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Nadusha1986 [10]
3 years ago
14

Assume that the money demand function is (M/P)d = 2,200 – 200r, where r is the interest rate in percent. The money supply M is 2

,000 and the price level P is 2. If the price level is fixed and the Fed wants to fix the interest rate at 7 percent, it should set the money supply at:
Business
1 answer:
liubo4ka [24]3 years ago
6 0

Answer: The nominal money supply should set at 1,600.

Explanation:

Given that,

Money demand function: (M/P)d = 2,200 – 200r

r - Interest rate

Money supply (M) = 2,000

Price level (P) = 2

If the fed wants to set the interest rate at 7% then,

Money supply = money demand

(\frac{M}{P})^{s} = (\frac{M}{P})^{d}

\frac{M}{P} = 2,200 – 200r

P = 2 and r = 7%

\frac{M}{2} = 2,200 – 200 × 7

                            M = 800 × 2

                            M = 1,600

The nominal money supply should set at 1,600.

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PB8.
Sophie [7]

Answer:

                                                                   Debit               Credit

Applied overheads                                    $110,000

Cost of sales (over applied overheads)                             $4,000

Overhead control account                                                 $106,000

Explanation:

Since the estimated overhead amounting to $110,000 are greater than the actual overheads amounting to $106,000, therefore the overheads are overapplied by $4,000.

The journal entry to disposed off the overapplied overheads are given below:

                                                                   Debit               Credit

Applied overheads                                    $110,000

Cost of sales (over applied overheads)                             $4,000

Overhead control account                                                 $106,000

                   

3 0
2 years ago
Type the correct answer in the box. Spell all words correctly. What factor reflects the ‘cost of money’? The ‘cost of money’ is
Serga [27]

1) Production Opportunities

2) Time Preferences for Consumption

3) Risk

4) Inflation

Explanation:

These are the factor reflects the ‘cost of money. The cost of the borrowing is the rate of interest paid by the lender to the creditor by the supply and demand of the assets.

1) Production Opportunities  : Investment Opportunities to produce competitive (cash) assets.

2) Time Preferences for Consumption  : Present market choice rather than potential demand savings.

3) Risk  : The probability of a small or unfavourable return on an investment.

4) Inflation  : The price will growing over time.

6 0
3 years ago
This information relates to Sherper Co. 1. On April 5 purchased merchandise from Newport Company for $22,000, terms 2/10, n/10.
Feliz [49]

Answer:

April 5, purchased merchandise on account terms 2/10, n/10

Dr Merchandise inventory 22,000

    Cr Accounts payable 22,000

April 6, paid freight costs

Dr Merchandise inventory 900

    Cr Cash 900

April 7, purchase equipment on account

Dr P, P & E - Equipment 26,000

    Cr Accounts receivable 26,000

April 8, returned some merchandise (April 5th purchase)

Dr Accounts payable 2,000

    Cr Merchandise inventory 2,000

April 15, paid merchandise invoice

Dr Accounts payable 20,000

    Cr Cash 19,600

    Cr Purchase discounts 400

         or

May 4, paid merchandise invoice

Dr Accounts payable 20,000

    Cr Cash 20,000

If the company pays the invoice on April 15th, it will get a 2% discount which must be recorded as a purchase discount.

5 0
2 years ago
You have just taken a job at a manufacturing company and have discovered that they use absorption costing to analyze product cos
poizon [28]

Answer and Explanation:

Respected Sir,

Sub: Absorption costing to analyze product costs and subsequent cost-volume-profit decisions

As per your requirement please find the explanation below:

Absorption costing is a process by which we add part of the fixed overhead to the production expense of the goods. If we do on a per-unit basis. Here we will compute by dividing the fixed costs by the number of units that we built and sold over the era. Whereas Variable costing includes fixed overhead as a lump sum instead of a per-unit price.

Under this process, all your variable costs like equipment, raw materials, and shipping are included. We will add the maximum fixed overhead costs for the duration. Such costs are not calculated on a per-unit basis. Rather than we deduct them as a lump-sum expense from your income amount.

Variable costing is really useful as it reveals the earnings after all the expenses are paid for the accounting period. While you would not have earned revenue for the goods we purchased as some may be in the inventory, we are showing you have paid all of your expenses for the time. We have excess revenue when you actually sell the finished goods in the warehouse.

The absorption approach is not all that effective as absorption costing will inflate the income figures excessively in any given span of accounting. Since you're not going to subtract any of your fixed costs as we did not sell any of us produced goods, our profit and loss report doesn't reflect the maximum expenses you've had for the time. Therefore, these results may mislead us when our profitability is analyzed.

Regards

ABC

7 0
3 years ago
Ken consumes two goods, Sprite and potato chips. Sprite costs $1 per can, and he consumes it to the point where the marginal uti
borishaifa [10]

Answer:

The correct option is c. $8.

Explanation:

Ken will maximize utility where the following equation holds:

MU of Sprite / Price of Sprite = MU of potato chips / Price of potato chips ................. (1)

Where;

MU of Sprite = Marginal utility of Sprite = 3

Price of Sprite = $1 per can

From the table in the question, equation (1) holds at the point where Marginal utility of potato chips is 6 since the Potato chips cost $2 per bag.

Substituting the values into equation (1), we have:

MU of Sprite / Price of Sprite = MU of potato chips / Price of potato chips => 3 / 1 = 6 / 2 = 3

Since when the marginal utility of potato chips that maximizes utility is 6, Ken consumes 4 Bags of Potato chips monthly and pays $2 per bag at this point, the amount he spends on potato chips each month can be calculated as follows:

Amount spent on potato monthly = Number of bags of Potato chips consumed monthly * Cost of potato chips per bag = 4 * $2 = $8

Therefore, the correct option is c. $8.

3 0
2 years ago
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