Read the excerpt below from The Call of the Wild and answer the question that follows.

If the U.S. economy is producing at a level that is substantially less than potential GDP and the government's budget deficits a

diamong [38]

Answer:

an inflationary increase in the price level.

Explanation:

Monetary policy can be defined as the actions (macroeconomic policies) adopted and undertaken by the central bank of a particular country to control the money supply and interest rates so as to boost or enhance economic growth. The central bank uses monetary policies to manage inflation, economic growth through long-term interest rates and level of unemployment in a country.

In order to boost economic growth, a monetary policy is implemented to increase money supply (liquidity). Also, it is used to prevent inflation by reducing money supply.

An inflationary gap, also referred to as an expansionary gap in economics, is typically used for measuring the difference between the gross domestic product (GDP) and the current level of Real Gross Domestic Products that exists when a country's economy is gauged at a full employment rate. Consequently, this situation causes the price of goods and services to go up with a low income level among the people living in the country.

A budget deficit is the amount by which spending exceeds income.

All other factors held constant or all things being equal (ceteris paribus), an increase in government's budget deficit drives the interest rate up.

Generally, when there's a deficit in government budget, they resort to issuing more bonds or borrowing money from creditors. These creditors are likely to be sceptical about the government's ability to repay the debt and as such would increase the interest rate.

Hence, an inflationary increase in the price level of goods and services is not much of a danger if the U.S. economy is producing at a level that is substantially less than potential gross domestic product (GDP) and the aggregate demand is being increased by government's budget deficits.

3 0

3 years ago

Several years ago Brant, Inc., sold $900,000 in bonds to the public. Annual cash interest of 9 percent ($81,000) was to be paid

gtnhenbr [62]

Answer:

The Journal entries are as follows:

(1) On December 31, 2016

Bonds payable A/c Dr. $154,040

Interest income A/c Dr. $14,070

Loss on retirement of debt A/c Dr. $49,000

To investment in bonds $198,870

To Interest expense $18,240

(To record consolidation entry)

(2) On December 31, 2018

Bonds payable A/c Dr. $158,884

Interest income A/c Dr. $13,761

Investment in Zack A/c Dr. $40,266

To investment in bonds $194,152

To Interest expense $18,759

(To record consolidation entry)

Workings:

Interest expense for December 31, 2016:

Book value = 20% of Bond liability (as per equity method)

= 0.2 × $760,000

= $152,000

Interest expense = 12% of Book value

= 0.12 × $152,000

= $18,240

Interest expense for December 31, 2016:

= 12% of Book value

= 0.12 × $156,325

= $18,759

7 0

3 years ago

The general ledger of Sandhill Corporation as of December 31, 2021, includes the following accounts: Copyrights $ 58000 Deposits

Dafna1 [17]

Answer:

$687,000

Explanation:

Intangible Assets are identifiable assets of a non-monetary asset and without physical substance. Intangible assets include trademarks, copyrights and goodwill that is acquired.

Important to note that Internally generated Goodwill is not defined as an assets. Thus, deposits with advertising agency of $35,000 are not included within tangible assets

<u>Calculation of Total Intangible Assets will be :</u>

Intangible Assets Calculation = (Copyrights) $ 58,000 + (Goodwill Acquired) $560,000 + (Trademarks) $69,000

= $687,000

Therefore,

Sandhill's balance sheet as of December 31, 2021 should report total intangible assets of $687,000

5 0

3 years ago

Roma and Swain are partners in Roma & Swain Attorneys, LLP, a limited liability partnership. Roma supervises their firm's as

meriva

Answer:

b. Roma and Taylor

Explanation:

In this case each attorney is liable for his negligence, so Taylor will be liable for not appearing in court .

Roma is his supervisor, and he will also be liable because he is responsible for Taylor's performance.

The other attorneys in the firm will not be liable, because there is personal liability. When they are not directly involved in negligence, they will not be liable to Umberto.

4 0

3 years ago

Western Wear Clothing issues 1,600 shares of its $0.01 par value common stock to provide funds for further expansion. Assuming t

Kaylis [27]

Answer:

Journal Entry

Explanation:

The Journal Entry is shown below:-

Cash Dr, (1,600 shares × $13 per share) $ 20,800

To Common Stock (1,600 shares × $ 0.01 par) $16

To Additional Paid in Capital in excess of par-Common Stock $20,784

(Being Issuance of common stock is recorded)

Therefore for recording the issuance of common stock we debited cash and credited common stock and additional Paid in Capital in excess of par common stock

7 0

3 years ago