Answer:
The correct answer is d) neither the long-run Phillips curve nor the Classical dichotomy.
Explanation:
The answer that best suits the situation described is the Phillips curve in the short term but not in the long term.
The Phillips curve starts from the principle that the amount of money circulating (commonly called "money supply") has real effects on the economy in the short term. In this way, an increase in the money supply would have a beneficial effect on aggregate demand, as citizens will spend more when their nominal wages are increased (known as “monetary illusion”) and a more favorable framework for investment and investment will be created. that the prospects of rising prices will improve the expectations of corporate profits. The improvement in aggregate demand would result in greater economic growth, and this in turn in the creation of new jobs. This is how an inverse relationship between inflation and unemployment is established, expressed graphically by a downward curve.
The theory of the long-run Phillips Curve, but not the Classical Dichotomy, might imply that the unemployment rate in Flosserland could be above the natural rate due to persistent high inflation.
The correct answer to this question - which posits what would happen if Flosserland has maintained a long term inflation rate of 25% - is (c): the long-run Phillips curve, but not the Classical dichotomy. This conclusion is drawn from understandings of both the Classical Dichotomy and the long-run Phillips Curve.
The Classical Dichotomy is a theoretical construct that assumes a separation between real and nominal variables in an economy, indicating that changes in the money supply only affect nominal variables and wouldn't directly influence real economic factors like unemployment.
Conversely, the long-run Phillips Curve, is vertical suggesting there's no long-run trade-off between unemployment and inflation. In the long-run, changes in the inflation rate would not lead to a change in unemployment from its natural rate. However, if Flosserland has had a long-term high inflation rate, it's possible that expectations have not adapted and therefore unemployment could be above the natural rate. So only the long-run Phillips curve might suggest higher unemployment, but not the Classical dichotomy.
#SPJ3
ii. average revenue is equal to average total cost
iii. total revenue is equal to total variable cost
iv. total revenue is equal to total cost
B. Flexible
C. Management
D. Vertical
Disbursing Date
(Month/Day) Bank Account Two
Receiving Date
(Month/Day)
Per Bank Per Books Per Bank Per Books
a. 1/02 12/30 12/31 12/30
b. 1/04 12/31 1/02 12/31
c. 1/03 12/31 1/02 1/02
d. 1/02 1/02 12/31 1/02
For each of transfers a through d indicate whether cash is understated, unaffected, or overstated by the transfer and provide a brief example of what could cause the situation in which cash is either understated or overstated.
Answer:
A. Unaffected
B. Unaffected
C. Understated
D. Overstated
Explanation:
C. Understated.
Understated balance is one that is reported as having a lesser balance than it actually does. example of what could cause the situation in which cash is understated is that when check is written on the disbursing bank on the last day of December with a credit to cash, and an associated debit to some expense account so as to decrease reported profits and taxes be it (direct or indirect tjaxes) for the year.
Another example is when a utility bill that is suppose to be paid by the last day of the month but failed to record the expenses, under the accrual basis of accounting, the company should recognize the expenses now even though the bill is not yet due. Until the bill is recorded, the utilities payable is understated
d. Overstated.
An overstated balance is an account balance that is reported as having a greater balance than it actually does, example of such situation is that in which an employee has misappropriated funds during the year, and draw a check transferring funds to the account with the shortage so as to cover the shortage. As of December 31, the shortage is replaced, with no reduction as yet recorded in the account on which it is drawn.
In second example of understated, expense account is understated and because of this net income is overstated.