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alexdok [17]
3 years ago
8

Suppose the Fed purchases $100 million of U.S. securities from security dealers. If the reserve requirement is 20 percent, the c

urrency holdings of the public are unchanged, and banks have zero excess reserves both before and after the transaction, the total impact on the money supply will be a:A.$100 million increase in the money supply.B.$100 million decrease in the money supply.C.$200 million increase in the money supply.D.$500 million increase in the money supply.
Business
1 answer:
VikaD [51]3 years ago
7 0

Answer:

The correct answer is option D.

Explanation:

The reserve requirement is 20 percent.

The Fed purchases $100 million of U.S. securities from security dealers.

The excess reserves with banks are zero.  

When fed purchased securities, this open market operation increased the reserves with banks by $100 million.  

The increase in money supply  

= \frac{1}{RR}\times Change\ in\ reserves

= \frac{1}{0.2}\times 100

= 500

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Ramon incurred $83,100 of interest expense related to his investments this year. His investment income included $34,500 of inter
cestrela7 [59]

Answer:

$72,000

Explanation:

To calculate investment interest expense dedcution, we need to know the total investment income  & total investment interest expenses

Then there're 2 scenarios as followings:

  • If the investment interest expenses are less than the net investment income, the entire investment interest expense is deductible.
  • If the investment interest expenses are more than the net investment income, we can deduct the expenses up to the net investment income amount. The rest of the expenses are carried forward to next year.

In this example, Ramon's investment income is  $72,000 ($34,500 of interest and a $37,500 net capital gain on the sale of securities); is lower than his interest expenses of $83,100.

So Ramon is entiled to deduct $72,000 all the entire investment interest expense in current year

7 0
3 years ago
Consider an economy that only produces two goods: DVDs and DVD players. Last year, 10 DVDs were sold at $20 each and 5 DVD playe
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Answer:

$4,000

Explanation:

Given that,

Last year:

DVDs sold = 10

Selling price of each DVD = $20

DVD players sold = 5

Selling price of each DVD player = $100

This year:

DVDs sold = 150

Selling price of each DVD = $10

DVD players sold = 10

Selling price of each DVD player = $60

Real GDP:

= (No. of DVDs sold this year × Selling price of each DVD last year) + (No. of DVD players sold this year × Selling price of each DVD player last year)

= (150 × $20) + (10 × $100 )

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= $4,000.

3 0
3 years ago
Define incentive. Provide an example of a financial and a non financial incentive....
Montano1993 [528]

An incentive is a thing that motivates or encourages one to do something.

Financial incentives can include things like bonuses, raises, paid time off, and other things that involve money.

Non-Financial incentives include things like recognition, respect, career development opportunities, retirement planning assistance, improved work environment, etc.

7 0
3 years ago
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A concrete block making company is developing an aggregate capacity plan from the following sales forecast for its 6” and 8” con
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3 years ago
Choco Chocolata is a cookie company in Juarez, Mexico that produces and sells American-style chocolate chip cookies with extreme
lyudmila [28]

Answer:

(1) The total amount of product costs is $79,430.

(2) The total amount of period costs is $37,300.

Explanation:

Note: There are two requirements in this question as follows:

(1) What is the total amount of product costs?

(2) What is the total amount of period costs?

These two are answered as follows:

(1) What is the total amount of product costs?

Product cost can be described as the expenses that are incurred in order to produce a product. These types of expenses are charged to cost of goods sold and include direct materials, direct labor, factory overhead, and consumable production supplies.

Therefore, the total amount of product costs of Choco Chocolata can be calculated as follows:

Choco Chocolata

Computation of Total Product Costs

<u>Details                                                                     Amount ($)   </u>

Utilities for the bakery                                                  2,100

Paper used in packaging product                                  180

Salaries and wages in the bakery                            23,500

Cookie ingredients                                                    43,500

Bakery labor fringe benefits                                        1,300

Bakery equipment maintenance                                   800

Depreciation of bakery plant and equipment           2,200

Uniforms for bakers                                                        750

Insurance for the bakery                                                900

Boxes, bags, and cups used in the bakery                 1,100

Overtime premiums                                                     2,600

Idle Time                                                                  <u>        500  </u>

Total                                                                          <u>   79,430   </u>

Therefore, the total amount of product costs is $79,430.

(2) What is the total amount of period costs?

Period costs are costs that are related to passage of time but cannot not be charged to the cost of goods sold.

Therefore, the total amount of period costs of Choco Chocolata can be calculated as follows:

Choco Chocolata

Computation of Total Period Costs

<u>Details                                               Amount ($)   </u>

Administrative costs                             2,300

Rent for administration offices            18,500

Advertising                                            3,500

Office Manager's salary                    <u>  13,000  </u>

Total                                                    <u>  37,300   </u>

Therefore, the total amount of period costs is $37,300.

8 0
2 years ago
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