Answer:
The correct answer is:
the price of shoes goes down. (A)
Explanation:
The most important determinant of demand is price. An increase in price without accompanying income to the consumer leads to a reduction in demand because more money is needed to purchase a unit of the product hence to make up for the change, the quantity demanded (purchased) reduces. On the other hand, if the price reduces, the consumer spends lesser for the same units of product, therefore he/she can afford more quantity with the same price, hence demand increases. Therefore if the price of furry boots go down, the quantity demanded increases.
Extrapolative expectations work when prices are rising, but not when prices decline. True or False True False
Answer:
False
Explanation:
Extrapolative expectations refer to an expectation in which there is a continuation of trend that means if the price of a property rises, then the demand is also rising and it pushed for more prices also there is a condition when the price is falling so it would also decrease in the market supply also it pushed out down
So the given statement is false
Matthew, vice president of human resources at Gamma Phi Corporation, is a(n) Multiple Choice middle-level manager. board manager. team leader. upper-level manager. first-line level manager.
Answer: upper level manager
Explanation:
Upper level mangers are the individuals that are charged with the responsibility of making the main and important decisions for a company. These set of individuals are at the helm of affairs and also top of corporate ladder. They also carry a greater degree of responsibility for the company.
Therefore, Matthew, vice president of human resources at Gamma Phi Corporation, is an upper level manager.
Discuss Warren Buffett’s approach to business dealings, especially as they relate to business ethics.
Answer:
Warren Buffett's ethical approach to business dealings is broadly discussed below.
Explanation:
INTEGRITY is the key word in Warren's business philosophy. He believes that a business owner or business person should make only choices that he/she would be proud of, in terms of his/her company's reputation.
FAIR TREATMENT is another approach of Buffett to the conducting of business activities. He believes that employees and suppliers; not just customers, should be treated right, as this will have a good impact on the company's reputation in the long run.
He believes it is better for a company to lose money than to lose reputation.
A client surrenders a variable annuity contract 5 years after purchase because of poor performance. Any surrender fee imposed:______.
a. increases cost basis.
b. reduces cost basis.
c. is deductible.
d. is not deductible.
Answer: d. is not deductible.
Explanation: Annuity cancellation is possible before the specified term of the contract which may occur due to poor performance or other needs best known to the holder of the contract. However, when cancellation clause of an annuity is triggered, the holder may have to bear with losses arising from the cancellation in the form of Fall in the net asset value at the time, that is if the net asset value is lower than the cost basis, this is classed as ordinary and is deductible. However, the insurer also charges a non-deductible surrender charge upon cancellation.
Paige Edley's study of discourse at a woman-owned business found that:__________
A. everyone in the business talked about having a cooperative and friendly workplace.
B. the owner of the business derided those who took off too much time for family concerns.
C. the emotional nature of communication within the organization was often labeled as simply the way women talk.
D. all of the above
Answer:
D. all of the above
Explanation:
In the research conducted by feminist Paige Edley, at an Interior Designs company where she worked for six months, she made some observations of what it meant to have worked in an environment that was made up of women.
She observed that;
1. the women tried to avoid conflict by not making many complaints about the owners, thus silencing their voice.
2. the owners of the company do not like it when workers who are mostly women take out time for family concerns such as tending to their sick children.
3. also, communication was stereotyped and labeled as women talk. The owners of the company did not walk the talk even though they were women.
Opportunities are a. internal and unfavorable. b. external and favorable. c. internal and favorable. d. external and unfavorable
Answer:
b. external and favorable
Explanation:
The SWOT analysis reveals the Strengths, Weakness in the company (Internal) and the Opportunities and Threats (External) of the company when evaluating the Company within a given market.
The Opportunities are External (arising from the macro-economic environment) and Favorable (factors that promote business).
Opportunities are external and favorable. The correct answer to the question is option B.
Going through the SWOT analysis we are taught that opportunities are caused by the market as well as all other environmental factors. This agrees with the fact that opportunities are external.
Also, opportunities and strengths are favorable factors for all organizations and economic systems.
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For each scenario, select the appropriate distribution density classification.1. Snack Time-Frito-Lay knows that hunger can strike at any time and hungry consumers want snacks quickly. Thus, Frito-Lay places its snacks in vending machines, convenience stores, grocery stores, and other retail outlets. A. Intensive Distribution.B. Selective Distribution.C. Exclusive Distribution.2. Handbag Heaven-Coach handbags can be purchased in many, but not all, mid- to high-end retailers. Coach limits the number of retailers authorized to sell its line of leather goods to manage the demand for the brand. A. Intensive Distribution.B. Selective Distribution.C. Exclusive Distribution.3. Clean Up-Households use one to two rolls of paper towels each week. To make replenishment easy, P&G makes sure consumers can buy its Bounty towels in grocery stores, discounters, warehouse clubs, convenience stores, and pharmacies. A. Intensive Distribution.B. Selective Distribution.C. Exclusive Distribution.4. British Invasion-The British luxury brand Burberry can only be purchased at a few high-end retailers like Nordstrom and Saks Fifth Avenue, in addition to Burberry retail stores. JC Penney and Kohl's are not authorized to carry the brand. A. Intensive Distribution.B. Selective Distribution.C. Exclusive Distribution.5. Distribution-Apple products have high brand equity but in a category that is very competitive. To optimize its market coverage, Apple computers are available at Apple retail stores and authorized electronics retailers. A. Intensive Distribution.B. Selective Distribution.C. Exclusive Distribution.6. Luxury Ride-There are only 54 Bentley dealerships in the entire United States. The ultra-luxury car brand comes with an exorbitant starting price of $180.195 and is only targeted at the wealthiest consumers.A. Intensive Distribution.B. Selective Distribution.C. Exclusive Distribution.
Answer:
1. Intensive Distribution
2. Selective Distribution
3. Intensive Distribution
4. Exclusive Distribution
5. Selective Distribution
6. Exclusive Distribution
Explanation:
Intensive Distribution is the one in which the product is available almost everywhere. That the product is easily available and the company ensures that it has a wide range of consumers.
Selective Distribution is the one in which the product is available only at some identified places, as for example the 5. point the apple phones are available usually at apple stores or some other specified mobile sellers, thus it is easily available yet at some limited shops only.
Exclusive Distribution is the one in which the product is available only at some exclusive shops, as in the 4th point and 6th point the luxury brand is not easily available and rather at only a few outlets of the company.
Shrives Publishing recently reported Sales $9,750.00 Operating costs excluding depreciation 4,500.00 Depreciation 1,250.00 Operating income (EBIT) $ 4,000.00 During the year, the firm had expenditures on fixed assets and net operating working capital that totaled $1,550. These expenditures were necessary for it to sustain operations and generate future sales and cash flows. What was its free cash flow
Complete Question
Shrives Publishing recently reported $9,750 of sales, $4,500 of operating costs, and $1,250 of depreciation. The company had no interest expense, and its income tax rate was 35%. During the year, the firm had expenditures on fixed assets and net operating working capital that totaled $1,550. These expenditures were necessary for it to sustain operations and generate future sales and cash flows. What was its free cash flow
Answer:
$2,300
Explanation:
The formula to calculate Free cash flow, we will use the following formula:
Free Cash Flow = EBIT (STEP1)* (1 - Tax Rate) + Depreciation - Capital Investment - Investment in Working Capital
Here
Depreciation is $1,250
Investment in Capital and working capital is $1,550
EBIT is $4,000
Tax rate is 35%
By putting values, we have:
Free Cash Flow = $4,000 * (1 - 35%) + $1,250 - $1,550
Free Cash Flow = $2,300
STEP 1: Find Earnings Before Interest and Tax
EBIT = Sales - Operating Expense Before Depreciation - Depreciation
EBIT = $9,750 - $4,500 - $1,250 = $4,000
eall Corporation has a standard cost system in which it applies manufacturing overhead to products on the basis of standard machine-hours (MHs). The company has provided the following data for the most recent month: Budgeted level of activity 10,500 MHs Actual level of activity 10,600 MHs Standard variable manufacturing overhead rate $ 7.70 per MH Budgeted fixed manufacturing overhead cost $ 70,000 Actual total variable manufacturing overhead $ 71,600 Actual total fixed manufacturing overhead $ 76,000 What was the fixed manufacturing overhead budget variance for the month
Answer:
$6,000 unfavorable
Explanation:
The fixed manufacturing overhead budget for the month is the difference between budgeted fixed manufacturing overhead cost minus actual fixed manufacturing overhead cost represented below;
Fixed manufacturing overhead budget = Budgeted fixed manufacturing overhead cost - Actual fixed manufacturing overhead cost
= $70,000 - $76,000
= $6,000 unfavorable
It is unfavorable since the actual overhead cost expended is more than the budgeted cost.
Given $100,000 to invest, construct a value-weighted portfolio of the four stocks listed below.
Stock Price/Share ($) Number of Shares Outstanding (millions)
Golden Seas 14 1.43
Jacobs and Jacobs 24 1.44
MAG 43 29.52
PDJB 9 11.48
Required:
Write down the the portfolio weight.
Answer:
Weight of Golden Seas in the portfolio = 1.40%
Weight of Jacobs and Jacobs in the portfolio = 2.42%
Weight of MAG in the portfolio = 88.94%
Weight of PDJB in the portfolio = 7.24%
Explanation:
This can be done as follows:
Step 1: Calculation of value of each stock
Value of stock can be calculated using the following formula:
Value of a stock = Price per share * Number of shares outstanding................ (1)
Using equation (1), we have:
Value of Golden Seas = $14 * 1.43 millions = $20.02 millions
Values of Jacobs and Jacobs = $24 * 1.44 millions = $34.56 millions
Value of MAG = $43 * 29.52 millions = $1,269.36 millions
Values of PDJB = $9 * 11.48 millions = $103.32 millions
Step 2: Calculation of value of the portfolio
This can be obtained by adding the values of all the stocks in step 1 as follows:
Value of the portfolio = Value of Golden Seas + Values of Jacobs and Jacobs + Value of MAG + Values of PDJB = $20.02 millions + $34.56 millions + $1,269.36 millions + $103.32 millions = $1,427.26 millions
Step 3: Calculation of weight of each stock in the portfolio
The weight of each stock in the portfolio is obtained as the values of each stock divided by the value of the portfolio. This can be calculated as follows:
Weight of Golden Seas in the portfolio = $20.02 millions / $1,427.26 millions = 0.0140, or 1.40%
Weight of Jacobs and Jacobs in the portfolio = $34.56 millions / $1,427.26 millions = 0.0242, or 2.42%
Weight of MAG in the portfolio = $1,269.36 millions / $1,427.26 millions = 0.8894, or 88.94%
Weight of PDJB in the portfolio = $103.32 millions / $1,427.26 millions = 0.0724, or 7.24%
Suppose there are 5 gas stations in Durham. All of them sell, among other things, 87 octane regular unleaded gas. Which of the following best describes the market for 87 octane gas in Durham?
a) monopoly
b) undifferentiated oligopoly
c) perfect competition
d) monopolistic competition
Answer:
b
Explanation:
An Oligopoly is when there are few large firms operating in an industry. While, a monopoly is when there is only one firm operating in an industry.
Oligopolies are characterised by:
Firms that set the market price for their productsprofit maximisation high barriers to entry or exit of firms downward sloping demand curve87 octane gas in Durham is the same in each of the five stations, so the product is undifferentiated
A perfect competition is characterised by many buyers and sellers of homogeneous goods and services. Market prices are set by the forces of demand and supply. There are no barriers to entry or exit of firms into the industry.
A monopolistic competition is when there are many firms selling differentiated products in an industry.
A monopoly is when there is only one firm operating in an industry.
An example of a monopoly is a utility company
The risk-free rate of return is 8%, the expected rate of return on the market portfolio is 15%, and the stock of Xyrong Corporation has a beta coefficient of 1.2. Xyrong pays out 40% of its earnings in dividends, and the latest earnings announced were $10 per share. Dividends were just paid and are expected to be paid annually. You expect that Xyrong will earn an ROE of 20% per year on all reinvested earnings forever. a. What is the intrinsic value of a share of Xyrong stock? (Do not round intermediate calculations. Round your answer to 2 decimal places.) b. If the market price of a share is currently $100, and you expect the market price to be equal to the intrinsic value one year from now, what is your expected 1-year holding-period return on Xyrong stock? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
Answer:
a.
P0 = $101.82
b.
Holding period return = 18.52%
Explanation:
a.
The intrinsic value of the share can be calculated using the constant growth model of DDM. The DDM values the share based on the present value of the expected future dividends from the stock. The formula for Price today under this model is,
P0 = D1 / r - g
Where,
D1 is the expected dividend for the next period or Year 1 or D0 * (1+g)r is the required rate of returng is the constant growth rate in dividendsFirst we need to calculate the r or required rate of return using the CAPM equation.
r = rRF + Beta * (rM - rRF)
Where,
rRF is the risk free rate and rM is the return on marketr = 0.08 + 1.2 * (0.15 - 0.08)
r = 0.164 or 16.4%
The constant growth rate on the stock can be calculated as follows,
Constant or sustainable growth rate or g = ROE * RR
Where,
ROE is return on equityRR is retention ratio or (1 - Dividend payout ratio)g = 0.2 * (1 - 0.4)
g = 0.12 or 12%
As the earnings per share were $10 and the payout ratio is 40%, the dividend per share or D0 was 10 * 0.4 = $4
P0 = 4 * (1+0.12) / (0.164 - 0.12)
P0 = $101.8181818 rounded off to $101.82
b.
The price one year from now will be,
P1 = D2 / (r - g)
P1 = 4 * (1+0.12)^2 / (0.164 - 0.12)
P1 = $114.0363636 rounded off to $114.04
Dividend Year 1 = 4 * 1.12 = 4.48
The formula for holding period return is attached.
Holding period return =[ 4.48 + (114.0363636 - 100) ] / 100
Holding period return = 0.185163636 or 18.5163636% rounded off to 18.52%
What are 3 benefits of adding non-QuickBooks Online clients to your Client List in QuickBooks Online Accountant
Answer:
The answer is below
Explanation:
There are quite some benefits of adding non-QuickBooks Online clients to your Client List in QuickBooks Online Accountant, in which three amongst them are:
1. It gives the opportunity to keep all the clients' data, including documents in a specific place together
2. It gives the user a chance to easily transfer to clients, the saved documents in QuickBooks Online Accountant
3. A user can easily create projects and tasks for non-QuickBooks Online clients in the work tab in order to meet some crucial clients deadlines.
Which one of the following firms would be described as having below-average sensitivity to the state of the economy?
A) A defensive firm
B) A stalwart firm
C) A cyclical firm
D) An asset play firm
Answer: A) A defensive firm
Explanation:
Defensive firms have a below-average sensitivity to the state of the Economy which is shown by them maintaining stable returns regardless of if the Economy is in boom or in a recession.
Because of this their stock are highly sough after in Recessions as opposed to Booms because in Recessions they offer better returns than other types of firms but in Booms they will offer lower.
Examples of such firms include those that supply human necessities such as electricity and water.
What is the operating income using variable costing if units are sold for each?
Answer:
$29,200
Explanation:
Computation of the operating income using absorption costing
Operating income using absorption costing
Sales Revenue $64,000
($160×400 units)
Less :Cost of Goods Sold ($26,800)
[($57×400 Units)+$4,000]
Gross Profit $37,200
Less:Selling and Administrative Costs ($8,000)
($12×400 units)+$3,200
$4,800+$3,200=$8,000
Operating Income$29,200
($37,200-$8,000)
Calculation for Cost of goods sold
Direct materials, $9 per unit
Direct labor $30per unit
Variable manufacturing overhead $18 per unit
Total =$57
Therefore the operating income using absorption costing will be $29,200
John ________ a difficult time at the university this year. (have)
John had a difficult time at the university this year
When assessing sample frame error, which two factors are to be considered?a) the cost of the frame versus the accuracy of the frame.
b) are people in the frame different from the population and are people in the population not on the frame's list.
c) the coincidence rate and the bi-incidence rate.
d) the cost versus the timeliness of the frame.
e) all of the above actually must be considered.
Answer:
Are people in the frame different from the population and are people in the population not on the frames's list ( B )
Explanation:
The two factors that are to be considered : are people in the frame different from the population and are people in the population not on the frames's list. this is because sample frame errors are caused by the presence of respondents who do not qualify for a survey, responding to a survey been carried out and this action will cause an imperfect representation of the population that the survey was intended for.
The Shirt Company manufactures shirts in two departments: cutting and sewing. The company allocates manufacturing overhead using a single plantwide rate with direct labor hours as the allocation base. Estimated overhead costs for the year are 200,000 and estimated direct labor hours are 100,000. In June, the company incurred 15,500 direct labor hours.
1) Compute the predetermined OH allocation rate.
2) Determine the amount of OH allocated in June. The estimated costs for the cutting dept are 259,600. They will be allocated based on direct labor hours, which are estimated to be 118,000 hours for the year. The estimated costs for the sewing department are 513,000. Those costs will be allocated based on machine hours, which are estimated to be 190,000 hours for the year. In June, the company incurred 7,000 direct labor hours in cutting and 13,000 machine hours in sewing.
3) Compute the predetermined OH allocation rates for each department.
4) Determine the total amount of OH allocated in June.
Answer and Explanation:
1. The computation of predetermined OH allocation rate is shown below:-
Predetermined OH allocation Rate = Estimated overhead cost ÷ Estimated Direct labor hours
= 200,000 ÷ 100,000
= 2
2. The computation of the amount of OH allocated in June is shown below:-
Amount of OH allocated in June = Actual Direct labor hours × Overhead allocation Rate
= 15,500 × 2
= 3,100
3. The computation of predetermined OH allocation rates for each department is shown below:-
Overhead allocation Rate Estimated overhead costs ÷ Estimated Direct labor hour
For Cutting Dept = 259,600 ÷ 118,000
= 2.2
For Sewing Dept = 513,000 ÷ 190,000
= 2.7
4. The computation of the total amount of OH allocated in June is shown below:-
Amount of overhead allocated in June
= Machine hours × Predetermined OH allocation rate
For Cutting Dept = 13,000 × 2.2
= 28,600
For Sewing Dept = 7,000 × 2.7
= 18,900
It is _______ for a company to issue equity than debt; it is ________ for an investor to buy equity in a company than debt in the same firm.
Answer:
It is safer for a company to issue equity than debt
It is riskier for an investor to buy equity in a company than debt in the same firm
Explanation:
If company issues debt that it has to make fixed interest payments, thus even if company is making losses, it has to pay interest which is not in case of equity. Hence, it is riskier option for the company to raise debt.
On the other, if investor in debt, then he will get fixed interest, thus debt option is relatively cheap than equity for investor
"An investor purchases $10,000 worth of marginable stock in his margin account. If the investor wishes to pay for this trade using $5,000 of fully paid marginable stock, how much more in cash, if any, will the investor need to deposit?"
Answer:
The investor will need to deposit additional $5,000 cash.
Explanation:
a) Data:
Marginable stock in margin account = $10,000
Payment with fully paid marginable stock = $5,000
Balance to be called in the margin account = $5,000 ($10,000 - $5,000)
b) Mrs. Christie opens an account with a brokerage firm by borrowing from the broker in order to purchase stocks or other financial products, and the broker's loan is secured on the collateral of the purchased investments and cash deposited into the account, then a margin account exists. A margin account attracts a periodic interest rate. Though, it gives Mrs. Christie the opportunity to purchase more securities than her funds would have initially allowed her, it has all the rewards and risks attached.
c) The stocks or securities which Mrs. Christie has thus purchased are said to be marginable stocks because they are paid for by a loan from the brokerage or other financial institution that lends the money for these trades.
Which variable of the marketing mix is most affected by Dell’s decision to become a "make-to-stock" manufacturer?
Answer:
distribution variable
Explanation:
The marketing mix consist of all combinations of factors that get people or consumers to purchase a company's products. It is a set of tools utilized by the company to optimally market it's products and increase it's sales. From the question above, Dell utilizes the distribution variable in its marketing mix to influence customers purchases. This means that Dell modifies it's model of distribution in the sense that it includes retail stores in its distribution, including the middle man to get it's stock delivered to its customers at the shortest possible time(not 7 to 10 days). In doing this Dell becomes a "make to stock " producer and not "built to order" which consumes more time in producing and getting the product to the buyer.
Athena Company provides employee health insurance that costs $14,200 per month. In addition, the company contributes an amount equal to 5% of the employees' $142,000 gross salary to a retirement program. The entry to record the accrued benefits for the month would include a:________.
Debit to Employee Retirement Program Payable $7,100.
Credit to Employee Benefits Expense $14,200.
Debit to Payroll Taxes Expense $21,300.
Debit to Employee Benefits Expense $21,300.
Debit to Medical Insurance Payable $14,200.
Answer:
Debit to Employee Benefits Expense $21,300
Explanation:
Based on the information given the Journal entry to record the accrued benefits for the month would include a Debit to Employee Benefits Expense for the amount of $21,300 calculated as:
5% × $142,000 gross salary
=$7,100
Hence employee health insurance costs $14,200 per month +$7,100
=$21,300
Therefore The entry to record the accrued benefits for the month would include a:
Debit to Employee Benefits Expense $21,300
You are a shareholder in an S corporation. The corporation earns $2.31 per share before taxes. As a pass-through entity, you will receive $2.31 for each share that you own. Your marginal tax rate is 35%. How much per share is left for you after all taxes are paid
Answer:
$1.50
Explanation:
Calculation for How much per share is left for you after all taxes are paid
Using this formula
Amount per share left= Amount per share-(Amount per share× marginal tax rate
Let plug in the formula
Amount per share left=$2.31-($2.31×35%)
Amount per share left=$2.31-0.8085
Amount per share left=$1.50
Therefore How much per share is left for you after all taxes are paid will be $1.50
Consumers will pay the full tax that is placed on the sellers of a good if demand is __________ or supply is __________.
Answer:
Perfectly inelastic, Perfectly elastic
Explanation:
Consumers will pay the full tax that is placed on the sellers of a good if demand is Perfectly inelastic or supply is Perfectly elastic. The reason for this is that the complete tax burden is borne by a perfectly inelastic side and no tax burden falls on the perfectly elastic side of a transaction.
A client invests $100,000 in a tax shelter as a limited partner, giving him a 10% interest in the program. However, the general partners cannot meet the program's expenses. A mortgage balance of $3 million remains, and the property of the program is liquidated for $1 million. How much does the investor get back from his original investment
Answer: 0
Explanation:
From the question, we are informed that a client invests $100,000 in a tax shelter as a limited partner, giving him a 10% interest in the program but that, the general partners cannot meet the program's expenses.
We are further told that a mortgage balance of $3 million remains, and the property of the program is liquidated for $1 million. The investor get back nothing from his original investment
This is because a limited partner will not get return of his investment. The creditors of the partnership have to be paid first in a failed program.
Question 9 of 25
Eugene is itemizing deductions on his federal income tax return. His AGI was
$185,170 last year, and he contributed $94,660 to charity. If charitable
contributions are deductible up to 50% of a taxpayer's AGI, how much can
Eugene deduct for charitable contributions?
A. $47,330
B. $185,170
C. $92,585
D. $94,660
SUBMIT
Answer:
$92,585
Explanation:
Apex
Which of the following statements regarding a 30-year monthly payment amortized mortgage with a nominal interest rate of 8% is CORRECT?
A. Exactly 8% of the first monthly payment represents interest.
B. The monthly payments will decline over time.
C. A smaller proportion of the last monthly payment will be interest, and a larger proportion will be principal, than for the first monthly payment.
D. The total dollar amount of principal being paid off each month gets smaller as the loan approaches maturity.
E. The amount representing interest in the first payment would be higher if the nominal interest rate were 6% rather than 8%.
Answer:
C. A smaller proportion of the last monthly payment will be interest, and a larger proportion will be principal, than for the first monthly payment.
Explanation:
I prepared a summary of an amortization schedule to explain this:
principal = $100,000
r = 8% annual
n = 360 months
first payment = $733.76: $666.67 are interests and only $67.09 reduces principal
second payment = $733.76: $665.95 are interests and only $67.54 reduces principal
last payment = $733.76: $4.90 are interests and only $728.86 reduces principal to $0
intext:"Jared's Co. has total assets of $60,000 and total liabilities of $40,000. Its debt-to-equity ratio is"
Answer:
Debt to Equity ratio = 2
Explanation:
The debt to equity ratio is a financial ratio to measure the proportion of debt financing in a company's capital structure in relation to the shareholders' equity. The debt to equity ratio can be calculated as follows,
Debt to Equity ratio = Total Liabilities / Total Equity
To calculate the value of total equity, we will use the basic accounting equation which is,
Total assets = Total Liabilities + Total Equity
60000 = 40000 + Total Equity
Total Equity = 60000 - 40000 = $20000
Debt to Equity ratio = 40000 / 20000
Debt to Equity ratio = 2
g transfers $15,000 from her small time deposit at the Bank of Alabama to her savings account. M1 _______ and M2 _______.
Answer:
M1 WILL REMAIN THE SAME and M2 WILL REMAIN THE SAME.
Explanation:
M1 includes:
coins and bills in circulationchecking accountstravelers' checksM2 includes:
M1savings accounts: THE $15,000 WERE DEPOSITED HEREmoney market fundssmall time deposits: THE $15,000 WERE WITHDRAWN FROM HEREg If the Fed sells government securities, in the short run the nominal interest rate ________ and the real interest rate ________.
Answer:
The answer is: If the Fed sells government securities, in the short run the nominal interest rate increases and the real interest rate also increases.
Explanation:
In the open market operations tool, Fed can sell government securities, mostly bonds, to reduce the money supply by replacing outstanding cash in the market with securities. Consequently, in the short run, the nominal interest rate will increase. The real interest rate is the nominal rate minus the inflation rate. Also in the short run, when the general prices or inflation hasn't been affected by Fed's intervention, the real interest rate will increase too.