Answer:
c. fall from 20 to 10.
Explanation:
The formula for the money multiplier is 1/reserve ratio,this means that the lower the reserve ratio the higher the multiplier, the reason for this is when the reserve ratio is lower banks can loan out a higher proportion of money therefore more money is created thus the multiplier and reserve ratio have an inverse relationship.
when the reserve ratio is 5% the multiplier is 1/0.05=20
When the reserve ratio is changed to 10% the multiplier is 1/0.1= 10
So the multiplier changes from 20 to 10.
The new classical critique of activist fiscal policy is theoretically different from the crowding-out critique. Crowding-out occurs when private spending __________ in response to government spending. Under the new classical critique, increased government spending leads people to __________ their current savings in order to help pay for higher taxes in the future.
A. decreases; decrease
B. increases; increase
C. decreases; increase
D. increases; decrease
Answer:
C. decreases; increase
Explanation:
Although both the crowding-out critique and the classical critique both argue that more public spending (activist fiscal policy) will lead to less private spending (thus less-than-expected increase in demand for the economy to grow), the reasons they put forward are subtly different.
Crowding-out happens because government spending reduces the money supply (hence raise interest rate - the price of money) or investment opportunities to the private sector, making it difficult for the private sector to spend , hence there's less private spending.
The classical critique argues that because people anticipate that goverment will increase tax in the future to cover for the fiscal deficit, they will save more to pay for tax, also leading to less private spending.
Andrea purchased an auto insurance policy with bodily injury liability limits of 250/500 ($250,000/$500,000). She also purchased a personal umbrella policy with a $1 million limit and a $500 self-insured retention. Andrea was talking on her cell phone while driving, and her car struck and killed a pedestrian in a crosswalk. The court ordered her to pay $750,000 to the spouse of the person she killed. How will this claim be settled?
Answer:
Auto insurance policy with Bodily injury liability limits = 250/500
personal umbrella policy with a limit = $1 million
Self-insured retention = $500
Here, total claim = $750,000
Amount paid by the auto insurance policy = $250,000
Remaining = $750,000 - $250,000
= $500,000
Remaining claim amount of $500,000 shall be paid by the umbrella policy.
If the company has selected its target market and positioning carefully, then its marketing mix strategy, including price, will be fairly straightforward. Of the following, which is NOT one of the common pricing?
A. Avoiding government intervention
B. Supporting re-sellers and gaining their support
C. Customer retention and building profitable customer relationships
D. Preventing competition
E. Grabbing international market share
Answer:
The correct answer is A. Avoiding government intervention
Explanation:
The marketing mix is a concept that is used to define all the tools and variables available to the marketing manager. In the digital world, the marketing mix strategy consists of adapting the product, price, place and promotion to the digital context.
The Marketing Mix is about putting the right product, in the right place, at the right time and at the right price. The hard part is doing well, since you need to know all aspects of your business plan.
For its part, the marketing mix is predominantly associated with the 4P’s of marketing, the 7P’s of service marketing and the 4 Cs developed in the 1990s.
So the Marketing Mix is basically composed of four main pieces that create the image of a successful business.
The price, the place or place, the promotion and the product, known as «4 Ps», are the basis of what your company is about. After all, selling the right product at the right price is how it is done in good business.
Starbucks is using its purchasing power to continue its quest to reduce its energy usage. Recently, the company announced plans to replace all of the traditional incandescent and halogen bulbs in its stores worldwide with more efficient light-emitting diode (LED) bulbs—a move the company claims will enable it to cut energy consumption in its stores by up to 7 percent. Starbucks would be considered a leader in____________.
Answer:
Sustainable procurement
Explanation:
Sustainable procurement is a purchasing and venture process that. considers the financial, ecological and social effects of. the substance's spending. Feasible acquirement permits associations. to address their issues for products, administrations, development works and utilities.
The primary focus reasonable obtainment is to incorporate natural and social contemplations into the procurement procedure, with the objective of lessening antagonistic effects upon well being, social conditions and the earth, in this manner sparing significant expenses for open segment associations and the network on the loose.
Who is responsible for fiscal policy?
A. Fiscal policy is controlled by market forces.
B. The Federal Reserve controls fiscal policy.
C. The federal government controls fiscal policy.
D. The federal government and the Federal Reserve jointly control fiscal policy.
Answer:
C. The federal government controls fiscal policy.
Explanation:
Fiscal policy are policies enacted by the government using its spending or taxes to stabilise the economy. There are two types of fiscal policy, expansionary and contractionary fiscal policy.
1. Expansionary fiscal policy is a policy that increases the money supply in an economy. They include :
A. Reduction of taxes - this increases disposable income and increases consumer spending which increases money supply.
B. Increased government spending- this is when government increases its spending usually on public projects.
2. Contractionary fiscal policy are policies that reduces the money supply in an economy. They include:
A. Increase in taxes- an increased tax reduces disposable income and money supply in an economy.
B. Reduced government spending - reduced government spending reduces money supply.
Monetary policy is policy controlled by the Federal Reserve.
I hope my answer helps you.
The federal government, specifically the President and Congress, controls fiscal policy which includes tax rates, government budgets, and social welfare programs.
Explanation:The entity responsible for fiscal policy is option C. The federal government. Fiscal policy involves the use of government spending and tax policies to influence the economy. Unlike monetary policy, which is managed by the Federal Reserve, fiscal policy is determined by the President and Congress. They decide on matters such as tax rates, government budgets, and social welfare programs. This policy plays a vital role in influencing the direction of the economy. Examples of fiscal policy tools include increasing government spending during a recession to stimulate economic growth or decreasing taxes to encourage consumer spending.
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Merchandise that was purchased on the account was accepted by the Orion Company. As of December 31, Orion had recorded the transaction using the periodic method but did not include the merchandise in its inventory. What would be the effect of this on the financial statements for December 31?
Answer:
In the balance sheet the assets would be understated, merchandise inventory would be lower, which would unbalance the balance sheet. The transaction was already recorded, so accounts payable increased.
If the merchandise was not sold yet, then the income statement wouldn't be altered, but if the merchandise was sold then the COGS could have been understated, resulting in income overstating.
Phil has been working on a new version of his company's best-selling sales management software and now he'd like to ask several co-workers and a handful of the existing version's top users to perform an acceptance test. Phil is preparing for _________.
A. Gamma Testing
B. Beta Testing
C. Delta Testing
D. Alpha Testing
Answer:
The correct answer is (D)
Explanation:
Alpha Testing is characterised as a kind of programming testing performed to recognise bugs before clearing the item to genuine clients or general society. It is a sort of acknowledgement testing. Phil is as of now dealing with the main period of alpha testing where the principal testing is finished by in-house designers.The goal is to perform the tasks that a typical user might execute.
___________ is the stage of new-product development that involves promoting a product to distributors, and developing advertising and sales campaigns in order to generate and maintain consumer interest.
Answer: Commercialization
Explanation:
The commercialization stage is the process in which the various types of new products and the services are developed in the market.
In the commercialization stage the new products are get launched and also promoted for increase the demand of the new products and services in the market.
The main key function of the commercialization stage is that achieve the various types of commercial success and also the customer support of the new products. It is mainly the process introduce the new products in the market.
During the current year, Ashley Corporation charged the following payments to
miscellaneous expense:
Travel expense of $300 for the company president to offer
voluntary testimony at the state capital against proposed
legislation regarded as unfavorable to its business
Christmas gifts to 20 customers at $75 each
Contribution of $600 to local political candidate
The maximum deduction that Ashley can claim for these payments is
A. $800
B. $1,400
C. $1,800
D. $2,400
Answer:
option (D) $2,400
Explanation:
Data provided in the question:
Payments to miscellaneous expense:
Travel expense = $300
Total value of Christmas gifts = 20 × $75 = $1,500
Contribution to local political candidate = $600
Now,
The maximum deduction that Ashley can claim for these payments
= Travel expense + Total value of Christmas gifts + Contribution to local political candidate
= $300 + $1,500 + $600
= $2,400
Hence,
The correct answer is option (D) $2,400
The objective of layout strategy is to:
a. minimize space used.
b. maximize worker satisfaction.
c. develop an effective and efficient layout that will meet the firm's competitive requirements.
d. maximize flexibility.
e. minimize cost.
Answer:
c. develop an effective and efficient layout that will meet the firm's competitive requirements.
Explanation:
The objective of layout strategy is to develop an effective and efficient layout that will meet the firm's competitive requirements.
Rose Co. sells one product and uses the last-in, first-out method to determine inventory cost. Information for the month of January follows: Total Units Unit Cost Beginning inventory, 1/1 8,000 $8.20 Purchases, 1/5 12,000 7.90 Sales 10,000 Rose has determined that at January 31, the replacement cost of its inventory was $8 per unit, and the net realizable value was $8.80 per unit. Rose’s normal profit margin is $1 per unit. Rose applies the lower-of-cost-or-market rule to total inventory and records any resulting loss. At January 31, what should be the net carrying amount of Rose’s inventory?
A. $79,000
B. $78,000
C. $80,000
D. $81,400
Answer:
C) $80,000
Explanation:
Since Rose uses the LIFO method for determining COGS, the 10,000 units sold should be recorded at $7.90 (purchase price 1/5).
10,000 units still remain in inventory (8,000 beginning + 2,000 last purchase). Using the LIFO costing method the inventory unit cost should be [(8,000 x $8.20) + (2,000 x $7.90)] / 10,000 = $8.14 per unit
If the replacement cost is $8 per unit, and Rose decides to use lower-of-cost-or-market rule, then she should use the lowest cost which is the replacement cost ($8 < $8.14).
So the ending inventory's total cost is $8 per unit x 10,000 units = $80,000
David manages a Shoney's restaurant. He is considering staying open later in the evening. For David, the variable costs associated with staying open longer hours will include all of the following except___________.a.rent on the restaurant building.b.hours worked by the servers.c.energy costs.d.hours worked by cooks.e.ingredients used in preparing food.
Answer:
.a.rent on the restaurant building.
Explanation:
Variable costs are costs that changes with the level of production.
If David extends opening hours, hours worked by the servers, energy costs, hours worked by cooks and ingredients used in preparing food would increase. Therefore, they are all variable cost.
Fixed cost are costs that do not change with production level.
If David extends opening hours, the rent paid isn't affected in any way.
I hope my answer helps you.
Final answer:
The variable costs of staying open later include hours worked by the servers and cooks, energy costs, and ingredients used in preparing food. The rent on the restaurant building is a fixed cost and not affected by the restaurant's hours of operation. The correct option is a.
Explanation:
Among the options provided, the correct answer is 'a. rent on the restaurant building.' Variable costs are expenses that change in proportion to the activity of a business. In the scenario where David is considering staying open later, the variable costs would include 'b. hours worked by the servers,' 'c. energy costs,' 'd. hours worked by cooks,' and 'e. ingredients used in preparing food,' since all these costs will vary depending on how long the restaurant is open and how much business it does.
However, 'a. rent on the restaurant building' is considered a fixed cost because it remains constant regardless of how long the restaurant stays open. Even if David decides to extend the business hours, the rent will not change, making it a fixed expense and not a variable one. It's important to distinguish between fixed and variable costs when making decisions about business operations, such as extending opening hours.
In many countries, people hold money as a cushion against unexpected needs arising from a variety of potential scenarios (e.g., banking crises, natural disasters, health problems, unemployment, etc.) that are not usually covered by insurance markets. Explain the effect of such a behavior on the precautionary component of the demand for money.
Explanation:
precautionary demand for money is classified as money that are held to cover for unforeseen occurrence e.g, an accident or illness.
It should also be noted that: The amount of money held for such purposes is broadly dependent on the level of income and expenditure.
With more income the precautionary demand will increase because there are more likely to be surprises in the timing or magnitude of the correspondingly high expenditures
A higher rate of interest represents a higher opportunity cost of holding money for any reason, including the precautionary reason, and so leads to lower precautionary holdings.
At Wilson Manufacturing, evaluators are required to justify in writing extremely high or extremely low-performance ratings that are given to employees.
Which of the following is the most likely outcome of this requirement?
A) leniency
B) central tendency error
C) halo error
D) recent behavior bias
Answer:
(B) Central tendency error
Explanation:
Central tendency of error is generally known as the tendency of managers a to rate all or most of the employees or interviewees as average.A term in execution examinations or enlistment talking with process.
To assess and grade a dominant part of representatives or subjects as normal or away from the extraordinary purposes of the scale. Therefore, exceptions are hard to recognize.The effect of the focal inclination blunder increments with increment in rating scale size.
Suppose that McDonalds and Yum Brands are the sole producers of a quadruple-decker chicken and hamburger sandwich. The two firms currently charge the same price for their products. If neither firm reduces the price of its quadruple-decker chicken and hamburger sandwich, each firm earns $40 million in profit. If both firms reduce their prices, then each firm will earn $9 million in profit. If one firm reduces its price and the other does not, then the firm that reduces price will earn a profit of $70 million while the other firm will earn a profit of $2 million.
Assuming that collusion is not a possibility, the Nash equilibrium occurs when
Answer:
Both companies will reduce their prices.
Explanation:
Given that collusion is not possible between McDonald's and Yum, both companies will try to earn more money by reducing their prices and increasing their profits to $70 million. They will do this hoping that the other firm doesn't modify its pricing strategy.
Cream Bay has come out with a new range of ice creams. To promote the new products, Cream Bay has set up shopping mall kiosks to offer free ice cream samples to potential customers. Which promotion tool is Cream Bay most likely using?A) rebates
B) price packs
C) point-of-purchase promotions
D) coupons
E) advertising specialties
Answer:
The answer is letter C.
Explanation:
The promotion tool used by Cream Bay Ice Cream is a point-of-purchase promotions
Answer:
C) point-of-purchase promotions
Explanation:
A point of purchase (POP) strategy refers to planning the placement of the products your company is trying to offer. POP strategies usually include product displays located in very specific places, e.g. near checkout counters or in aisle intersections. They are located in strategic places in order to draw the attention of potential customers.
In this case, Cream Bay doesn't use a product display, instead it uses a kiosk since they need more space, which should be strategically placed in high traffic areas within a mall.
Grouper Corp. retires its $640000 face value bonds at 105 on January 1, following the payment of annual interest. The carrying value of the bonds at the redemption date is $663970. The entry to record the redemption will include a________
Answer:
Explanation:
The journal entry is shown below:
Bonds payable A/c Dr $640,000
Premium on bonds payable A/c Dr $23,970
Loss on bonds redemption A/c $8,030
To Cash A/c $672,000 ($640,000 × 1.05)
(Being the redemption of bond is recorded and the remaining balance is debited to the Loss on bonds redemption account)
The Premium on bonds payable is computed below:
= Carrying value of the bonds - face value of the bond
= $663,970 - $640,000
= $23,970
A market in which firms can enter and leave so easily that firms in the market face competition from potential entrants is a _______ market.
A. potential
B. cooperative
C. contestable
D. perfectly competitive
Answer:
The correct answer is option D.
Explanation:
A perfectly competitive market is a market structure where there is no limitation or restriction on entry and exit of firms in the market. All potential firms can easily enter the market and all existing firms can easily exit.
There are a large number of sellers in the market that sell homogenous products. Because of free entry and exit, these firms face competition from potential entrants. Since there is a large number of firms, these firms are price takers.
The transferring of business functions or processes to other companies has traditionally been known as ch12 Select one:
a. Joint venture.
b. Partnering.
c. Downsizing.
d. Outsourcing.
e. Subcontracting.
Answer: (D) Outsourcing
Explanation:
The outsourcing is the one of the type of agreement between the two companies in which the one organization or company transferring all the business function into the another company. In technically terms, one organization hires the another organization.
Then, the company handle all its services and operations by proper outsourcing. The main purpose of the outsourcing is that by using the efficient strategy the one company hires another for increasing the productivity.
Therefore, Option (D) is correct.
This is a graphic representation of the quantity producers are willing to produce at different prices.
Answer:
The correct answer is: supply curve.
Explanation:
The supply curve is the graphical representation of the supply of a product. The supply of a product can be defined as the quantity of goods or services that a producer is willing to produce at a given time.
The supply schedule shows the quantity the producers are willing to supply at different prices. Its graphical representation is the supply curve.
The supply curve is an upward sloping curve indicating a positive relationship between the price level and the quantity supplied.
market is in long-run equilibrium and firms in this market have identical cost structures. Suppose demand in this market decreases. Which of the following will happen to the market quantity as the market leaves and then returns to long-run equilibrium?
Answer:
There will be oversupply. Pressure will be exerted on price. Weak producers will leave. Supply will fall. Price will rise. A new long run equilibrium will be attained, albeit at a lower equilibrium quantity.
Explanation:
Change in demand or supply will cause the equilibrium position to change. Given a constant supply, a reduced demand would result in supply overshadowing demand. Identical cost structure means that the profit margin would be further reduced which would force weak players in the market to exit the market as well as reduce the incentive to produce more by the remaining players given the poor margin. As the producers exit the market, the market supply falls and price increases. Eventually, equilibrium price returns to its long run equilibrium but at a lower quantity of transaction in the market.
A tariff on avocadoes ______________ the price of avocadoes, _____________ consumers’ surplus for avocado buyers, _______________ producers’ surplus of avocado growers and __________________ tariff revenue. Because the loss to _____________ is more than the gain to ___________________, there is a net loss to society.
a) raises; increases; decreases, generates, producers, consumers and government
b) lowers, increases; decreases; does not generate, producers, consumers
c) raises, increases, decreases; does not generate consumers, producers and importers
d) raises; decreases; increases, generates, consumers, producers and government
Answer:
d) raises; decreases; increases, generates, consumers, producers and government
Explanation:
Tariffs are trade policies by a local government in a country for the purpose of giving protection to local producers. In the case of avocados, the tariff can bring about some negative effects to local consumers as it minimizes their purchasing power because the avocados become more expensive due to price increase. This effect causes a reduction in consumer’s surplus and an increase in producer’s surplus. The government in return benefits from tariff revenues making choice D correct.
Nanci needs to let Morgan know that the production line will be down until tomorrow and the items she needs to ship to the customer won't be ready on time. The information Nanci wants to share is called the_______________________.
Answer:
message
Explanation:
Based on the information provided within the question it can be said that the information Nanci wants to share is called the message. This is basically a voice, verbal, or written communication that is sent to or left for (if they can't be reached) an individual in order to relay important information. Which is what Nanci is doing in order to let Morgan know that the production line will be down until tomorrow.
The information that Nanci is sharing with Morgan is termed as a business communication or message. It pertains to the delay in a production line and the resultant late shipment, making it a crucial part of the business operation. Effective communication is pivotal to managing schedules and customer expectations.
Explanation:In the context of the question, the information that Nanci wants to share with Morgan can be called a business communication or message. It is a conveyance of information regarding the operations of the business, specifically referring to the delay in production line and its impact on shipment. This is a crucial aspect of business operations as it involves communicating changes in plans or schedules to relevant parties, in this instance, letting Morgan know about the postponement so that she can manage customer expectations. Thus, making effective business communication indispensable in ensuring smooth running of operations.
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On April 1, 2017, La Presa Company sells some equipment for $18,000. The original cost was $50,000, the estimated salvage value was $8,000, and the expected useful life was 6 years. On December 31, 2016, the Accumulated Depreciation account had a balance of $29,400. How much is the gain or loss on the sale?
Answer:
The loss on sales of equipment is : $850
Explanation:
Depreciation expenses per year for the equipment is: (Original cost - Salvage value ) / expected useful life = (50,000 - 8,000)/6 = 7,000
Depreciation expenses per month for the equipment is: Depreciation expenses per year for the equipment/12 = 7,000/12
3-month depreciation expenses for the equipment from December 31,2016 to 31st March 2017 = 3 x 7,000/12 =1,750
Accumulated depreciation as at April 1 2017 ( the time of equipment disposal) = Accumulated Depreciation account as at December 31st 2016 + 3-month depreciation expenses for the equipment from December 31,2016 to 31st March 2017 = 29,400 + 1,750 = 31,150
Net book value of the equipment = Original cost - Accumulated depreciation as at April 1 2017 = 50,000 - 31,150 = 18,850
Gain/ (loss) on equipment disposal = Selling price - Net book value of the equipment = 18,000 - 18,850 = $(850)
=> Thus, the loss on sales of equipment is $850.
Final answer:
To calculate the gain or loss on the sale of the equipment, subtract the book value from the selling price. In this case, the company has a gain of $4,400 on the sale.
Explanation:
To calculate the gain or loss on the sale of the equipment, we need to determine the book value of the equipment at the time of sale. The book value is the original cost minus accumulated depreciation.
On December 31, 2016, the Accumulated Depreciation account had a balance of $29,400.
The depreciation expense for one year can be calculated as (original cost - salvage value) / useful life.
In this case, it is ($50,000 - $8,000) / 6 = $7,000.
Therefore, the book value on April 1, 2017, is $50,000 - $29,400 - $7,000 = $13,600.
The gain or loss on the sale is the selling price minus the book value. In this case, it is $18,000 - $13,600 = $4,400.
Since the selling price is higher than the book value, the company has a gain of $4,400 on the sale.
For accounting errors, which of the below sentences is true?
a.They represent intentional sabotage of controls.
b.They are problems caused by failures in systems, procedures, and policies.
c.They represent fraud and normally result in legal action being taken.
d.They are primarily caused by lack of training.
Answer:
The correct option is C
Explanation:
Accounting error is the type of error in the accounting which was not done intentionally but when spotted, the error need to be fixed immediately. And when there is no immediate solution for the error, an investigation is conducted in order to find out who caused the error.
The statement which is true is that they represent the fraud which usually result in the legal action to be taken.
Getchecked Inc. is a leading medical devices manufacturer. A cosmetic surgeon, Dr. Matt Breen is discussing the prices of Getchecked's medical devices with his colleague, Dr. Ed Walter. Matt says, Getchecked probably finds it difficult to make profits. The medical device market is highly crowded." Ed replies, Well, they do have quite a few patented products so the profits must be flowing in." Meanwhile James Radford, a medical technician, agrees that Getchecked must be doing well. Given that Getchecked's products are widely used in the market, even an increase in prices would not affect sales or profits according to James.
Which of the following, if true, would weaken Matt's argument that Getchecked's profits are most likely negligible due to competition?
A.Lifestyle-related diseases like diabetes and hypertension are on the rise in this country.
B.Getchecked recently hiked the per-unit commission paid to its salesmen.
C.Product differentiation in terms of quality is common in this market because the buyers are very quality-conscious.
D.Some firms in the market have started manufacturing medical devices that can be directly used by the final consumer.
E.Doctors choose the brand of medical devices that should be used in the hospital.
Answer:
The Correct answer is option (C)Product differentiation in terms of quality is common in this market because the buyers are very quality-conscious.Explanation:
On the off chance that the items are separated based on quality, the market structure is certifiably not an ideal rivalry with no extension for benefits except for it is a monopolistic contest where benefits can be made. It is conceivable that individuals favor Getchecked's items because of their quality and expanded contests as such won't influence their deals or benefits a lot. Any remaining choices are incorrect as they don't clarify why the benefits of Getchecked can be procured amid rivalry.Product differentiation
Product differentiation is an advertising procedure intended to recognize an organization's items or administrations from the opposition. Effective item separation includes distinguishing and imparting the exceptional characteristics of an item or organization while featuring the unmistakable contrasts between that item or organization and its rivalsLearn more about product differentiation, refer:
https://brainly.com/question/2920117Flux Corporation is a public company whose shares are traded in the public securities markets. Under the Sarbanes-Oxley Act of 2002, Flux is subject to the direct corporate governance requirements of:_______
a) any other public company with which flux exchanges shares
b) any state in which flux does business
c) the federal government.
d) the state in which flux incorporated
Answer:
The correct answer is C) the federal government.
Explanation:
The Sarbanes-Oxley Act, also known as SarOx or SOA, is the law that regulates accounting and auditing financial functions and severely penalizes corporate and white-collar crime. Due to the multiple frauds, administrative corruption, conflicts of interest, negligence and bad practice of some professionals and executives who, knowing the codes of ethics, succumbed to the attractiveness of making easy money and through companies and corporations deceiving partners , employees and interest groups, including their customers and suppliers.
The application and interpretation of this law has generated multiple controversies, one of which is extraterritoriality and international jurisdiction, which has created panic in the global financial system, especially in banks with correspondents in the United States and multinational companies listed on the stock exchange. New York stock.
An expansionary monetary policy may cause asset prices to rise, thereby reducing the likelihood of financial distress and causing consumer durable and housing expenditures to rise. This monetary transmission mechanism is referred to as
a) the household liquidity effect
b) the wealth effect
c) Tobin's q theory
d) the cash flow effect
Answer:
The answer is a) the household liquidity effect.
Explanation:
A central bank will increase the money supply in an economy when it decides to pursue an expansionary monetary policy.
With more money supply, interest rate will go down.
Subsequently, asset prices such as bond prices go up. Besides, household's interest expenses will be lower allowing them to have more fund for spending/investment in asset such as housing. Moreover, lower interest rate encourages household to borrow more, and discourages them to save money. Higher demand for products and services in the economy will also bring asset prices to the higher level.
Such transmission mechanism from an expansionary monetary policy is referred to as the household liquidity effect.
Mr. Brown transferred property, which had an adjusted basis to him of $40,000 and a fair market value of $50,000, to Corporation B in exchange for 100% of B’s only class of stock and $15,000 cash. At the time of the transfer, the stock had a fair market value of $35,000. What is the amount of gain to be recognized by Mr. Brown?
Answer:
$0
Explanation:
The adjusted basis for any property or assets transferred to a corporation or a partnership in exchange for shares or property rights must be registered at fair market value.
In this case Mr. Brown transferred property with a fair market value of $50,000 and received in exchange stock worth $35,000 and $15,000 in cash. ($50,000 = $35,000 + $15,000)
Q 11.31: Tabitha and Gerald are discussing common stock that they hold. Tabitha states that she purchased hers through the New York Stock Exchange, but Gerald says that he purchased his by investing in his brother-in-law’s company. What is the difference between the investments of Tabitha and Gerald?
Answer:
Tabitha's stocks are from a publicly held corporation but Gerald's is from a privately held corporation
Explanation:
The main difference between Tabitha's and Gerald's investment seems to be the fact that Tabitha's stocks are from a publicly held corporation but Gerald's is from a privately held corporation. Public held corporation's stocks/shares can be bought by anyone on a stock exchange. On the other hand Privately held corporation's stocks/shares are only sold by the company to a select few investors. Which Gerald managed to buy solely because it is his brother-in-law's company.