Answer:
a) You have found the critical path
Explanation:
The Time Cost Critical Path Method(CPM) in project management works by adding up/calculating duration of all tasks/activities in the project in order to find the longest time possible to complete the project. It is a method to estimate project duration using a flow chart that shows a network of tasks and estimated duration(start and finish times). The critical path is reached when project time is at the maximum/longest time of completion.
When computing equivalent units of production, the method that combines partially completed units in beginning inventory with current-period production is the
Answer: the weighted average method
Explanation:
When computing the equivalent units of production, the weighted average method can be used in the combination of partially completed units in the beginning inventory with the current-period production.
In Weighted Average Cost method, a weighted average is used in the determination of the amount which gives into the inventory and the cost of goods sold.
Managers lead in a wide variety of situations and organizations and have various kinds of subordinates performing diverse tasks in a multiplicity of environmental contexts. Given the wide variety of situations in which leadership occurs, what makes a manager an effective leader in one situation (such as certain traits or behaviors) is not necessarily what that manager needs to be equally effective in a different situation. Contingency models of leadership take into account the situation or context within which leadership occurs. According to contingency models, whether or not a manager is an effective leader is the result of the interplay between what the manager is like, what he or she does, and the situation in which leadership takes place.
Answer:
need points
Explanation:
This information relates to Flint Real Estate Agency.
Oct. 1 Stockholders invest $30,740 in exchange for common stock of the corporation.
2 Hires an administrative assistant at an annual salary of $38,880.
3 Buys office furniture for $3,630, on account.
6 Sells a house and lot for E. C. Roads; commissions due from Roads, $12,010 (not paid by Roads at this time).
10 Receives cash of $135 as commission for acting as rental agent renting an apartment.
27 Pays $620 on account for the office furniture purchased on October 3.
30 Pays the administrative assistant $3,240 in salary for October.
Prepare the debit-credit analysis for each transaction. (If there is no transaction, then enter no effect for the account and 0 for the amount.)
A. Oct. 1 Debits increase assets:
debit Cash $ 30000
Credits increase stockholders' equity:
credit Common stock $ 30000
B. Oct. 2 Debits increase no effect:
debit___ $______
Credits increase ______
credit ____$_______
C. Oct 3 Debits increase assets:
debit ______ $ 4600
Credits increase liabilities:
credit Accounts payable $ 4600 .
D. Oct. 6 Debits increase :_____
debit ____ $_____
Credits increase :____
credit ___ $____
E. Oct. 10 Debits increase assets:
debit ___ Cash $ 140
Credits increase ____
credit ____ $____
F. Oct 27 Debits decrease :_____
debit_____ $____
Credits decrease :___
credit____ $.____
G. Oct 30 Debits increase :____
debit ____ $____
Credits decrease :_____
credit ___ $.____
Answer:
Flint Real Estate Agency
A. Oct. 1 Debits increase assets:
debit Cash $ 30,740
Credits increase stockholders' equity:
credit Common stock $ 30,740
B. Oct. 2 Debits increase no effect:
debit___ $__0____
Credits increase __0____
credit ____$____0___
C. Oct 3 Debits increase assets:
debit _Office furniture_____ $ 3,630
Credits increase liabilities:
credit Accounts payable $ 3,630.
D. Oct. 6 Debits increase :_____assets
debit _Accounts receivable___ $__12,010___
Credits increase :_stockholders' equity___
credit _Service Revenue__ $_12,010___
E. Oct. 10 Debits increase assets:
debit ___ Cash $ 135
Credits increase __stockholders' equity__
credit _Commission Revenue___ $__135_
F. Oct 27 Debits decrease :__Liabilities___
debit__Accounts payable___ $__620__
Credits decrease :_Assets__
credit__Cash__ $.__620__
G. Oct 30 Debits increase :__Expenses__
debit _Salaries expense___ $_3,240___
Credits decrease :__Assets___
credit _Cash__ $.__3,240__
Explanation:
a) Data and Analysis:
Oct. 1 Cash $30,740 Common stock $30,740
Oct. 3 Office furniture $3,630 Accounts payable $3,630
Oct. 6 Accounts receivable (E. C. Roads) $12,010 Service Revenue $12,010
Oct. 10 Cash $135 Commission Revenue $135
Oct. 27 Accounts payable $620 Cash $620
Oct. 30 Salaries Expense $3,240 Cash $3,240
Assume you deposit $5,000 at the end of each year into an account paying 9.5 percent interest. a. How much money will you have in the account in 19 years
Answer: $242,567.27
Explanation:
The $5,000 is an annuity as it is being paid every year and is a constant amount.
The value in 19 years is the future value of this annuity:
Future value of annuity = Annuity * ( ( 1 + rate) ^ number of years - 1) / rate
= 5,000 * ( ( 1 + 9.5%)¹⁹ - 1) / 9.5%
= $242,567.27
Which of these is NOT a barrier to trade?
a) Tariff
b) Quota
C) All the options are correct
D) Embargo
Answer:
All the options are correct
The ending inventory of finished goods has a total cost of $9,000 and consists of 600 units. If the overhead applied to these goods is $3,000, and the overhead rate is 75% of direct labor, how much direct materials cost was incurred in producing these units
Jensen Company purchased a new machine on January 1, 2018, at a cost of $104,000. The company estimated that the machine has a salvage value of $8,000. The machine is expected to be used for 80,000 working hours during its 8-year life.
Compute depreciation using the Double-declining method for 2018:
Straight-line for 2018 and 2019, assuming a December 31 year-end.
unit of activity
depriciation
Answer:
Results are below.
Explanation:
Giving the following information:
Purchase price= $80,000
Salvage value= $8,000
Useful life= 8 years
To calculate the annual depreciation under the double-declining balance method, we need to use the following formula:
Annual depreciation= 2*[(book value)/estimated life (years)]
2018:
Annual depreciation= 2*[(80,000 - 8,000) / 8]
Annual depreciation= $18,000
Now, the straight-line method:
Annual depreciation= (original cost - salvage value)/estimated life (years)
Annual depreciation= (80,000 - 72,000) / 8
Annual depreciation= $9,000
It remains constant during useful life.
Finally, the units-of-activity method (suppose 15,000 hours):
Annual depreciation= [(original cost - salvage value)/useful life of production in hours]*hours operated
Annual depreciation= [(80,000 - 8,000) / 80,000]*15,000
Annual depreciation= $13,500
Depreciation refers to the reduction in the value of asset over time and such valued reduction are reflected in the Balance sheet at year ended.
Machine usage period is 3 month (1st October 2017 - 31st December 2017)Computing the Straight-line depreciation for 2017 and 2018
Depreciation for 2017 = (Cost - Salvage value) / Useful Life
Depreciation for 2017 = (104,000 - 8,000) /8
Depreciation for 2017 = $96,000 / 8
Depreciation for 2017 = $12,000 per year
For the 3 month, Depreciation for 2017 = $12,000*3/12 = $3,000
Depreciation for 2018 = (Cost - Salvage) / Useful Life
Depreciation for 2018 = ($104,000 - $8,000) /8
Depreciation for 2018= $96,00 ) /8
Depreciation for 2018 = 12000
Computing the Declining-balance using double the straight-line rate for 2017 and 2018
Useful life = 8 Year
Straight line Depreciation % = 1/8
Straight line Depreciation = 0.125
Straight line Depreciation = 12.50%
Depreciation Rate = 2 * 12.50
Depreciation Rate = 25%
Depreciation for Year 2017 = $104,000*25%*3/12
Depreciation Rate = $6,500
Depreciation for Year 2018 = ($104,000 - $6,500)*20%
Depreciation for Year 2018 = $24,375
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valued at $850,000 by a real estate expert. The president of the company is questioning the accuracy of the firm’s latest balance sheet because it shows a book value of $550,000 for the building. How would you explain this situation to the president
Question Completion:
A building owned by Hopewell Company was recently valued at $850,000 by a real estate expert.
Answer:
Book Value and Fair Value
There is a difference between the book value and the fair value of an asset. The book value is based on the asset's historical cost. The fair value is the current market price of the asset. In reporting long-term assets, the acceptable basis is the historical cost or the cost of acquiring the asset. This cost is further reduced by annual depreciation charges. The fair value is not often the acceptable basis for reporting long-term assets unless the entity is no longer a going concern or the asset has suffered an impairment loss.
Explanation:
a) Data and Calculation:
Fair value by a real estate expert = $850,000
Book value (historical cost) = $550,000
Difference between fair value and book value = $300,000
The explanation regarding the given situation is described below:
It considered the fair value of the asset at the time of valuation of an asset. At the time of valuation of the asset in the balance sheet, the asset should be recorded like = cost of the asset - depreciation. The asset valuation should be recorded at the book value always not the fair value.Learn more: brainly.com/question/17429689
Here are data on two companies. The T-bill rate is 4% and the market risk premium is 6%.What would be the fair return for $1 Discount Store according to the capital asset pricing model (CAPM)
Answer:
13%
Explanation:
Please find attached a table containing further information needed to answer this question
According to the capital asset price model: Expected rate of return = risk free + beta x (market rate of return - risk free rate of return)
Expected rate of return = risk free + beta x market premium
Beta measures systemic risk
The higher beta is, the higher the systemic risk and the higher the compensation demanded for by investors
4% + (1.5 x 6%) = 13%
Four major breakfast cereal companies share a majority of the cereal market: Kellogg, Post, General Mills, and Quaker. This is an example of
Answer:
Oligopoly
Explanation:
An oligopoly can be defined as a market structure comprising of a small number of firms (sellers) offering identical or similar products, wherein none can limit the significant influence of others.
Hence, it is a market structure that is distinguished by several characteristics, one of which is either similar or identical products and dominance by few firms.
The characteristics of an oligopolistic market structure are;
I. Mutual interdependence between the firms.
II. It's a market that is typically controlled by many small firms.
III. Difficult entry to new firms.
In this scenario, four major breakfast cereal companies share a majority of the cereal market (identical or similar products) such as Kellogg, Post, General Mills, and Quaker. Thus, this is an example of an oligopoly.
New educational study has proven that the practice of writing, erasing, and rewriting improves students' ability to process information, leading parents to steer away from pen use in favor of pencils.
a. True
b. False
[The following information applies to the questions displayed below.] Pacific Ink had beginning work-in-process inventory of $744,960 on October 1. Of this amount, $304,920 was the cost of direct materials and $440,040 was the cost of conversion. The 48,000 units in the beginning inventory were 30 percent complete with respect to both direct materials and conversion costs. During October, 102,000 units were transferred out and 30,000 remained in ending inventory. The units in ending inventory were 80 percent complete with respect to direct materials and 40 percent complete with respect to conversion costs. Costs incurred during the period amounted to $2,343,600 for direct materials and $3,027,840 for conversion.
Required:
a. Compute the equivalent units for the materials and conversion cost calculations.
b. Compute the cost per equivalent unit for direct materials and for conversion costs using the weighted-average method.
Answer:
Pacific Ink
a. The equivalent units for materials and conversion costs are:
Materials Conversion
Equivalents units 126,000 114,000
b. The cost per equivalent unit for direct materials and for conversion costs using the weighted-average method are:
Cost per equivalent unit $21.02 $30.42
Explanation:
a) Data and Calculations:
Materials Conversion Total
Work in process, Oct. 1 $304,920 $440,040 $744,960
Costs incurred in October 2,343,600 3,027,840 5,371,440
Total costs of production $2,648,520 $3,467,880 $6,116,400
Units:
Work in process, Oct. 1 48,000 (30%) 48,000 (30%)
Units transferred out 102,000 (100%) 102,000 (100%)
Work in process, Oct. 31 30,000 (80%) 30,000 (40%)
Equivalent units of production:
Units transferred out 102,000 (100%) 102,000 (100%)
Work in process, Oct. 31 24,000 (80%) 12,000 (40%)
Total equivalent units 126,000 114,000
Cost per equivalent units:
Total costs of production $2,648,520 $3,467,880 $6,116,400
Total equivalent units 126,000 114,000
Cost per equivalent unit $21.02 $30.42
MC Qu. 94 A company uses a process... A company uses a process costing system. Its Assembly Department's beginning inventory consisted of 57,200 units, 75% complete with respect to direct labor and overhead. The direct labor beginning inventory costs were $10,700. The department completed and transferred out 109,500 units this period. The ending inventory consists of 47,200 units that are 25% complete with respect to direct labor and overhead. All direct materials are added at the beginning of the process. The department incurred direct labor costs of $42,000 and overhead costs of $50,000 for the period. Assuming the weighted average method, the direct labor cost per equivalent unit (rounded to the nearest cent) is:
Answer:
$0.43
Explanation:
Equivalent Units
Labor
% Completion Units
Units Completed and Transferred out 100% 109,500
Ending Work in Process 25% 11,800
Total Equivalent units 121,300
Particulars Amount
Beginning work in Process 10,700
Cost Added during May 42,000
Total cost added during the year $52,700
Cost per Equivalent unit = Total cost added during the year / Total Equivalent units
Cost per Equivalent unit = $52,700 / 121,300 units
Cost per Equivalent unit = 0.43446002
Cost per Equivalent unit = $0.43
Suppose there are three factories in Macroland and the following occurred in 2019: Metal, plastic and a car factory. Metal factory produces $200, plastic factory produces $500, and car factory produces $700, of its respective products. The metal factory sells all of its output to the car factory. The plastic factory sells $80 worth of plastic to the car factory, $20 to the government, and the rest to consumers. The Car factory exports $50 of its cars and sells the rest to consumers.
Required:
What is the GDP of Macroland in 2019?
Answer:
$1120
Explanation:
The computation of the GDP is shown below:
Y = C + I + G + X
Here Y denotes the GDP
C denotes the consumption = $500 - $80 - $20 = $400 and 700 - 50 = $650
I denotes the investment = $
G denotes the government purchase = $20
X denotes the net exports = $50
So,
Y = $400 + $650 + 0 + $20 + $50
= $1120
A student is deciding whether to take an additional class or work extra hours. Which amounts are relevant to this decision
Answer:
a. Out-of-pocket costs
c. opportunity costs
Explanation:
Out of pocket costs are those that have to be incurred by the student for having to take the additional classes if there are any. This needs to be considered as they are a cost that the student will need to pay for to take the classes and therefore might need budgeting.
Opportunity costs are the returns offered by the next best alternative to the current decision being taken. In other words, the student needs to consider what will happen if they pick additional class over work and vice versa.
Answer:
pocket and opportunity
Explanation:
Exercise 5-10 Lower of cost or market LO P2 Martinez Company's ending inventory includes the following items. Product Units Cost per Unit Market per Unit Helmets 27 $ 55 $ 59 Bats 20 83 77 Shoes 41 100 96 Uniforms 45 41 41 Compute the lower of cost or market for ending inventory applied separately to each product.
Answer:
Martinez Company
Ending inventory is:
= $8,806.
Explanation:
a) Data and Calculations:
Product Units Cost per Unit Market per Unit
Helmets 27 $ 55 $ 59
Bats 20 83 77
Shoes 41 100 96
Uniforms 45 41 41
Lower of cost or market value Valuation:
Product Units Cost per Unit Market per Unit LCM
Helmets 27 $ 55 $ 59 $1,485
Bats 20 83 77 1,540
Shoes 41 100 96 3,936
Uniforms 45 41 41 1,845
Total cost of ending inventory $8,806
Bedeker, Inc., has an issue of preferred stock outstanding that pays a $4.95 dividend every year in perpetuity. If this issue currently sells for $94 per share, what is the required return
Answer:
Required return = 5.27%
Explanation:
Below is the calculation of required return:
Given the dividend paid amount = $4.95
The selling price of share = $94
Use below formula to find the required return:
Required return = Dividend amount / Selling price
Now plug the values:
Required return = $4.95 / 94
Required return = 5.27%
Brandy’s Restaurant estimates that its total cost of providing Q meals per month is given by TC = 6,000 + 2 Q. If Brandy charges $4 per meal, what is its break-even level of output?
Answer: 3,000 meals
Explanation:
The 6,000 in this total cost formula represents the fixed costs of providing the Q meals per month.
The 2 represents the variable cost.
If a meal is $4, that means that the Contribution margin is:
= 4 - 2
= $2 per meal
The break-even level of output is:
= Fixed cost / Contribution margin per meal
= 6,000 / 2
= 3,000 meals
The senior marketing executive you have assigned as team leader asks you to stay on as a team consultant until she gets things rolling. She asks your advice on her first course of action. What will you advise her to do
Answer:
In layman's terms, you suggest a highly skilled communications specialist with exceptional creative abilities. You frequently recommend a sales manager who is known with his or her abilities to provide clear direction and follow action. The project will need individuals who will have the relevant experience in managing others as well as academic specialization in related operations.
Senior marketing executive carries out the companies marketing activities, they advise sales manager to understand the customer's need.
What is the role of senior marketing executive?The senior marketing executive carries out the marketing activities, plan the strategies to maximize profits and to achieve the target of a company.
When a senior marketing executive act as team lead:they are expected to increase sales and maximize the companies profit. They recommend sale manger to know the customer's expectation and make sales accordingly. You require people in team who have experience in the field and have academic specialization also.
Therefore, the above explanation aptly describes the role of senior marketing executive
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These selected condensed data are taken from a recent balance sheet of Sanson Company (in millions of dollars). Cash Accounts receivable Inventory Other current assets Total current liabilities $ 7.2 14.4 18.0 11.1 24.8 Additional information: Current liabilities at the beginning of the year were $35.6 million.
(a) What is the working capital? ____________
(b) What is the current ratio? _____________
Answer:
a. Working capital = Current Assets - Current Liabilities
Working capital = (Cash + Accounts receivable + Inventory + Other current assets) - Total current liabilities
Working capital = ($7.2 + $14.4 + $18.0 + $11.1) - $24.8
Working capital = $50.7 - $24.8
Working capital = $25.9
b. Current ratio = Current Assets / Current Liabilities
Current ratio = $50.7 / $24.8
Current ratio = 2.04 : 1
Allen Green is a single taxpayer with an AGI (and modified AGI) of $214,000, which includes $172,000 of salary, $26,200 of interest income, $10,400 of dividends, and $5,400 of long-term capital gains. What is Allen's net investment income tax liability this year, rounded to the nearest whole dollar amount
Answer:
$532
Explanation:
The income that is considered for NIIT is the (a) lesser of the net investment income or (b) the amount by which MAGI exceeds the applicable threshold.
a. $42,000 ($26,200 interest income + $10,400 dividends + $5,400 Long-term capital gains)
b. $14,000 ($214,000 - $200,000)
Note: MAGI threshold of $200,000 for single taxpayer is applicable before they fall under the NIIT bracket of 3.8% of tax.
Net Investment Income = $14,000
Net investment income tax liability = Net Investment Income * 3.8%
Net investment income tax liability = $14,000 * 3.8%
Net investment income tax liability = $532
So, Allen's net investment income tax liability this year is $532.
Tarnopol Learning Services (TLS) offers tutoring to high school students, college students, and adults returning to school. TLS's major product offerings include academic tutoring, standardized test preparation, and admissions consulting. Demand for standardized test preparation, which accounts for the majority of TLS's revenues, peaks before the most popular test dates. Demand for admissions consulting peaks late in the year, just before application deadlines. Demand for tutoring services varies less than demand for other TLS services, but it is highest near the end of academic semesters. Staff shortages during these times have been a persistent problem. In response, TLS is considering whether to 1) recruit and train a greater number of temporary workers during peak demand times; or 2) partner with a tutoring and testing outsourcing firm that would provide services to TLS customers using the TLS brand. An executive at TLS believes that the best way to measure the number of extra employees that TLS needs is to estimate the number of extra employees each product category requires and then add all of those estimates together. Which of the following points out a flaw in this approach??A. The largest growth area for TLS is governmental contracts, which have buying procedures that are very different from those of other customers.B. TLS currently maintains separate accounting departments in each of its regions. C. To be effective, TLS managers need to be experts in at least one of the products that TLS sells. D. TLS hopes to build sustained relationships with customers, selling the same person academic tutoring standardized test preparation, and admissions consulting. E. Communication between different marketing departments in different regions has been substandard.
Answer:
D. TLS hopes to build sustained relationships with customers, selling the same person academic tutoring standardized test preparation, and admissions consulting. E. Communication between different marketing departments in different regions has been substandard.
Explanation:
Two years ago, Kuley invested $20,900. She has earned and will earn compound interest of 7.8 percent per year. In 3 years from today, Nabax can make an investment and earn simple interest of 5.3 percent per year. If Nabax wants to have as much in 7 years from today as Kuley will have in 7 years from today, then how much should Nabax invest in 3 years from today
Answer:
$73306.46
Explanation:
Compound interest = Principal(1+rate/n)^nt
If Kuley invested $20900 and compound interest rate of 7.8% per year for 7 years then,
Compound interest in 7 years =$20900(1+7.8/12)^12×7
=$20900×1.7233= $36016.97
After 3 years, Nabax would have 4 years left to make what kuley made in 7 years
Kuley made compound interest of $36016.97-$20900= $15116.97
Nabax will invest for 4 years at simple interest rate of 5.3%
Simple interest = principal×time×rate/100
We substitute to get his needed amount(principal)
$15116.97=Principal×4×5.3/100
$15116.97= 21.2Principal/100
Cross multiply to make principal subject of the formula:
Principal= 1511697/21.2
Principal = $73306.46
Therefore Nabax needs to invest $73306.46 to get the same amount of return that kuley got in 7 years
Resource X is necessary to the production of good Y. If the price of resource X falls, the equilibrium price of Y will ______________ and the equilibrium quantity of Y will ________________.
Answer:
fall
rise
Explanation:
If the cost of resource x falls, it becomes cheaper to produce good y. This leads to an increase in supply of y. the supply curve of good y shifts out. As a result, equilibrium price falls and quantity rises
Gary Marks is paid on a monthly basis. For the month of January of the current year, he earned a total of $9,138. FICA tax for Social Security is 6.2% on the first $128,400 of earnings each calendar year and the FICA tax for Medicare is 1.45% of all earnings. The FUTA tax rate is 0.6%, and the SUTA tax rate is 5.4%. Both unemployment taxes are applied to the first $7,000 of an employee's pay. The amount of Federal Income Tax withheld from his earnings was $1,516.27. What is the amount of the employer's payroll taxes expenses for this employee
Answer:
$ 1,119.06
Explanation:
It is given that :
Gary Marks total earning = $ 9,138
The social security tax = 6.2%
The Medicare tax = 1.45%
We known, the FUTA and the SUTA must only be applied to the first $7000 earned from Gary's pay.
So, the employer's payroll taxes expenses = Social security + Medicare + FUTA + SUTA
= ($9,138 x 6.2%) + ($9,138 x 1.45%) + ($7000 x 0.6%) + ($7000 x 5.4%)
= 566.56 + 132.5 + 42 + 378
= $ 1,119.06
Therefore, the amount of the employer's payroll taxes expenses is $1,119.06
You overhear a group of your co-workers laughing at some crude jokes about a few customers. Which of the following would you most likely do?
Answer: Tell your manager about this offensive behavior.
Explanation:
If I overhear a group of your co-workers laughing at some crude jokes about a few customers, the most likely thing for me to do will be to inform my manager about this offensive behavior.
Customers are vital to every business and should be treated right, without the customers, there isn't any business at all. Therefore, I'll inform my manager so that he'll have an idea of what is going on and then call them to order and explain to them that customers should be treated right and respected.
To the extent that a firm is able to standardize its products across country borders, use the same or similar production facilities, and coordinate critical resource functions, the more likely it is to achieve optimum economies of scale. Group of answer choices
Answer: True
Explanation:
When a firm is able to use the same or similar processes across different countries to produce goods and services, they will get more adept at using them and will be able to acquire resources at a cheaper rate because they acquire the required resources in huge quantities.
This will lead to optimum economies of scale because costs would be saved from both knowing how to be more efficient across various nations and being able to acquire resources at the lowest prices.
Most investors have an expected outcome associated with an investment, and risk refers to the potential for receiving an outcome or return that is greater or less than his or her expected return. It is not surprising that investors _____________ receiving investment returns that exceed their expected return, but they tend to respond differently if the investment can generate a lower return. This potential for ______________ outcome is the risk on which most investors focus.
Answer:
dont mind
negative or downside
Explanation:
In the case when the investors mostly have a predicted outcome that attached with an investment also the risk means the potential that collect an return that could be more or less as compared to the expected return. So here the investor should dont mind with the investment that they received also it is more than the expected return but at the same time they will response differently when the investment have a less return. This could be negative or downside result based on the risk where mostly investor focused
Perfect elasticity and zero elasticity refer to the same event, which occurs when quantity demanded or quantity supplied change by an infinite amount in response to any change in price.
a) true
b) false
Answer:
b
Explanation:
perfectly elasticity is when at an existing price quantity demanded can increase or decrease.the numerical co efficient is always infinity ♾️
The Fed threw a lot of money at the financial crisis in 2008 to unfreeze credit markets and encourage economic activity. As part of its effort to keep the interest rate low, the Fed purchased government bonds worth $300 billion between March and September 2009. By October, the Fed held $770 billion in government securities, nearly double its pre-crisis total. Before the crisis, the Fed held mainly government securities, which it used to control the quantity of money in the economy. Now government securities make up just 35% of the Fed's balance sheet.
Explain how the Fed uses its government securities to control the nominal interest rate
When the Fed purchases government securities, bank reserves ______ and bank deposits ______.
A. increase; increase
B. decrease; increase
C. decrease; decrease
D. increase; decrease
Answer:
D. increase; decrease
Explanation:
$2200; increased; 300
