Answer: Price of coffee beans falls and quantity of coffee beans rises.
Explanation:
Exceptionally good weather increases the harvest of the coffee bean crop. This leads to an increase in the supply of coffee beans, shifting the supply curve of coffee beans to the right. The price of coffee beans falls while the quantity of coffee beans sold rises.
Fall in the price of coffee beans will lead to an increase in the supply of coffee cups leading to a fall in the price of coffee cups as well. Quantity of coffee cups rises.
Since, coffee cups and donuts are complements, fall in the price of coffee beans will lead to a rise in the demand for donuts, leading to a rise in the price of donuts and quantity of donuts sold.
Answer:
Explanation:
A. The effect of a permanent increase in government purchases is different from that of a temporary increase.
I case of a permanent increase, the income effect is more as compared to that of a temporary increase. This happens because in case of a permanent increase, the present value of taxes is high in order to pay for the added government purchases. Hence, labor supply increases more in case of permanent change.
B. When consumption falls by the equal amount of taxes, there will be no change in the desired national savings. As a result, there will be no shift in the savings curve. If investment is also not changed or affected, The IS curve would not shift.
C. When there is a permanent increase in government purchases and taxes, the supply of labor will increase, thus shifting the FE curve to the right. In order to restore equilibrium back in the economy, the price level must decline, shifting LM curve to the right. As a result, output increases and interest rate falls.
Answer:
Pension expense:
= Service cost + Interest on PBO - actual return
= 40,000 + (10% * 160,000) - 15,000
= $41,000
PBO at end of year:
= Beginning PBO+ Service cost + Interest on PBO - Benefits paid
= 160,000 + 40,000 + (10% * 160,000) - 20,000
= $196,000
Pension Assets at end of year:
= Beginning PBO + Return + Contribution - Benefits
= 160,000 + 15,000 + 30,000 - 20,000
= $185,000
