Answer:
The amount of the impairment loss for this asset is $110,000
Explanation:
A assets is impaired when the fair market value of that assets lowers than the book value of the asset.
To calculate the impairment of an assets following formula is used
Impairent = Book value of Asset - fair market value of the asset
Placing values in the formula
Impairent = $700,000 - $590,000
Impairent = $110,000
Question 1 of 10
What is one way banks can recover money they have loaned to someone who
has stopped making payments?
O A. Banks can require the borrower's friends and family to pay off the
loan.
B. Banks can have collection agencies seize part of the borrower's
income.
C. Banks can force the borrower's employer to fire him or her
immediately
D. Banks can make the borrower work at the bank for no salary.
Answer:
B. Banks can have collection agencies seize part of the borrower's income.
Explanation:
Hope it helps
Banks can recover money they have loaned to someone who has stopped making payments the banks can have collection agencies seize part of the borrower's income. Thus, option (b) is correct.
What is bank?
The term Bank refers to a financial institution that deals with money. For the aim of saving and investing, the individual deposits money into a personal account. Additionally, banks can offer loans and ATM services. There are two different kinds of banks, such as public and private ones.
The debtors give the loan to the bank, but as long as someone is not returned on payment, the bank can hire collection agencies. The collection agencies' main role is to collect money with interest from debtors.
Therefore, option (b) is correct.
Learn more about on banks, here:
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What is the beta of a portfolio comprised of the following securities? Stock Amount Invested Security Beta A $ 4,000 1.44 B $ 5,000 1.55 C $ 7,500 1.00
Answer: 1.27
Explanation:
The portfolio beta is a weighted average of the individual betas of the composite stocks.
Total amount invested = 4,000 + 5,000 + 7,500
= $16,500
Portfolio beta = (4,000/16,500 * 1.44) + (5,000/16,500 * 1.55) + (7,500/16,500 * 1.00)
= 0.3490909 + 0.469697 + 0.45454545
= 1.27333335
= 1.27
Determine whether the following bonds payable will be issued at par value, at a premium, or at a discount. a. Evergreen Company issued bonds payable that pay stated interest of 6 1/4%. On the date of issuance, the market interest rate was 6 3/4%.b. Seven Hills, Inc., issued 3% bonds payable when the market rate was 3 3/4%. c. Flagstaff Corporation issued 5% bonds when the market interest rate was 5%. d. The market interest rate is 4%. Rainforest Corp. issues bonds payable with a stated rate of 5 1/2%.
Answer:
b is you answer
Explanation:
Selected transactions for Windsor, Inc., an interior decorating firm, in its first month of business, are as follows.
Jan. 2
3
9
11
Invested $18,481 cash in the business in exchange for common stock.
Purchased used car for $10,103 cash for use in the business.
Purchased supplies on account for $616.
Billed customers $2,218 for services performed.
Paid $246 cash for advertising.
Received $961 cash from customers billed on January 11.
Paid creditor $370 cash on balance owed.
Declared and paid a $616 cash dividend.
16
20
23
28
Journalize the transactions. (Credit account titles are automatically indented when the amount is entered. Do not indent
manually. Record journal entries in the order presented in the problem. If no entry is required, select "No Entry" for the
account titles and enter o for the amounts.)
16 28 24 29-$4&3 gfrrffttttttru
Bill Darby started Darby Company on January 1, 2016. The company experienced the following events during its first year of operation:
a. Earned $1,600 of cash revenue.
b. Borrowed $3,000 cash from the bank.
c. Adjusted the accounting records to recognize accrued interest expense on the bank note. The note, issued on September 1, Year 1, had a one-year term and an 10 percent annual interest rate.
Required:
a. What is the amount of interest payable at December 31, 2016?
b. What is the amount of interest expense in 2016?
c. What is the amount of interest paid in 2016?
Answer:
Darby Company
a. The amount of interest payable at December 31, 2016 is $100.
b. The amount of interest expense in 2016 is $100.
c. The amount of interest paid in 2016 is $0.
Explanation:
a) Data and Calculations:
Notes Payable to the bank = $3,000
Interest rate = 10%
Period of note = 1 year
Issue date = September 1
Interest on the note = $3,000 * 10% * 4/12 = $100
b) The interest payable in 2016 equals the interest expense for 2016. From the calculations, there is no payment for interest expense in 2016, that is why the interest payable equals the interest expense.
Entity A supplies planed timber, paint, varnish, springs, upholstery, and cushioning to EntityB, which produces a ready to use furniture. Entity C is the marketing department of Entity B. In this context, ______.a. A is an upstream supply chain member, while C is the downstream chain memberb. C is an upstream supply chain member, while A is the downstream chain memberc. B is an upstream supply chain member, while A is the downstream chain memberd. C is an upstream supply chain member, while B is the downstream chain member
Answer:
a. A is an upstream supply chain member, while C is the downstream chain member
Explanation:
Supply chain management can be defined as the effective and efficient management of the flow of goods and services as well as all of the production processes involved in the transformation of raw materials into finished products that meet the insatiable want and need of the consumers. Generally, the supply chain management involves all the activities associated with planning, execution and supply of finished goods and services to the consumers.
The key principle of supply chain management can be best summed up as collaboration between multiple firms. These multiple firms include a company that is saddled with the responsibility of manufacturing, a wholesaler, and a retailer who typically sells the products to the customers or consumers.
Basically, these three (3) firms or individuals are required to collaborate with each other so as to meet the needs of the customers in a timely manner or fashion and at a fair price too.
Entity A supplies planed timber, paint, varnish, springs, upholstery, and cushioning to Entity B, which produces a ready to use furniture. Entity C is the marketing department of Entity B.
In this context, Entity A is an upstream supply chain member, while Entity C is the downstream chain member.
The upstream supply chain member are the suppliers of raw materials to another organization for its production line while the downstream chain member are the intermediary between the manufacturer and the consumer.
The adjusted trial balance of Sunland Company shows these data pertaining to sales at the end of its fiscal year, October 31, 2022: Sales Revenue $903,400; Freight-Out $13,700; Sales Returns and Allowances $22,000; and Sales Discounts $15,400. Prepare the sales section of the income statement.
Answer and Explanation:
The preparation of the sales section of the income statement is presented below:
Income Statement
For the year ended
Sales
Sales revenue $903,400
Less:
Sales Discount $15,400
Sales return & allowances $22,000
Net Sales $866,000
hence the net sales is $866,000
The freight out would not be considered. Hence, ignored it
Rearden Metal has a bond issue outstanding with ten years to maturity, a yield to maturity of 8.6%, and a B rating. The corresponding risk-free rate is 3% and the market risk premium is 6%. Assuming a normal economy, the expected return on Rearden Metal's debt is closest to:______
a. 0.6%
b. 1.6%
c. 4.6%
d. 6.0%
Answer:
c. 4.6%
Explanation:
the question is incomplete, since it is missing the average beta for B rated bonds, so I looked for similar questions: average beta for B bonds = 0.26 and since we are assuming a normal economy, we should use it:
the expected return on the bonds = risk free rate + (average beta of B rated bonds x risk premium)
expected return = 3% + (0.26 x 6%)
expected return = 3% + (0.26 x 6%) = 3% + 1.56% = 4.56% ≈ 4.6%
In the Keynesian model, when government decreases its spending by $20 billion, and it decreases taxes by $30 billion, and the MPC is .75, by how much will total spending in the economy change?A) Total spending will increase by $70 billion.
B) Total spending will decrease by $270 billion.
C) Total spending will increase by $200 billion.
D) Total spending will increase by $10 billion.
E) Total spending will decrease by $470 billion.
Answer:
D) Total spending will increase by $10 billion.
Explanation:
The computation is shown below:
As we know that
Multiplier = 1 ÷ 1 -MPC
= 1 ÷ 1 - 0.75
= 1 ÷ 0.25
= 4
When there is a decrease in tax so the total spending increase is $30 billion
And, the reduction in spending because of the reduction in the government expenditure is $20 billion
So, the increase in total spending is
= $30 billion - $20 billion
= $10 billions
hence, the correct option is D.
Which of the following is not an exemption from minimum essential coverage for health insurance:
a. the taxpayer had coverage for all but 1 month during the year
b. the taxpayer’s income is less than 200% of the federal poverty level
c. the taxpayer was in jail
d. the taxpayer spent 350 days out of the United States during the year
Answer:
c. the taxpayer was in jail
Explanation:
The minimum eligibility for cover in the health insurance exemption is as follows:
1. Tax payer should cover for all month but for one month
2. The income of the taxpayer should be lower than 200 of the federal level of the poverty
And,
3. The taxpayer should spent 350 days out of the total days avaiiable in the united states
Therefore the option c is to be selected as it not come under the exemption criteria
Leach Inc. experienced the following events for the first two years of its operations:
Year 1: Issued $10,000 of common stock for cash.
Provided $100,000 of services on account.
Provided $35,000 of services and received cash.
Collected $65,000 cash from accounts receivable.
Paid $14,000 of salaries expense for the year.
Adjusted the accounting records to reflect uncollectible accounts expense for the year. Leach estimates that 8 percent of the ending accounts receivable balance will be uncollectible.
Year 2: Wrote off an uncollectible account for $680.
Provided $120,000 of services on account.
Provided $25,000 of services and collected cash.
Collected $102,000 cash from accounts receivable.
Paid $30,000 of salaries expense for the year.
Adjusted the accounts to reflect uncollectible accounts expense for the year. Leach estimates that 8 percent of the ending accounts receivable balance will be uncollectible.
Required
a. Record the 2016 and 2017 events in general journal form and post them to T-accounts. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
b. Prepare the income statement, statement of changes in stockholders’ equity, balance sheet, and statement of cash flows for 2016 and 2017. (Statement of Cash Flows and Balance Sheet only: Items to be deducted must be indicated with a minus sign.)
c. What is the net realizable value of the accounts receivable at December 31, 2016 and Dec. 31. 2017?
Answer:
that is too hard check gogle
Under certain conditions, the Coase theorem asserts that the property right to an activity will be acquired by the party that values it most. What are the two implications of the Coase theorem that are listed in the chapter? (Check only two.) A. Legal constraints will not affect the outcome. B. The outcome will result in the rights to an activity going to the party that deserves them the most C. The outcome will result in the largest possible economic pie for society to enjoy. D. Bargaining will be efficient since transactions costs are eliminated.
Answer:
The correct answers are the options:
B) The outcome will result in the rights to an activity going to the party that deserves them the most
D) Bargaining will be efficient since transactions costs are eliminated.
Explanation:
To begin with, the concept that is name as "Coase Theorem" is famously known in the microeconomics theory as the statement that describes the economic efficiency of an outcome that involves externalities. Moreover, it indicates that if a trade between two private parties is possible and the transactions costs are low, then it all will end up in a Pareto efficiency situation in where the party that it deserves the most will be benefit himself from that. However the theorem is just that, a theorem, it is very difficult to be applicable for the real life economics due to the fact that in real life the transactions costs are rarely low enough.
(TCO C) For several years, Mountain Home University had used IBM computers. Recently, Apple Computers offered them a better machine at lower a price for one of the University's labs; however Mountain Home did not buy them because the _____ costs were too high.a. transactional.
b. opportunity.
c. marginal.
d. switching.
Answer:
d. switching.
Explanation:
Since in the question it is mentioned that Mountain university used IBM computers also the apple computers offered them a better machiner at a lesser cost but the university did not buyed as the switching cost is too high
Bcz from exchanging from IBM computer to Apple computers the cost is high and that cost we called as switching
Hence, the correct option is d.
The ________ summarizes the tasks to be accomplished and who is responsible for what on a project.
Answer:
Responsibility matrix
Explanation:
The responsibility matrix deals with the various kind of the responsibilities that specified the task that should be achieved and the type of responsibility that each one of them is responsible for their work
It is also known as the linear responsibility chart
Therefore the responsibility matrix is the answer and the same is to be considered
Suppose that you buy a 1-year maturity bond with a coupon of 7.2% paid annually. If you buy the bond at its face value, what real rate of return will you earn if the inflation rate is 2%? 4%? 8.30%? (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places. Negative amount should be indicated by a minus sign.)
Answer:
Explanation:
The Real rate of return would be calculated as:
= (1 + Coupon rate)/(1 + Inflation rate) - 1
a. When inflation rate = 2%
Coupon rate = 7.2%
= (1+7.2%) / (1+2%) -1
= (1 + 0.072) / (1 + 0.02) - 1
= 5.10%
b. When inflation rate = 4%
= (1+7.2%) / (1+4%) -1
= (1 + 0.072) / (1 + 0.04) - 1
= 3.08%
3) When inflation rate = 8.30%
= (1+7.2%) / (1+8.3%) -1
= (1 + 0.072) / (1 + 0.083) - 1
= -1.02%
identify three of the many shared ethical standards among businesses that are incorporated in codes of ethics
Answer:
c. Social responsibility, fair pricing and truth in advertising.
Explanation:
The ethical standards shared by organizations that are incorporated into codes of ethics are: Social responsibility, fair price, truth in advertising.
A company needs to be ethical and transparent, this includes all its internal and external processes and systems. A company's social ethics can be demonstrated through responsibility to its stakeholders, which means that the company must promote the development of its employees, society and the environment.
The fair price refers to fair competition and the practice of prices consistent with its products and services, acting as a promoter to improve the quality of life of the population and enabling economic strengthening.
The truth in advertising corresponds to organizational transparency in promoting products and services consistent with what they offer in terms of price, quality, benefits, etc.
A company that complies with such ethical standards is much better positioned in the market and has a higher level of reliability by investors and consumers.
Answer: C. Social responsibility, fair pricing and truth in advertising.
Explanation:
The Economy Tomorrow Suppose a person who is developing an app crowdfunds $20,000 and holds this as cash for future expenses. If this $20,000 comes from donors' checking accounts, by how much will the money supply fall of the reserve ratio is 10 percent? Instructions: Enter your response as a whole number The money supply will decrease by $___________.
Answer:
Decrease in money supply = $200,000
Explanation:
Given:
Check account balance = 20,000
Reserve ratio = 10 percent
Find:
Money supply will decrease
Computation:
Decrease in money supply = Decrease in check account balance[1/reserve ratio]
Decrease in money supply = $20,000[1/0.10]
Decrease in money supply = $200,000
The Fremont Company uses the weighted-average method in its process costing system. The company recorded 43,500 equivalent units for conversion costs for November in a particular department. There were 7,400 units in the ending work-in-process inventory on November 30, 80% complete with respect to conversion costs. The November 1 work-in-process inventory consisted of 9,400 units, 50% complete with respect to conversion costs. A total of 39,000 units were completed and transferred out of the department during the month. The number of units started during November in the department was:________
Answer:
37,000 units
Explanation:
Calculation for the number of units started during November in the department
Using this formula
Number of Units started = Units completed and transferred out + Units in ending work-in-process − Units in beginning work-in-process
Let plug in the formula
Number of Units started= 39,000 units+7,400 units − 9,400 units
Number of Units started= 37,000 units
Therefore number of units started during November in the department was 37,000 units
Which of the following are frequently mentioned goals of the Federal Reserve? Check all that apply.
Answer:
Stability in the financial system
– Price stability—fighting inflation
– Full employment
– Economic growth
– Interest rate stability
– Currency stability
If during the year the portfolio manager sells all of the holdings of stock D and replaces it with 200,000 shares of stock E at $50 per share and 200,000 shares of stock F at $25 per share, what is the portfolio turnover rate?The composition of the Fingroup fund portfolio is as follows:Stock shares PriceA 200,000 $35B 300,000 40C 400,000 20D 600,000 25 The fund has not borrowed any funds but its accrued management fee with the portfolio manager currently totals 30,000. there are 4 million funds outstanding ? What is the net asset value of the fund?
Answer:
$10.49
Explanation:
The computation of the net asset value of the fund is shown below:
= (Market value of the assets - market value of the liabilities) ÷ number of oustanding shares
where,
Market value of assets is
= (200,000 × $35) + (300,000 × $40) + (400,000 × 20) + (600,000 × 25)
= $42,000,000
So, the net asset value of the fund is
= ($42,000,000 - $30,000) ÷ (4,000,000)
= $10.49
On May 1, 2017, Crane Company purchased the copyright to Blue Spruce Corp. for $112800. It is estimated that the copyright will have a useful life of 4 years. The amount of amortization expense recognized for the year 2017 would be:_______. a) $28200 b) $15040 c) $18800. d) $14100.
Answer:
$18,800
Explanation:
The amortization expense can be calculated by dividing the cost of copyright to purchase by the estimated useful life and then multiplied by the number of months covered until May 1, 2017.
Amortization expense = Cost to purchase / Estimated useful life) x 8/12 Amortization expense = ($112,800 / 4 years) * 8/12
Amortization expense = $18,800
As the copyright is purchased on may 1 it will cover 8 months till 31 december 2017
The point where marginal cost curve crosses the ____________ and ___________ curve is where the profit maximizing quantity demanded (dropping down to the X-axis) and price (going up to the demand curve or average revenue curve and over to the Y-axis) are determined.
Answer:
This question is incomplete, the options are missing and the word "and" between the gaps is wrong and should not be there.
The options are the following:
a) Marginal revenue
b) Average revenue
c) Variable cost
d) Fixed cost
And the correct answer is the option A: Marginal revenue.
Explanation:
To begin with, in the microeconomics theory the marginal analysis is very well known for being one of the reasons why the price is determined in the markets under the laws of economic sciences. Moreover, this marginal analysis focus on the interaction between all the curves that represents the costs and revenues that are related to the consumer of a good or service in a particular market. In the graphic, the point where the marginal cost curve equals the marginal revenue curve is where the profit maximizing quantity demanded and the price are the same and therefore those are the equilibrium numbers.
To prevent everyone from passively agreeing with each other in quarterly department meetings, one person will now be required to openly point out all the possible things that could go wrong with each new project.
2. HomeSafe sells and installs wireless home security systems in 5 districts across the Midwest. HomeSafe has about 20 sales reps in each district. At the end of each year, the top sales rep from each district wins an extra week of paid vacation time to use in the following year.
3. Your organization is in a rut. Everyone is doing the same things they’ve always done and there’s nothing creative or groundbreaking happening. You have two employees retiring soon and decide to replace them with people from completely different industries to bring in novel perspectives and keep everyone on their toes.
4. People in your office seem to be afraid to try new things, so the company sets up a monthly brainstorming session where employees can safely present wild and innovative new ideas. The sessions happen after work hours, but everyone who attends and contributes at least one new idea gets to take the last Friday of the month off of work.
5. Some of your employees want to bring the company’s training program entirely online (option 1), while others think it’s best to keep a face-to-face component in addition to offering a few online sessions (option 2). Due to resource constraints, the company can only choose one option. The executives decide to assign one upper manager to argue for option 1 and another to argue for option 2. This will help them to gather the necessary facts to make a final call.
Question Completion:
Managers are constantly confronted with conflicts—both functional and dysfunctional-while trying to reach organizational goals. This activity is important because effective management requires the ability to stimulate functional conflicts.
The goal of this exercise is to challenge your knowledge of the techniques for stimulating functional conflict.
Select the most appropriate technique for stimulating functional conflict for each of the items listed below.
Options:
Spur competition among employees
Change the organization's culture and procedures
Bring in outsiders for new perspectives
Use programmed conflict
Answer:
1. Change the organization's culture and procedures
2. Spur competition among employees
3. Bring in outsiders for new perspectives
4. Spur competition among employees
5. Use programmed conflict
Explanation:
Functional workplace conflicts are purposeful conflicts that spur healthy, constructive, and problem-solving disagreements between functional groups or individuals. They help to identify problems early, as these regulated conflicts trigger some actions that may expose other underlying problems. They also improve productivity by galvanizing the workforce to improve their individual insights, relationships with others, and commitment to the achievement of organizational success. Functional conflicts should be encouraged by management, while efforts should be exerted to reduce dysfunctional conflicts through appropriate mediations.
___________________ includes the process, content, and outcome of refreshment or replacement of attributes that have the potential to substantially affect its long-term prospects in a company.a) vertical integrationb) general managementc) strategic renewald) corporate governance
Answer:
Strategic renewal
Explanation:
Strategic renewal includes the process, content, and outcome of refreshment or replacement of attributes that have the potential to substantially affect its long-term prospects in a company. It is also the process of change and the outcome of adjustment in strategic direction that has the vital potential to determine the long-term competitiveness of a company in its industry
Suppose you invest $1,600 for six years at an annual percentage rate of 9 percent. a. What is the future value if interest is compounded annually? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. What is the future value if interest is compounded semiannually? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) c. What is the future value if interest is compounded monthly? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) d. What is the future value if interest is compounded continuously? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Answer:
a. Principal amount = $1,600
rate of interest = 9% compounded annually
Period = 6 years
Future value = P (1+r)^t
= $1,400 (1+0.09)^6
= $1,600 * 1.6771
= $2683.36
b. Principal amount = $1,600
rate of interest = 9% compounded semi annually, semi annual rate of interest = 9*6/12 = 4.5%
Time = 6 years, semiannual period = 6*2 =12
Future value = P (1+r)^t = $1,400 (1+0.045)^12
= $1,600 * 1.6959
= $2713.44
c. Principal amount = $1,600
Rate of interest = 9% compounded monthly, monthly rate of interest = 9/12 = 0.75%
Time = 6 years, monthly period = 6*12 =72
Future value = P (1+r)^t
= $1,600 (1+0.0075)^72
= $1,600 * 1.7125
= $2740
d. Principal amount = $1,400
Rate of interest = 9% compounded continuously
Period = 6 years
Future value = P * e^rt
= $1,600 (2.71828)^(0.09*6)
= $1,600 * 1.7160
= $2745.60
Ivanhoe Company sublet a portion of its warehouse for five years at an annual rental of $71100, beginning on May 1, 2020. The tenant, Barbara Jones, paid one year's rent in advance, which Ivanhoe recorded as a credit to Unearned Rent Revenue. Ivanhoe reports on a calendar-year basis. The adjustment on December 31, 2020 for Ivanhoe should be:________.
Answer and Explanation:
The adjustment should be as follows
Unearned Rent Revenue $47,400
To Rent Revenue $47,400
(Being recording of revenue earned is recorded)
Here unearned rent revenue is debited as it decreased the liabilities and the rent revenue is credited as it increased the revenue. Also liabilities and revenue contains the normal debit balance
The working is shown below:
= $71,100 × 8 months ÷ 12 months
= $47,400
The eight months are calculated from May 1 to December 31
Once the prototype of Wainwright Industries' new riding lawnmower, made especially for women, passes concept testing, the next step is ________
A) commercialization
B) focus group surveys
C) concept development
D) post-testing
E) marketing strategy
Answer: commercialization
Explanation:
Concept testing is the stage at which survey is being carried out for a particular product. This is done in order to know how consumers will accept a new product before such product is finally introduced to the market.
Since the product has passed the concept testing, the next step will be commercialization. This is when the product is then introduced and the business is managed in order to make profit.
Answer:
E) marketing strategy
Explanation:
When a new product is the be introduced to the market there are various stages the it should undergo to ensure it has high quality and is well recieved by the consumer.
The various steps are:
- idea development
- focus group survey
- concept testing
- market strategy development
- product development
- test marketing
- commercialisation
When the new product is confirmed as a viable one marketing strategy development is started to see how product can best be delivered to the consumer
This stage comes after concept testing.
Blue Enterprises reported cost of goods sold for 2020 of $1,307,500 and retained earnings of $5,383,000 at December 31, 2020. Blue later discovered that its ending inventories at December 31, 2019 and 2020, were overstated by $118,630 and $36,930, respectively. Determine the corrected amounts for 2020 cost of goods sold and December 31, 2020, retained earnings.
Answer: See explanation
Explanation:
Based on the information given in the question, the corrected amounts for 2020 cost of goods sold would be:
= $1307500 + $36930 - $118630
= $1225800
The corrected Retained earnings would be:
= $5,383,000 - $36,930
= $5,346,070
At which stage of the business cycle would the economy be at when GDP begins to rise and the unemployment rate begins to fall?
A)
Peak
B)
Contraction
Trough
D)
Expansion
Answer: A - peak
Explanation:
Just took the test the other answer is wrong!!!
In the country of Marzipana, total consumption in Year 1 was $56,000 million and in Year 2 was $60,000 million. It has been observed that each time disposable income changes in this country by $100, consumption changes by $70. Using this information compute the change in disposable income from Year 1 to Year 2.
A. Disposable income increased by $2,800 million in Year 2.
B. Disposable income decreased by $2,000 million in Year 2.
C. Disposable income increased by $2,000 million in Year 2.
D. Disposable income increased by $4,500 million in Year 2.
E. Disposable income decreased by $2,600 million in Year 2.
Answer: A. Disposable income increased by $2,800 million in Year 2.
Explanation:
Disposable income is gotten when the personal current taxes has been deducted from the total personal income of an individual.
Total consumption in year 1 = $56,000 million
Total consumption in year 2 = $60,000 million.
The above shows that there was an increase in total consumption of:
= $60,000 million - $56,000 million
= $4,000 million
From the question, we can also deduce that there's a 0.7 (70/100) change in consumption as a result of a $1 change in disposable income.
Therefore, the increase in the disposable income in year 2 will be:
= $4,000 million × 0.7
= $2,800 million
Therefore, the correct option is A.