Economics Answers

Discuss the limitations of financial ratios in using them to evaluate business.

the fluctuations in the level of economic activities of a country over time are often best illustrated by business trade cycles. elaborate the role of government in dealing with the periodic fluctuations of economic activity over time

On average, what is the minimum length of two Wheeler's operating cycle? The maximum length?

You are given the following information about the commodity and Money markets of a closed economy without government intervention.

The commodity market
Consumption function: C = 50 + 2/5Y
Investment function: I = 790 – 21r
The Money Market
Precautionary and Transactions demand for money: MDT = 1/6 Y
Speculative demand for money: MDS = 1200 -18r
Money supply: MS = 1250
Required:
(i) Determine the equilibrium levels of income and interest rate for this economy.
(ii) Using a well labelled diagram, illustrate the equilibrium condition in part (i) above.
1. (b) Discuss clearly any two instruments of monetary policy that the Central Bank can use to meet monetary policy objectives

Which product would be likely to be bought in the same quantity even if it doubled in price?

Explain five uses of financial ratios

Differentiate between non-purchased goodwill and purchased goodwill

A limited has an authorized share capital of 200,000 shares of Kshs. 1 each out of which only 150,000 shares have been issued. Although the firm requested the shareholders to pay 80 cents per share, they were able to pay 50 cents per share.
Required:
Determine the:
i. Authorized share capital
ii. Issued share capital
iii. Called up share capital
iv. Uncalled up share capital
v. Paid up share capital

Explain the following terms using a suitable illustration
i. Subscription in arrears
ii. Issued share capital
iii. Capital expenditure

At a recent board meeting, the president and CEO got into a heated argument about whether to shut down the firm’s plan in Miami. The Miami plant currently loses $60,000 monthly. The president of the firm argued that the Miami plant should continue to operate, at least until a buyer is found for the production facility. The president’s argument was based on the fact that the Miami plant’s fixed costs are $68,000 per month. The CEO exploded over this point, castigating the president for considering fixed costs in making the shutdown decision. According to the CEO, “Everyone knows fixed costs don’t matter!”
a. Should the Miami plant be closed or continue to operate at a loss in the short run?
b. How would you explain to the incorrect party that he is wrong?