co. can further process Product B to produce Product C. Product B is currently selling for $45 per pound and costs $3

Annette [7]

Answer:

In this case, the differential cost os $18.

Explanation:

<u>The differential cost is the increase in unitary or total production value in two or more steps of the decision-making process. </u>In this case, the unitary cost of product B is not a differential cost. It would remain constant in both products, but, the additional $18 is a cost incurred only in product C.

In this case, the differential cost os $18.

5 0

3 years ago

Leasing is often referred to as off-balance-sheet financing because of the way that the transaction is treated and reported in f

Trava [24]

Solution :

Part 1

a). According to the $\text{ FASB-issued statement}$ 13 :

The Assets that are leased under the capital leases or the financial should be reported as the fixed assets on balance sheet.

b). False, the payments on the financial lease should not be treated as the operating expense.

Part 2

1. The debt ratio = $\frac{2400}{6000}$

= 0.40

2. The total debt in the balance sheet is 2400 + 800 = $ 3200 whereas debt ratio will change to 0.4706

3. Debt ratio of the company will remain same as the lease will not be capitalized.

4. The financial risk of the company will be less under the the lease agreement as compared $\text{to the financial risk in purchasing the equipment }$ by taking the loan.

5. However, when lease is capitalized, financial risk under lease agreement will remain same as $\text{compared to the risk in buying the equipment.}$

7 0

3 years ago

At the end of 2017, Stacky Corp. had $500,000 in liabilities and a debt-to-assets ratio of 0.5. For 2017, Stacky had an asset tu

miv72 [106K]

The annual sales for Stacky Corp. at for the year 2017 will amount to $3,000,000.

<h3>What is annual sales?</h3>

The total amount of products sold throughout a financial year by a corporation is known as the annual sales of such corporation.

Using the given information, it can be ascertained that:

Debt-to-Equity Ratio of 0.5 and liabilities of $500,000 means that firm's assets will be, $1,000,000. Calculating further,

$\rm Asset\ Turnover\ Ratio = \dfrac{Sales}{Assets}$

Using the given formula, it can be ascertained that the total annual sales of the Stacky Corp for the year 2017 will be $3,000,000.

Hence, the annual sales of the corporation is calculated as above.

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8 0

2 years ago