All categories

3 years ago

Consider an economy described by the following equations:

Business

1 answer:

Ede4ka [16]3 years ago

8 0

Answer:

a. exchange rate = 1

b. exchange rate = 1.5

Explanation:

(a) National Saving = Private saving + public saving

Private saving = Y - C - T

=> Private saving = 5000 - (250 + 0.75(Y – T)) - 1000

=> Private saving = 5000 - (250 + 0.75(5000 – 1000)) - 1000 = 750

Public saving = T - G = 1000 - 1000 = 0

National saving = 750 + 0

= 750

Investment = 1000 - 50r = 1000 - 50*5

= 750

Y = C + I + G + NX

Trade Balance = Y - C - G - I = 5000 - (250 + 0.75(5000 – 1000)) - 1000 - 750 = 0

Thus Trade Balance = 0

NX = 0 => NX = 500 – 500e = 0

=> e = 1

Thus exchange rate = 1

(b)

National Saving = Private saving + public saving

Private saving = Y - C - T

=> Private saving = 5000 - (250 + 0.75(Y – T)) - 1000

=> Private saving = 5000 - (250 + 0.75(5000 – 1000)) - 1000 = 750

Public saving = T - G = 1000 - 1250 = -250

National saving = 750 - 250

= 500

Investment = 1000 - 50r = 1000 - 50*5

= 750

Y = C + I + G + NX

Trade Balance = Y - C - G - I = 5000 - (250 + 0.75(5000 – 1000)) - 1250 - 750 = -250

Thus Trade Balance = -250

NX = -250 => NX = 500 – 500e = -250

=> e = 750/500 = 1.5

Thus exchange rate = 1.5

You might be interested in

A likely analytical procedure to test the accuracy of purchase discounts would be to compute the ratio of cash discounts earned

NikAS [45]

A likely analytical procedure to test the accuracy of purchase discounts would be to compute the ratio of cash discounts earned to : Purchase

<h3>What is Purchase Discount?</h3>

Purchase discount is deducted to the total purchases when computing for the net purchases. This account has a normal balance of credit and decreases the total amount of cost of goods sold.

<h3>What is Analytical procedures ?</h3>

Analytical procedures refer to study of significant ratios and past trends and investigating unusual fluctuations.

Under analytical review procedures, an auditor compares financial information of the current period with those of the previous periods, applying techniques of ratio analysis and investigating the causes of unusual fluctuations and deviations.

Therefore, we can conclude that the correct option is C.

Your question is incomplete, but most probably your full question was:

A likely analytical procedure to test the accuracy of purchase discounts would be to compute the ratio of cash discounts earned to:

a. accounts payable

b. notes payable

c. purchases

d. sales discounts

Learn more about Analytical procedures on:

brainly.com/question/16370850

#SPJ4

8 0

2 years ago

Laurie Corp., a major watch manufacturer, purchases Smith Inc., a smaller company that makes watch bands. Following this purchas

solniwko [45]

Answer: True

Explanation: The given case does illustrates business acquisition. Business acquisition refers to the process in which one company purchases majority or all of the shares of another company.

In the given case, Laurie corp. purchased Smith inc. and the part of production is then transferred to the purchased company for the ease of operations.

Hence, from the above we can conclude that the answer is true.

5 0

4 years ago

The manager of a certain division at Alpha Manufacturing is evaluated on how efficiently the division uses equipment, buildings,

kumpel [21]

Answer:

Investment center

Explanation:

Investment center is a section of an organization that make use of the amount of capital at their disposal to earn more profit for the company. Their main aim is to generate more revenue for the organization.

This section of the company is solely responsible for the amount of money generated, the costs incurred during the production process and the various benefits realized.

They are accessed according to the amount of money brought into the company through various investments.

In the scenario described above, the manager of a particular section of Alpha manufacturing was evaluated on how the equipments, building and other assets were used to generate profit because they were considered as an investment center.

5 0

4 years ago

On January 1, 2021, Hage Corporation granted incentive stock options to purchase 18,000 of its common shares at $7 each. The opt

saveliy_v [14]

Answer:

104,000

Explanation:

The computation of diluted earnings per share for the quarter is shown below:-

Particulars Shares

Proceeds from exercise of options a $126,000

(18,000 × $7)

Used to repurchase of common stock b $14,000

( $126,000 ÷ $9)

Number of shares if option is exercised c 18,000

Less: Shares assume repurchased d 14,000

Potential Diluted common shares (e = c-d) 4,000

Add: Number of common shares f 100,000

Number of shares diluted earning per share 104,000

(e + f)

So, to reach the Number of shares diluted earning per share we simply add number of number of common shares with potential diluted common shares.

4 0

3 years ago

A physical inventory on December 31 shows 3,000 units on hand. Henri sells the units for $12 each. The company has an effective

bekas [8.4K]

Answer:

Lifo in inflationary- condition Income tax shows minimum amount, when there is inflation in the economy.

Fifo In inflationary condition, income tax shows a higher amount.

Lifo .in deflation .In case of deflation, larger amount of income tax is shown. Fifo in deflation .Reduced income tax will be shown in deflationary conditions

Explanation:

Lifo in inflationary- condition Income tax shows minimum amount, when there is inflation in the economy.

Fifo In inflationary condition, income tax shows a higher amount.

Lifo .in deflation .In case of deflation, larger amount of income tax is shown. Fifo in deflation .Reduced income tax will be shown in deflationary conditions.

3 0

3 years ago