Answer:
Asset S has $103333 more depreciation expense per year than asset L
Option D is the correct answer.
Explanation:
The straight line depreciation method charges a constant depreciation expense per period throughout the estimated life of the asset. The depreciation expense per year is calculated as follows,
Depreciation expense per period = (Cost - Salvage value) / Estimated useful life of the asset
We first need to calculate the cost of each asset. The cost that is recognized should include all costs incurred to bring the asset to the place and condition of use as intended by the management.
Cost - Asset L = 4000000 + 750000 = 4750000 or 4.75 million
Cost - Asset S = 2000000 + 500000 = 2500000 or 2.5 million
Depreciation expense per year
Asset L = (4750000 - 0) / 15
Asset L = $316,666.67
Asset S = $420000
Difference = 420000 - 316666.67
Difference = $103333.33
Asset S has $103333 more depreciation expense per year than asset L
Assume that a gourmet food manufacturer has considered renting a booth at a local mall to sell gift boxes of candy, nuts, and cookies during the holiday season. The fixed costs to rent and operate the booth would be $27,900. The unit contribution margins and sales mix anticipated by the company are as follows: Unit Contribution Margin Sales Mix Candy $1.50 50% Nuts $2.00 30% Cookies $1.00 20% What would be the weighted average contribution margin
In late 2018, malnutrition was widespread in Venezuela. Writing in an opinion column in the New York Times, Javier Corrales argued, "The government is making the crisis worse by...imposing more price controls." Source: Javier Corrales, "The Venezuelan Crisis Is Part of Maduro's Plan," New York Times, September 25, 2018. Shouldn't price controls help reduce malnutrition by lowering the price of food so more people can afford it? A. No. Price controls are intended exclusively to help support farmers to ensure that they are receiving a high enough price for their products to be able to keep supplying food. B. No. Imposing a price control below the equilibrium price in a market causes the quantity of the good available to consumers to fall because sellers will supply a smaller quantity, thereby causing some consumers to go without food that they would have been able to buy in the absence of the price control. C. Yes. Price controls, by definition, will always help reduce malnutrition by lowering the price of food so more people can afford it. D. No. Imposing a price control above the equilibrium price in a market causes the quantity of the good available to consumers to fall because sellers will supply a smaller quantity, thereby causing some consumers to go without food that they would have been able to buy in the absence of the price control.
Answer: B. No. Imposing a price control below the equilibrium price in a market causes the quantity of the good available to consumers to fall because sellers will supply a smaller quantity, thereby causing some consumers to go without food that they would have been able to buy in the absence of the price control.
Explanation:
If price controls are introduced below the equilibrium price in the market, farmers or sellers will supply less to the market because they will not be incentivized to produce more seeing as they are not making what they should be making.
This, coupled with increased demand on account of food being cheaper, will lead to shortages which would mean that those that could have been able to afford the food at the equilibrium price would not be able to access food leading to even worse food shortages.
Brewsky's is a chain of micro-breweries. Managers are interested in the costs of the stores and believe that the costs can be explained in large part by the number of customers patronizing the stores. Monthly data regarding customer visits and costs for the preceding year for one of the stores have been entered into the regression analysis and the analysis is as follows:
In a regression equation expressed as y = a + bx, how is the letter y best described?
a) An estimate of the total customers for the month.
b) The observed store cost for a given month
c) The estimate of the number of new customer visits for the month.
d) The proximity of the data points to the regression line.
Answer:
b) The observed store cost for a given month
Explanation:
As we know that
The regression equation should be expressed in
y = a + bx
So here the y denotes the cost of the observed store for the given month
That means it shows the total cost
So according to the given situation, the option b is correct
And, the same would be considered and relevant
Moreover, all other options would be incorrect
TB MC Qu. 20-94 Masterson Companys budgeted... Masterson Company's budgeted production calls for 67,000 units in April and 63,000 units in May of a key raw material that costs $1.65 per unit. Each month's ending raw materials inventory should equal 20% of the following month's budgeted materials. The April 1 inventory for this material is 13,400 units. What is the budgeted materials purchases for April
Answer:
Total Purchases(in $) 109,230
Explanation:
The computation of the budgeted material purchase is shown below;
Budgeted Production (in units) 67,000
Add:-Desired Ending Inventory (20% of 63,000) (in units) 12,600
Total needed (in units) 79,600
Less:-Opening Inventory (in units) 13,400
Total Purchases (in units) 66,200
Price per unit(in $) 1.65
Total Purchases(in $) 109,230
Hence, the same would be relevant
Different cultures have different ways of greeting each other in the business world.
Is this statement true or false?
A. true
B. false
Answer:
this statement is true.............
The journal entry to write-off a significant underapplied overhead balance at the end of an accounting period is:
A. Applied Manufacturing Overhead xxx
Cost of Goods Sold xxx
Manufacturing Overhead Control xxx
B. Applied Manufacturing Overhead xxx
Cost of Goods Sold xxx
Manufacturing Overhead Control xxx
C. Applied Manufacturing Overhead xxx
Work-In-Process Inventory xxx
Finished Goods Inventory xxx
Cost of Goods Sold xxx
Manufacturing Overhead Control xxx
D. Applied Manufacturing Overhead xxx
Work-In-Process Inventory xxx
Finished Goods Inventory xxx
Cost of Goods Sold xxx
Manufacturing Overhead Control xxx
Option A
Option B
Option C
Option D
Answer:
Option C
Explanation:
The journal entry to write-off underapplied overhead is shown below:
Applied Manufacturing Overhead xxx
To Work-In-Process Inventory xxx
To Finished Goods Inventory xxx
To Cost of Goods Sold xxx
To Manufacturing Overhead Control xxx
(Being the underapplied overhead written off is recorded)
The work in process inventory, finished goods inventory, and the cost of goods sold would be written off based on the overhead applied.
Bentonville Inc. bases its marketing and administrative expense budget on budgeted unit sales. The sales budget shows 4,900 units are planned to be sold in December. The variable marketing and administrative expense is $4.80 per unit. The budgeted fixed marketing and administrative expense is $93,100 per month, which includes depreciation of $8,420 per month. The remainder of the fixed marketing and administrative expense represents current cash flows. The cash disbursements for marketing and administrative expenses on the December marketing and administrative expense budget should be:
Answer:
$108,200
Explanation:
Marketing and Administrative Budget
Budgeted unit sales 4,900
Variable marketing and administrative expense per unit *$4.80
Variable marketing and administrative expense $23,520
Fixed marketing and administrative expense $93,100
Total marketing and administrative expense $116,620
Less: Depreciation $8,420
Cash disbursements for marketing $108,200
and administrative expenses
On December 31, 2019, Metlock Corporation signed a 5-year, non-cancelable lease for a machine. The terms of the lease called for Metlock to make annual payments of $8,482 at the beginning of each year of the lease, starting December 31, 2019. The machine has an estimated useful life of 6 years and a $5,000 unguaranteed residual value. The machine reverts back to the lessor at the end of the lease term. Metlock uses the straight-line method of depreciation for all of its plant assets. Metlockâs incremental borrowing rate is 5%, and the lessorâs implicit rate is unknown.
Required:
Compute the present value of the lease payments.
Answer:
$38,559
Explanation:
Computation of present value of lease payments
Using this formula
Present value of lease payments=annual payments*Present value of an annuity due of 1 for 5 periods at 5%
Let plug in the formula
Present value of lease payments=$8,482 × 4.54595
Present value of lease payments= $38,559
Therefore the present value of lease payments is $38,559
Jamieson Enterprises has presented the following information for the past year of operations Month Units Total Cost January 2,800 $ 9,200 February 3,500 $ 11,300 March 1,900 $ 6,500 April 2,700 $ 8,900 May 4,500 $ 14,300 June 5,300 $ 16,700 July 7,200 $ 22,400 August 5,100 $ 16,100 September 4,700 $ 14,900 October 3,900 $ 12,500 November 3,400 $ 11,000 December 2,400 $ 8,000 a. Using the high-low method, calculate the fixed cost per month and variable cost per unit. b. What would total costs be for a month with 8,200 units produced?
Answer:
a.
VC/unit = $3 per unit
Fixed Cost = $800
b.
Total Cost = $25400
Explanation:
a.
The high-low method is used to separate the components of a mixed cost and it calculates the variable cost component in a mixed cost. The formula to calculate the variable cost per unit under the high-low method is as follows,
VC/unit = [Highest Activity cost - Lowest Activity Cost] / [Highest Activity units - Lowest Activity units]
VC/unit = [22400 - 6500] / [7200 - 1900]
VC/unit = $3 per unit
Using figures from March, The total fixed costs will be,
Fixed cost = 6500 - [3 * 1900]
Fixed Cost = $800
b.
Total cost in a month with 8200 units will be,
Total Cost = Total Fixed cost + Total variable costs
Total Cost = 800 + (3 * 8200)
Total Cost = $25400
Saxon Manufacturing is considering purchasing two machines. Each machine costs $9,000 and will produce cash flows as follows. Saxon Manufacturing uses the net present value method to make the decision, and it requires a 15% annual return on its investments. The present value factors of 1 at 15% are: 1 year, 0.8696; 2 years, 0.7561; 3 years, 0.6575. Which machine should Saxon purchase
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Delta bought equipment on 1/1/15 at a cost of $525. The equipment has a useful life of 7 years and no salvage value. The full cost of the equipment was mistakenly expensed immediately as repairs and maintenance expense.
a) Assume the error was discovered on 1/1/17. Because of the error, is net income for 2015 correct or incorrect (if incorrect, is it too high or too low and by what amount?)
b) Assume the error was discovered on 1/1/17. Because of the error, is net income for 2016 correct or incorrect (if incorrect, is it too high or too low and by what amount?)
c) Now assume, instead, that the error was caught on 1/1/18. Because of the error, are total assets on 1/1/18 correct or incorrect? (if incorrect, are they too high or too low and by what amount?)
d) Now assume that the error is not discovered until 1/1/24, are R.E. and total assets correct or incorrect on 1/1/24? (if incorrect, are they too high or too low and by what amount?)
Answer:
Delta
a) Error discovered on 1/1/17: Net income for 2015 is incorrect. The net income is too low by $525
b) Error discovered on 1/1/17: Net income for 2016 is incorrect. The net income is too high by $75.
c) Error discovered on 1/1/18: Total assets for 1/1/18 are incorrect. The assets are too low by $300 ($525 - $225)
d) Error discovered on 1/1/24: Retained earnings and total assets are correct.
Explanation:
a) Data and Analysis:
Cost of equipment on 1/1/15 = $525
Estimated useful life = 7 years
Salvage value = $0
Cost of equipment recorded as Repairs and Maintenance Expense
g Assume you just purchased 100 shares of Apple stocks at $300. You are worrying that the competition from other tablet PC and smart phone producers will have a negative impact on Apple stock prices in 1 month. Generally speaking, you are still quite bullish on Apple stock. In order to hedge against this downside risk, you establish a protective put position by buying a put option contract with around 1-month maturity on Apple stock. However, the premium of the put option with strike price at $300 is $12, which is quite expensive. If you feel purchasing the put option with strike price at $300 and $12 premium is too expensive, what else can we do to reduce the cost of protective put position
Answer:
Buy at a lower strike put option or sell at a higher call option
Explanation:
100 shares of apple stock bought at $300
premium of put option ( cost ) = $12
Put option = $300
What can be done to reduce the cost of protective put position
To reduce the cost we can either buy at a lower strike put option or sell at a higher call option
Buying at a lower strike put option price ( < $300 )
This way premium will be reduced but this will not hedge against small fall in price
Sell at a higher call option
This way the premium charged will be reduced but if the price rises above the entry price on expiration then the gains made above the price will be foregone .
Read the following short scenario. Then select the response that best describes your views.
ABC Insurance Company served the inner-city area of a large western city with homeowners insurance. Recently, because of civil unrest, payment of claims exceeded estimates and the company found itself in the position of having to substantially reduce the dividend payment to its shareholders. The research department suggested the company cancel all policies in the inner city area and begin writing policies in the more affluent subdivisions of the city.
1. No ethical concern
2. Minor ethical concern
3. Moderate ethical concern
4. Important ethical concern
5. \Extremely important ethical concern
Answer:
4.
Explanation:
The response that best describes the views is, Important ethical concern. The suggestion to cancel all policies in the inner city area and shift focus to more affluent areas raises an important ethical concern, that could be considered redlining.
Hence, the correct option is 4.
The scenario raises an important ethical concern. The suggestion to cancel all policies in the inner city area and shift focus to more affluent subdivisions of the city indicates a potential discriminatory practice. By selectively serving only the more affluent areas and abandoning the inner-city area, the company would be engaging in redlining, which is the unfair practice of denying or limiting services based on geographical location or socioeconomic factors.
This action perpetuates social and economic disparities, further marginalizing an already disadvantaged community. Such a decision based on financial considerations without considering the impact on the affected community raises significant ethical concerns.
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On January 1 of this year, Houston Company issued a bond with a face value of $18,000 and a coupon rate of 6 percent. The bond matures in 3 years and pays interest every December 31. When the bond was issued, the annual market rate of interest was 5 percent. Houston uses the effective-interest amortization method. (FV of $1, PV of $1, FVA of $1, and PVA of $1) (Use the appropriate factor(s) from the tables provided. Round your final answers to whole dollars.) Required: 1. Complete a bond amortization schedule for all three years of the bond's life. (Enter all values as positive values.)
Answer:
Houston Company
The Bonds Amortization Schedule
Period PV PMT Interest FV
1 $18,490.18 $1,080.00 $924.51 $18,334.69
2 $18,334.69 $1,080.00 $916.73 $18,171.43
3 $18,171.43 $1,080.00 $908.57 $18,000.00
Explanation:
a) Data and Calculations:
Face value of bond = $18,000
Coupon rate = 6%
Annual coupon payment = $1,080 ($18,000 * 6%)
From an online financial calculator, the PV of the bond = $18,490.18:
N (# of periods) 3
I/Y (Interest per year) 5
PMT (Periodic Payment) = $1,080
FV (Future Value) = $18,000
Results
PV = $18,490.18
Sum of all periodic payments = $3,240.00
Total Interest = $2,749.82
Using the following information about the family’s assets and liabilities, calculate the debt ratio: Checking account: $3,000 Savings account: $13,000 Credit card balance: $5,500 Utility bill: $500 Home: $320,000 Mortgage (30 years): $210,000 Car: $25,000 Car loan (60 months): $18,000 Student loan (7 years): $25,000 Household items: $15,000 Retirement account: $64,000 Other assets: $39,000
Based on the various assets and liabilities that the family has, the debt ratio can be calculated to be 54.1%.
How is the debt ratio calculated?The debt ratio can be calculated as:
= Total debt / Total assets
Total debts
= Credit card balance + Utility bill(Car loan (60 months) + Student loan (7 years)
Total assets
= Checking account + Savings account + Home + Car + Household items + Retirement account + Other assets
= (5,500 + 210,000 + 180,000+ 25,000) / (3,000 + 13,000 + 320,000 + 25,000 + 15,000 + 64,000 + 39,000)
= 258,500 / 479,000
= 54.1%
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How could Competition policy undo the wrongs of the past and make South Africa a better place
In preparing its August 31, 2020 bank reconciliation, Vaughn Manufacturing has available the following information:
Balance per bank statement, 8/31/20 $25750
Deposit in transit, 8/31/20 3480
Return of customer's check for insufficient funds, 8/30/20 600
Outstanding checks, 8/31/20 2760
Bank service charges for August 100
At August 31, 2020, Vaughn's correct cash balance is :_________
a. $25030.
b. $25770.
c. $26470.
d. $25870.
Answer:
c. $26470
Explanation:
Calculation to determine what Vaughn's correct cash balance is
Using this formula.
Correct cash balance =Balance per bank statement + Deposit in transit - Outstanding checks
Let plug in the formula
Correct cash balance= $25750 + 3480 - 2760
Correct cash balance=$26470
Therefore At August 31, 2020, Vaughn's correct cash balance is:$26470
Rodriguez Company completed its income statement and comparative balance sheet for the current year and provided the following information:
Income Statement for Current Year Service revenue $ 52,500
Expenses Salaries $ 42,000
Depreciation 8,100
Amortization of copyrights 270
Other expenses 10,000 60,370
Net loss $ (7,870)
Partial Balance Sheet
Current Year Prior Year Accounts receivable $ 8,800 $ 15,200
Salaries payable 13,000 1,300
Other accrued liabilities 3,000 6,300
In addition, Rodriguez bought a small service machine for $5,900.
Required: 1. Present the operating activities section of the statement of cash flows for Rodriguez Company using the indirect method. (List loss amount and cash outflows as negative amounts.)
Answer: Please find answers in explanation column
Explanation:
Rodriguez Company
Statement of Cash flow(Partial)
Cash flows from operating activities Amount
Net Loss $(7,870)
Add: Depreciation $ 8,100
Add: Increase in Salaries Payable $11,700 ($13,000 − $1,300)
Add: Decrease in Accounts receivable $6,400 ($15,200 − $8,800)
Add: Amortization of Copy Rights $270
Less: Decrease in Other accrued $(3,300) ($3,000− $6,300)
liabilities
Net Cash provided by Operating $15,300
Activities
In a project schedule, which types of dependencies are most common?
Answer:
Finish to Start, finish to finish.
Explanation:
Acellus Businesses management
Any more ? Like intro to accounting or mastering excel?
Which accounting regulations body investigates and refers fraud and insider trading cases to the SEC to prosecute?
Ο Α. Financial Industries Regulating Association
OB.
OC.
OD.
hts reserved.
American Institute of Certified Public Accountants
Government Accounting Standards Board
State Board for Accountancy
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Accounting regulations organization Financial Industries Regulating Association conducts investigations and refers fraud and insider trading cases to the SEC for prosecution.
What does SEC stand for?The U.S. Securities and Exchange Commission (SEC) is an independent statutory government organization tasked with safeguarding investors, preserving the fair and orderly operation of the securities markets, and promoting capital formation.
What is the SEC?The U.S. Securities and Exchange Commission (SEC) is an independent federal government regulatory body tasked with fostering capital formation, preserving the fair and orderly operation of the securities markets, and safeguarding investors. As the initial government regulator of the securities, it was established by Congress in 1934.
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The act of attempting to acquire information such as user names passwords and credit card details by acting as a trustworthy entity in an electric communication is called
Phishing is the practice of pretending to be a reliable entity in an electronic conversation in order to get sensitive data such as usernames, passwords, credit card information, and occasionally even money (indirectly).
What happens when someone pretends to be a reliable internet source in order to try and get information like usernames or passwords?Phishing is the fraudulent act of pretending to be a reliable entity in an electronic contact in order to get sensitive information like usernames, passwords, and credit card numbers.
Is it an attempt to get sensitive information such credit card numbers, usernames, and passwords?Phishing is the practice of pretending to be a reliable entity in an electronic communication in order to get sensitive data, such as usernames, passwords, and credit card numbers.
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ADR purchases wood screws from a local representative. The local rep visits the shop once every 3 weeks (21 days). When he arrives he counts the number of boxes of wood screws in inventory and works with the inventory manager to place an order that day. The screws are shipped from a local distribution center. The average daily demand, lead time, safety stock, and on hand inventory are provided below. How many boxes of screws should ADR order
Answer: Attached below is the missing data related to your question
answer : 66 boxes
Explanation:
Determine the number of boxes of screws that ADR should order
we can determine the number of boxes by applying the relationship below
Q ( quantity of boxes ) = d ( T + L ) + SS - I ------ ( 1 )
where: d = 2 ( average daily demand )
T = 21 ( frequency of visit by local rep )
L = 4 ( lead time )
SS = 20 , I = 4
back to equation 1
Q = 2 ( 21 + 4 ) + 20 - 4
= 2 ( 25 ) + 16
= 50 + 16 = 66 boxes
Larry is studying productivity in an office, and decides to use a survey to collect data on how productive his employees are. In addition to using the survey, Larry records how many deliverable items each employee completes in a week and checks to see if productivity scores on the survey are associated with the number of deliverable items the employee completes. By doing this, what is Larry checking
Answer:
The question is incomplete, the options are missing. The options are the following:
a) Discriminant validity
b) Convergent validity
c) Internal validity
d) Criterion validity
And the correct answer is the option B: Convergent validity.
Explanation:
To begin with, the term known as "Convergent validity" refers to a concept used in the sociology and psichology and more other sciences who focus on the behaviors of the population with the primary goal of dealing with relation between two measures of constructs that should theorycally be related. So that means that the major purpose of this method is to prove how much relation there is between those two measurements that established to be close enough to be related. That is why that in this case Larry is checking the convergent validity so that he will see how much of the real productivity actually matches with the scores planned.
Because of inflation, the $1 you will have in the future will be worth _________. a. less than $1 you have today, b. more than $1 you have today, c. the same as $1 you have today, d. it is impossible to know the answer to the question And the answer b. more than $1 you have today is the wrong answer. I just took the test
Answer:less than it is toda
Explanation:
less than it is today. Inflation is an increase in the overall price level of goods and services in an economy over a period of time. As prices rise, the purchasing power of a dollar decreases, so a dollar in the future will be worth less than a dollar today. This is why it is important to consider inflation when planning for the future, especially when it comes to saving and investing.
A company is considering the purchase of a new machine for $48,000. Management predicts that the machine can produce sales of $16,000 each year for the next 10 years. Expenses are expected to include direct materials, direct labor, and factory overhead totaling $8,000 per year including depreciation of $4,000 per year. Income tax expense is $3,200 per year based on a tax rate of 40%. What is the payback period for the new machine
Answer:
The accounting rate of return is 10%
Explanation:
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Wacky Wendy produces gourmet cheese in Wisconsin. Wendy has sales as follows: Wacky Wendy's Sales: State Sales Iowa $ 350,512 Michigan $ 134,589 Minnesota $ 849,142 Wisconsin $ 1,323,032 Totals $ 2,657,275 Wendy is a Wisconsin corporation and has the following operations: Wendy has income tax nexus in Iowa, Minnesota, and Wisconsin. The Michigan sales are shipped from Wisconsin (a throwback state). $100,000 of the Wisconsin sales were to the federal government. What is Wendy's Wisconsin sale numerator
Answer: $1,457,621
Explanation:
Bassee on the information given in the question, Wendy's Wisconsin sales numerator will be calculated as the addition of the value of Wisconsin's sales and Michigan Sales and this will be:
= $1,323,032 + $134,589
= $1,457,621
Therefore, Wendy's Wisconsin sales numerator is $1,457,621.
What is the primary objective of most businesses
Global businesses that have extended their public relations strategies worldwide should: Group of answer choices Ensure that communications with local media take place in the area's native language. Never decentralize their global public relations programs to ensure the company has "one voice." Assume that there is no anti-American sentiment in the countries where they have operations. Ignore local customs and emerging issues in the locations where they operate.
Answer:
Ensure that communications with local media take place in the area's native language.
Explanation:
Globalization can be defined as the strategic process which involves the integration of various markets across the world to form a large global marketplace. Basically, globalization makes it possible for various multinational enterprise (MNE) to produce goods and services that is used by consumers across the world.
A multinational enterprise (MNE) can be defined as any business firm that engages in the production of goods and services in two or more countries.
Generally, a multinational enterprise (MNE) has subsidiaries in other countries and as such derives a high amount of revenue outside its home country by providing goods and services that meets the need of customers through the use of advanced technology.
Some examples of a multinational enterprise (MNE) are Amazon, BNP Paribas, Alcatel-Lucent, Apple, Chevron, Casio, Disney, etc.
Hence, global businesses that have extended their public relations strategies worldwide should ensure that communications with local media take place in the area's native language. For example, a multinational enterprise that has a branch in Shanghai, China must ensure that its communication and PR strategies are done in Chinese language in order to appeal to the senses of the locals. This would go a long way to foster the relationship between the organization and the people living in Shanghai and consequently boosting the brand's image and acceptance of its goods and services.
a. How can increases in government spending crowd out investment spending? An increase in government spending increases the use of automatic stabilizers, which reduces private investment spending. causes firms to worry about inflation, which reduces private investment spending. increases the real interest rate, which reduces private investment spending. lowers the real interest rate, which reduces private investment spending. b. Is crowding out a major concern when actual output is below potential output? Why? Crowding out is a major concern, because the goal is always to increase investment spending. is not a major concern, because the Fed will likely lower the real interest rate when actual output is far below potential. is a major concern, because the crowding out effect will outweigh the increase in government spending. is not a major concern, because the Fed will likely raise the real interest rate when actual output is above potential output.
Answer:
a. increases the real interest rate, which reduces private investment spending.
b. is not a major concern, because the Fed will likely lower the real interest rate when actual output is far below potential.
Explanation:
Increase in government spending means that the government would probably have to borrow money from the credit market. Because the government is so large, it will borrow in large amounts which would force rates to rise. At these higher rates, the private sector might find it too expensive to borrow money and so would be crowed out such that they reduce their investment spending.
When the economy is facing an output that is lower than potential, the Fed will engage in monetary policy aimed at reducing interest rates to improve investment spending. This therefore negates the effect of crowing out which means that it would no longer be a major concern.