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geniusboy [140]
3 years ago
12

For an economy starting at potential output, a decrease in planned investment in the short run results in a(n):

Business
1 answer:
Kruka [31]3 years ago
6 0

Question:

For an economy starting at potential output, a decrease in autonomous expenditure in the short-run results in a(n):

A. increase in potential output

B. recessionary output gap

C. decrease in potential output

D.  expansionary output gap

Answer:

The correct answer is B

Explanation:

A decrease in autonomous expenditure shifts the Planned Aggregate Expenditure curve downward thus creating a lower equilibrium output.

PAE = C + Ip + G + NX

where

PAE  = Planned Aggregate Expenditure

C = consumption

Ip = Investment Spending

G = Government Spending

NX =  Net Export

If an economy has its output equal to its potential, this will create a reduction in short-run equilibrium output leading to a recessionary output gap.

Cheers!

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Solution :

1.

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The wholesale amount that Paolo pays for the pianos to the manufacturer is an explicit cost and is aid in actual to the manufacturer.

The salary that Paolo could have earned if he choses to be an accountant will be an implicit cost as this cost is not paid in actual.

2. Paolo's accounting profit can be calculated by :

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Answer:

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Dr Finance charge 20,625

Cr Loan payable 600,000

Dr Accounts Receivable Assigned 825,000

Cr Accounts Receivable 825,000

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Cr Sales returns 22,000

Cr Accounts Receivable Assigned 720,000

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Dr Cash 579,375

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March 01,2019

Dr Accounts Receivable Assigned 825,000

Cr Accounts Receivable 825,000

(Assigning Accounts receivable)

b.Preparation of the journal entry for Rasheed's collection of the amount of $750,000 of the accounts receivable during March of 2019

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Dr Cash 750,000

Cr Sales discounts 8,000

Cr Sales returns 22,000

Cr Accounts Receivable Assigned 720,000

(750,000-8,000-22,000)

C.Preparation of the journal entry to record this payment.

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Dr Loan Payable 600,000

Cr nterest expense (600,000*8%*1/12) 4,000

Cr Cash 596,000)

(600,000-4,000)

(Loan settled along with interest)

6 0
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