Answer:
a) $10 billion
b) <em>For example, the investment made by the business in this question would become income in the hands of other transacting economic agents which in turn be re-spent by them.</em>
Explanation:
<em>Expenditure Multiplier is the amount by which the real GDP will change if autonomous expenditure changes by a given amount. </em>
It is calculated as follows: 1/(1-MPC).
MPC is the portion of additional income that is spent. If the MPC is 0.8, then the expenditure multiplier will be = 1/(1-0.8) = 5
Using the information given, if business investment increase by $2 billion, the resulting change in GDP would be
increase in real GDP = 2 billion × 5 = $10 billion
Explanation of the multiplier change in real GDP
<em>Real GDP increases by more than 2 billion because of the multiplier effect. This effect is implies that expenditures by made by one economic agent in a transaction becomes income in the hand of another which in turn be re-spent . This will continue in manifolds thereby increasing the total value of goods and services resulting from a single increase in autonomous spending in multiple fold.</em>
<em>For example, the investment made by the business in this question would become income in the hands of other transacting economic agents.</em>
Answer:
B. 904,000
Explanation:
Ash Company should report as supplemental information the amount of cash paid to suppliers = cost of goods sold + increase in inventory + decrease in accounts payable
cash paid to suppliers = $875,000 + ($83,000 - $69,000) + ($107,000 - $92,000) = $875,000 + $14,000 + $15,000 = $904,000
Apparently Ash Company buys and then resells goods, which means that one of its largest cash outflows should be suppliers. That is why it should provide supplemental information about cash paid to them.
Answer:
Explanation:
For materials:
Units transferred out 381,000*
Add:
Materials 42,000*100% = 42,000
Equivalent units 423,000
*Units transferred out = Units stated+Beg inv-End inv = 350,000+73,000-42,000 = 381,000
For conversion costs:
Units transferred out 381,000*
Add:
Conversion cost 42,000*30% = 12,600
Equivalent units 393,600
Correct answer is 423,000; 393,600
Explanation:
Is the seller licensed?
Is the investment registered?
How do the risks compare with the potential rewards?
Do you understand the investment?