Economics Answers

(a) Describe what is meant by the marginal propensity to consume (mpc) and give its formula.

Which of the following statements reflects the broad economic goal of equity?
Congress increasing funding for space exploration in order to boost high-tech employment and develop new technologies
Removing funding from public universities that refuse to accept women, minorities, or economically disadvantaged applicants as students
The National Park Service maintaining a program of controlled fires to burn off undergrowth and keep wildfires from happening
The president speaking about economic opportunities in giving better trade status to countries with command economies

In 2011, Jean earns a salary of $150,000 and invests $20,000 for a 20% interest in a partnership not subject to the passive loss rules. Through the use of $400,000 of nonrecourse financing, the partnership acquires assets worth $500,000. The activity produces a loss of $75,000, of which Jean's share is $15,000. In 2011, Jean's share of the loss from the partnership is $7,500. How much of the loss from the partnership can Jean deduct?

Distinguish between demand pull and cost push inflation. Why might it be difficult to establish the extent to which a given rate of inflation is demand pull or cost push?
(4 marks)

The Australian dollar has fallen markedly against other major currencies. What is economic impact on local producers and consumers?

Show all three channels by which changes in interest rates affect economic activity. Under what conditions might expansionary monetary policy, that is, lower interest rates might not greatly affect domestic economic activity? (4 marks)

Consider an economy initially at equilibrium level at near full employment. Using an aggregate demand and aggregate supply diagram or model of the economy, graphically illustrate and discuss the short-run and long-run effects of the following events upon the economy:

(a) The Central Bank within the economy lifts interest rates.
(b) There is an increase in private domestic investment spending.
(c) An increase in international oil prices.
(d) A fall in real estate prices in the capital cities of the country (hint: think of the effect upon one’s wealth level) (4 marks)

1.) There are only two travel agencies, A and B, offering Brazil World Cup 2014 Vacation Packages (flight, hotel acommodation, game tickets and group excursion). The demand function for Brazil World Cup 2014 Vacation Packages is given by P = 10 000-Q. The marginal cost is constant and it can be expressed by MC ( = ATC ) = $ 2 000.
a) The travel agencies try to coordinate their actions and set the price and quantity like a single monopolist. Once they set this profit maximizing price and quantity, they plan to split the resulting profit equally. What is the profit for each travel agency if they both adhere to the plan?
b) Now, suppose that both travel agencies set price equal to $ 4 000, and then split profit equally. What us the profit for each travel agency?
c)Now the travel agencies have two options: to charge a joint monopoly price as found in part a) or to see their price equal to $ 4 000. Fill in the pay-off matrix that represent these choices (use the template).

a) When do companies normally post to: 1) the subsidiary accounts and 2) the general ledger control accounts?
b) Describe the relationship between a control account and subsidiary ledger.

The cash and the accounts receivable columns in the cash receipts journal were mistakenly over added $4,000 at the end of the month.
a)Will the customer's ledger agree with the accounts receivable control account?
b)Assuming no other errors, will the trial balance totals be equal?