# The classical dichotomy is the separation of real and nominal variables. The following questions test your understanding of this distinction. Rina spends all of her money on comic books and beignets. In 2011 she earned \$14.00 per hour, the price of a comic book was \$7.00, and the price of a beignet was \$2.00. Which of the following give the nominal value of a variable? Check all that apply. __ Rina's wage is 2 comic books per hour in 2011. __The price of a beignet is \$2.00 in 2011. __ Rina's wage is \$14.00 per hour in 2011. Which of the following give the real value of a variable? Check all that apply. __Rina's wage is \$14.00 per hour in 2011. __The price of a comic book is 3.5 beignets in 2011. __Rina's wage is 7 beignets per hour in 2011. Suppose that the Fed sharply increases the money supply between 2011 and 2016. In 2016, Rina's wage has risen to \$28.00 per hour. The price of a comic book is \$14.00 and the price of a beignet is \$4.00. In 2016, the relative price of a comic book is ( 0.29 beignets, 3.5 beignets, \$4.00, \$14.00) Between 2011 and 2016, the nominal value of Rina's wage (decreases, increases, remains the same) and the real value of her wage(decreases,increases,remains the same) . Monetary neutrality is the proposition that a change in the money supply (does not affect, affect) nominal variables and ( does not affect, affect) real variables.

Real variable

__ Rina's wage is 2 comic books per hour in 2011.

Nominal variable

__The price of a beignet is \$2.00 in 2011.

__ Rina's wage is \$14.00 per hour in 2011.

Relative price of comic books - 3.5 beignets

Nominal value of Rina's wage increases

Real value of Rina's wage  stages the same.

Monetary neutrality is the proposition that a change in the money supply ( affect) nominal variables and ( does not affect, ) real variables.

Explanation:

Nominal value is the face value or stated value.

Real value is nominal value adjusted for inflation. Real value of money also refers to the amount of goods and services money can buy.

Relative price is the price of a good in relation to another good.

The relative price of comic books in 2016 to biegnets = \$14 / \$4 = 3.5

Rina's income increased from \$14 in 2011 to \$28 in 2016. Her nominal income increased.

But the purchasing power of her income fell. In 2011 , her income could buy :

\$14 / \$7 = 2 comic books

Or

14 / 2 = 7 beignets

But in 2016, her income would buy:

\$28 / \$14 = \$l2

Or

\$28 / \$4 = 7

We can see that her purchasing power remains the same.

I hope my answer helps you

## Related Questions

15–1. Undue Influence. Juan is an elderly man who lives with his nephew, Samuel. Juan is totally dependent on Samuel’s support. Samuel tells Juan that unless he transfers a tract of land he owns to Samuel for a price 35 percent below its market value, Samuel will no longer support and take care of him. Juan enters into the contract. Discuss fully whether Juan can set aside this contract.

Explanation:

Samuel took advantage of his fiduciary responsibility is taking care of Juan to unfairly influence him to sell him a piece of land at a price 35% below market price. Juan as an old man who is TOTALLY dependant on Samuel, felt he had no choice but to agree as failure to do so will lead to Samuel no longer taking care of him and this could be quite disadvantageous to him.

There was UNDUE INFLUENCE and Coercion in this scenario which means Voluntary consent was lacking.

For this reason, the contract can be voided.

Jason Rodriguez works as a waiter in a Houston restaurant. His boss overhears Jason telling a co-worker during a break period that he thinks that the president ought to be impeached. The boss, a big supporter of the president, fires Jason on the spot. Jason thinks the boss violated his freedom of speech. Would you expect that Jason would be able to get his job back on that basis?

No

Explanation:

It is mentioned in the question that the boss who is a big supporter of the president fired Jason, who works as a waiter in the restaurant

So based on the given situation, the first amendment is applied for the government employees as it become the first priority for everyone, not for the private employees

Select a company of your choice. Assume that your firm is considering whether to make a component in-house or to outsource it to an independent foreign supplier. Manufacturing the part in-house will require an investment in specialized assets; quality control and the protection of intellectual property rights are major concerns. The most efficient and reliable suppliers are located in countries whose currencies many foreign exchange analysts expect will appreciate in the next decade; likewise, wage rates in those countries are expected to rise. Discuss the pros and cons of manufacturing the component in-house as opposed to outsourcing it. Should the firm consider foreign direct investment as one of its strategies?

The airline company is considering buying the aircraft components in house or outsourcing it from other foreign countries.

Explanation:

A company can outsource the product manufacturing or can manufacture its own products. The manufacturing of a product in house will be according to the requirements and customization can be done but on the other hand it will require equipment and manufacturing line setup on the site which incurs heavy cost. Buying product from outside will save incurring heavy fixed costs.

Alpha Company has budgeted activity for October to reflect net income \$120,000. All sales are credit sales. Receivables are planned to increase by \$35,000, payables to decrease by \$25,000 and Depreciation Expense is \$55,000. Use this information to determine how much cash will increase (decrease) during the month of October. (Round & enter final answers to: the nearest whole dollar for total dollar answers, nearest penny for unit costs or nearest whole number for units)

The cash is increased by \$115,000 during the month of October.

Explanation:

The computation of net effect of cash is shown below:

= Net income - increased in receivables - decrease in payable + depreciation expense

= \$120,000 - \$35,000 - \$25,000 + \$55,000

= \$115,000

The increase in receivable should be deducted as the outflow of cash is there, which decrease the cash balance so we deduct it

The decrease in account payable reflect that the company has paid the amount which ultimately reduce the cash balance, hence it is deducted in the computation part

Depreciation expense is added in the cash balance because it is a non cash expense.

Thus, the amount is in positive number which reflects increase in cash

Hence, the cash is increased by \$115,000 during the month of October.

Here are the U.S. tax rates and their corresponding tax brackets based on filing status for single individuals (i.e. not corporations) If taxable income is: Then income tax equals: Not over \$9,875 10% of the taxable income Over \$9,875 but not over \$40,125 \$987.50 plus 12% of the excess over \$9,875 Over \$40,125 but not over \$85,525 \$4,617.5 plus 22% of the excess over \$40,125 Over \$85,525 but not over \$163,300 \$14,605.5 plus 24% of the excess over \$85,525 Over \$163,300 but not over \$207,350 \$33,271.5 plus 32% of the excess over \$163,300 Over \$207,350 but not over \$518,400 \$47,367.5 plus 35% of the excess over \$207,350 Over \$518,400 \$156,235 plus 37% of the excess over \$518,400 Layla's taxable income for 2019 was \$182,431. How much are her federal income taxes to the nearest dollar

Layla's federal income taxes to the nearest dollar are:

= \$39,393.

Explanation:

a) Data and Calculations:

Layla's taxable income

for 2019 =                 \$182,431    Income Tax

Income tax on            (163,300) = \$33,271.50

Excess of \$163,300        19,131 =    \$6,121.92 (\$19,131 * 32%)

Total income tax payable =       \$39,393.42

U.S. Tax Rates and Corresponding Tax Brackets (Single Individuals)

If taxable income is:            Then income tax equals:

Not over \$9,875 10% of the taxable income Over \$9,875 but not over \$40,125 \$987.50 plus 12% of the excess over \$9,875

Over \$40,125 but not over \$85,525 \$4,617.5 plus 22% of the excess over \$40,125

Over \$85,525 but not over \$163,300 \$14,605.5 plus 24% of the excess over \$85,525

Over \$163,300 but not over \$207,350 \$33,271.5 plus 32% of the excess over \$163,300

Over \$207,350 but not over \$518,400 \$47,367.5 plus 35% of the excess over \$207,350

Over \$518,400 \$156,235 plus 37% of the excess over \$518,400 Layla's taxable income for 2019 was \$182,431

Fred Company paid \$48,000 for a two-year insurance policy, (\$2,000 per month), on October 1 and recorded the \$48,000 as a debit to Prepaid Insurance and a credit to Cash. What adjusting entry should Fred make on December 31, the end of the accounting period (no previous adjustment has been made)? Select one: a. Debit: Prepaid Insurance 6,000 Credit: Insurance Expense 6,000 b. Debit : Insurance Expense 6,000 Credit: Prepaid Insurance 6,000 c. Debit: Insurance Expense 24,000 Credit: Prepaid Insurance 24,000 d. Debit: Prepaid Insurance 42,000 Credit: Insurance Expense 42,000

The adjusting entry should Fred make on December 31, the end of the accounting period is: Debit Insurance Expense \$6,000; Credit Prepaid Insurance \$6,000.

### Journal entry

Based on the information given the appropriate journal entry to record the transaction is:

Debit Insurance Expense \$6,000

Credit Prepaid Insurance \$6,000

( \$2,000 x 3 = \$6,000)

Inconclusion the adjusting entry should Fred make on December 31, the end of the accounting period is: Debit Insurance Expense \$6,000; Credit Prepaid Insurance \$6,000.

The adjusting entry Fred should make on December 31, the end of the accounting period:

b. Debit : Insurance Expense 6,000 Credit: Prepaid Insurance 6,000

Explanation:

On October 1, Fred Company paid \$48,000 for a two-year insurance policy, (\$2,000 per month)

From October 1 to December 31, Fred Company has used the insurance for 3 months.

Insurance Expense = \$2,000 x 3 = \$6,000

The adjusting entry Fred should make on December 31, the end of the accounting period:

Debit Insurance Expense \$6,000

Credit Prepaid Insurance \$6,000