The CEO of Fly Corporation decides to change an accounting method at the end of the current year. The change results in reported profits increasing by 5%, but the company's cash flows are not changed. If capital markets are efficient, then what would happen to the company stock price? Justify your answer with logical arguments

Answers

Answer 1

Answer:

Fly Corporation

The stock price will not be affected by the accounting change.

Explanation:

This opinion is based on the assumption that the capital markets are efficient.  Therefore, the stock's market price will reflect all available and relevant information.  Since all the necessary information is already incorporated into the stock price, the CEO of Fly Corporation cannot beat the market by the change in accounting method, and the stock price will not be undervalued or overvalued.  Moreover, the change in accounting method only shifts the timing for reporting income.


Related Questions

If autonomous consumption increases by $50 billion and the MPC is 0.95, the resulting change in total spending equals__________________ billion, assuming that idle resources exist at each expenditure round and the multiplier is operative.

Answers

Answer: $1,000 billion

Explanation:

The change in total spending is calculated by:

= Autonomous consumption increase * Multiplier

Multiplier:

= 1 / (1 - MPC)

= 1 / (1 - 0.95)

= 1 / 0.05

= 20

Change in total spending:

= 50 billion * 20

= $1,000 billion

Define ethics and law and show how they are different and similar.

Answers

Answer: The law sets minimum standards of behavior while ethics set maximum standards. Laws are created and enforced by governments based on society's ethics to mediate our relationships with each other and to protect their citizens.

A buyer of $7,000 in merchandise inventory failed to take advantage of the vendor's credit terms of 2/15, n/45, and instead paid the invoice in full at the end of 45 days. By not taking advantage of the cash discount, the buyer lost the discount of:_________
a. 100
b. 77
c. 1155
d. 770
e. 231

Answers

Cash discount refers to an incentive that a seller offers toward a buyer in order to pay a bill before its time limit.In this, the seller will normally decrease the amount that the customer owes by either a modest percentage or a fixed monetary amount, and the further explanation can be defined as follows:

Given:

The credit terms are: [tex]\bold{\frac{2}{15} \ \ \frac{n}{45}}[/tex]When the [tex]2\%[/tex] discount with [tex]\bold{45\ days}[/tex] to paySo, the  price of the merchandise is: [tex]\bold{ 7000}[/tex]

Calculating the cash discount:

[tex]= \bold{7000 \times 2\%}\\\\= \bold{7000 \times \frac{2}{100}}\\\\= \bold{70\times 2}\\\\= \bold{\$140}[/tex]

Therefore the answer is "140", and all the given choices are wrong.

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For a business to be considered a corporation: Multiple Choice it must issue both common and preferred stock. its stock must be sold in very large amounts. it must be organized as a separate legal entity. it must pay dividends.

Answers

Answer:

it must be organized as a separate legal entity.

Explanation:

A corporation is a business that is owned by shareholders. The corporation is a separate legal entity and so it can sue and be sued, pay taxes and own assets.

Advantages of a corporation include :

1. they have unlimited liabilities

2. they have unlimited life. the business doesn't end even after the death of the owners unlike a sole proprietorship

3. they have more access to capital

Disadvantages of a corporation include :

high cost of setting up  Earnings to shareholders are taxed twice

A corporation can only issue one type of share

A corporation is under no obligation to pay dividends

Stocks of a corporation can either be sold in large or small amounts

If the central bank did not follow the Taylor principle, an increase in inflation would lead to a decrease in ________.
A) the nominal interest
B) the real interest rate
C) aggregate output
D) all of the above

Answers

Answer:

B) the real interest rate

On November 1, Bahama National Bank lends $3.7 million and accepts a six-month, 9% note receivable. Interest is due at maturity. Record the acceptance of the note and the appropriate adjustment for interest revenue at December 31, the end of the reporting period.

Answers

Answer:

11/01

Dr Cash $3.7 million

Cr Notes Payable $3.7 million

12/31

Dr Interest expense $55,500

Cr Interest payable $55,500

Explanation:

Preparation of the journal entries to Record the issuance of the note and the appropriate adjustment for interest expense at December 31, the end of the reporting period.

11/01

Dr Cash $3.7 million

Cr Notes Payable $3.7 million

(To record issuance of the note)

12/31

Dr Interest expense $55,500

Cr Interest payable $55,500

(To record adjustment for interest expense)

Interest Expense = Face Amount x Interest Rate x Time Period

Interest Expense= $3.7 million x .09x 2/12 Interest Expense=$55,500

Geoffrey is looking for a safe investment for $3,000 he received as a bonus. He is looking for an investment that will also help him deal with the effects of inflation. Which of the following options would you recommend that Geoffrey invest in?

a. Series EE bonds.
b. Series I bonds.
c. Commercial paper.
d. Junk bonds.

Answers

Answer:

Hence the correct option is option b. Series I bonds.

Explanation:  

Series I bonds are going to be completing a fixed-rate Plus and adjustable-rate which can be adjusted with the inflation so if he's trying to find investment into a bond he should be choosing with series I Bonds, which can be adjusted with inflation effect.  

The correct option is b) Series I bonds.

Series I bonds will have a fixed interest rate plus an interest on the outstanding that will be adjusted without inflation, thus if he is searching for a bond to participate in, he will have to go with series I bonds, which will then be modified with inflation.

All of the other possibilities are untrue.

Alternative (B) Series I bonds is the correct answer.

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Suppose that you have generated the estimates listed below from a pro forma analysis for a company that had requested a three year loan. The loan is a $1.5 million term loan with the equal annual payments of principals. The P&I payments are due at the end of each year with the annual interest rate = Prime rate + 2%.
Yr.1 Yr. 2 Yr. 3
Capital expenditure 250,000 125,000 75,000
Cash dividends 140,000 140,000 140,000
Cash flow from operations before
interest expense 750,000 780,000 800,000
Assuming the Prime rate = 8% each year. What will be the interest payment at year 2?
a. 25,000.
b. 50,000.
c. 100,000.
d. 150,000.
e. 200,000.

Answers

The answer is "Option c" and its calculation can be defined as follows:

Calculation:

Year                To be paid in principal       Paid Interest             Paid Principal [tex]1\ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \$1,500,000\ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \$150,000\ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \$500,000\\\\2\ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \$1,000,000\ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \$100,000\ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \$500,000\\\\3\ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \$500,000\ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \$50,000\ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \$500,000[/tex]

That's why "Option c" is the only correct choice.

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If the U.S. economy is producing at a level that is substantially less than potential GDP and the government's budget deficits are increasing aggregate demand, then ____________________________ is not much of a danger.

Answers

Answer:

an inflationary increase in the price level.

Explanation:

Monetary policy can be defined as the actions (macroeconomic policies) adopted and undertaken by the central bank of a particular country to control the money supply and interest rates so as to boost or enhance economic growth. The central bank uses monetary policies to manage inflation, economic growth through long-term interest rates and level of unemployment in a country.

In order to boost economic growth, a monetary policy is implemented to increase money supply (liquidity). Also, it is used to prevent inflation by reducing money supply.

An inflationary gap, also referred to as an expansionary gap in economics, is typically used for measuring the difference between the gross domestic product (GDP) and the current level of Real Gross Domestic Products that exists when a country's economy is gauged at a full employment rate. Consequently, this situation causes the price of goods and services to go up with a low income level among the people living in the country.

A budget deficit is the amount by which spending exceeds income.

All other factors held constant or all things being equal (ceteris paribus), an increase in government's budget deficit drives the interest rate up.

Generally, when there's a deficit in government budget, they resort to issuing more bonds or borrowing money from creditors. These creditors are likely to be sceptical about the government's ability to repay the debt and as such would increase the interest rate.

Hence, an inflationary increase in the price level of goods and services is not much of a danger if the U.S. economy is producing at a level that is substantially less than potential gross domestic product (GDP) and the aggregate demand is being increased by government's budget deficits.

Malouka participates in a research project for a large consumer behavior research firm. Each time she purchases items in a grocery store, she scans the barcodes of her products into an app, which sends her purchase data to the firm for analysis. Malouka is working with an example of automation known as __________.

Answers

Malouka is working with an automation example that we called the importing/exporting data.

The following information should be considered for the given situation:

Since she scans the barcodes of that product she purchased even all products are associated with the barcodes via using the mobile app.Also, she offered the research firm having more information like time, location, quantity, gender,etc.

Therefore we can conclude that Malouka is working with an automation example that we called the importing/exporting data.

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Accrued Product Warranty Fosters Manufacturing Co. warrants its products for one year. The estimated product warranty is 4% of sales. Assume that sales were $379,000 for January. On February 7, a customer received warranty repairs requiring $250 of parts and $105 of labor.
a. Journalize the adjusting entry required at January 31, the end of the first month of the current fiscal year, to record the accrued product warranty.
b. Journalize the entry to record the warranty work provided in February.

Answers

Answer:

a.

Date                     Account Title                                          Debit             Credit

Jan. 31                 Product Warranty Expense                 $15,160

                            Product Warranty Payable                                        $15,160

Working:

Product warranty expense = Amount of sales for January * Estimated product warranty

= 379,000 * 4%

= $15,160

b.

Date                     Account Title                                          Debit             Credit

Jan. 31                 Product Warranty Payable                     $355

                            Supplies                                                                     $250

                            Wages payable                                                          $105

The costs of the warranty will be taken from the liability account for warranties  because the warranty payable account represents that the company owes warranty repairs which the customer just came to collect.

Lamp Corp. manufactures wooden desks. Production consists of three processes: cutting, assembly, and finishing. The following costs are for work completed and transferred out of each department in April: Cutting Assembly Finishing Direct materials $7,000 $10,000 $3,000 Direct labor 3,000 14,000 2,000 Applied overhead 4,000 5,000 6,000 There were no work-in-process inventories, and 1,000 desks were produced. Ignoring the transfer entry, the journal entry to assign costs incurred in the assembly process would be

Answers

Answer:

See the journal entry be;ow.

Explanation:

Given:

                                Cutting        Assembly        Finishing

Direct materials        $7,000         $10,000           $3,000

Direct labor                 3,000           14,000             2,000

Applied overhead      4,000            5,000              6,000

Therefore, the journal entry to assign costs incurred in the assembly process would be as follows:

Details                                    Debit ($)           Credit ($)        

Work in process                      10,000  

Direct material                                                   10,000

(To record cost of direct material.)                                          

Work in process                     14,000  

Wages payable                                                  14,000

(To record direct labor cost.)                                                    

Work in process                     5,000  

Manufacturing overhead                                   5,000

(To record manufacturing overhead.)                                      

Sleep Cheap is a private camping ground near the Boulder Peak Recreation Area. It has compiled the following financial information as of December 31, 2022.

Services revenues (from camping fees) $132,000
Dividends $8,000
Sales revenues (from general store) 25,000
Notes payable 50,000
Accounts payable 13,000
Administrative expenses 133,000
Cash 13,500
Supplies 2,500
Equipment 108,000
Common stock 40,000
Retained earnings (1/1/2022) 5,000

Required:
a. Determine net income from Sleep Cheap for 2022.
b. Prepare a retained earnings statement and a balance sheet for Sleep Cheap as of December 31, 2022.

Answers

Answer and Explanation:

a. The net income should be

Service Revenue $132,000  

Sales Revenue $25,000  

Total revenues $157,000  

Less: Total expense -$133,000  

Net income $24,000  

b.  

The preparation of the retained earning statement is presented below:

Retained Earnings Statement  

For the year ended December 31,2022  

Retained Earnings, January 1 $5,000  

Add: Net income $24,000  

Less: Dividends -$8,000  

Retained Earnings, December 31 $21,000  

The preparation of the balance sheet is presented below:

Balance Sheet  

December 31,2022

Assets  

Cash $13,500

Supplies  $2,500

Equipment $108,000

Total Assets $124,000

Liabilities and Stockholders' Equity  

Liabilities  

Accounts Payable $13,000  

Notes Payable $50,000  

Total Liabilities $63,000

Stockholders' Equity  

Common Stock $40,000  

Retained Earnings $21,000  

Total Stockholders' Equity  $61,000

Total Liabilities and Stockholders' Equity $124,000

A bond issue with a face amount of $1,100,000 bears interest at the rate of 7%. The current market rate of interest is 8%. These bonds will sell at a price that is:

Answers

Answer:

d. Less than $1,100,000

Explanation:

Here are the options

Equal to $100,000 O

O More than $100,000 o

O The answer cannot be determined from the information provide

d. Less than $1,100,000

If the current interest market rate is greater than the bonds coupon rate the bond is selling at a discount

If the current interest market rate is less than the bonds coupon rate the bond is selling at a premium

If a bond’s coupon rate is equal to its current interest market rate, then the bond is selling at par.

A bank has agreed to lend you $53,000 for a home loan. The loan will be fully amortized over 39 years at 13.50%, with .44 points. The loan payments will be monthly. The closing cost is estimated to be $3,894 and you plan to refinance the mortgage in 8 years. Calculate the actuarial rate.

Answers

Answer:

the actuarial rate is $599.44

Explanation:

The computation of the actuarial rate is given below:

= $53000 × 1.13% × (1+1.13%)^468) ÷ ((1 + 1.13%)^468 - 1)

= $599.44

The 1.13% comes from

= 13.50% ÷ 12

= 1.13%

And, the 468 comes from

= 39 × 12

= 468

Therefore the actuarial rate is $599.44

The same is to be relevant

Many talented teachers at Sunnydale High School resigned from their jobs in the past year. The Administrative President of the school board is in a fix and is unable to identify a reason for this attrition. The school pays competitive wages to its teachers and even gave them a pay hike recently. In this scenario, which of the following points should Sunnydale's Administrative President keep in mind when devising a solution to the problem?

a. Money is the main reason people leave, so the school administration should give its employees a bonus along with the pay hike.
b. When pay is competitive, other job factors become more important than the pay employees receive.
c. Employees are bound to leave, and there is not much employers can do to retain them.
d. Teachers usually leave their jobs because of involuntary turnover, so pay is not a major factor in their retention.

Answers

Answer:

b. When pay is competitive, other job factors become more important than the pay employees receive.

Explanation:

In the case when pay should be treated as the competitive so the factors that represent higher orders or requirement becomes more significant if we compared with the money also these requirements could not be fully satisfied due to this they will resign

So as per the given situation, the option b is correct

And, the rest of the options should be considered wrong

Bob and Alice enter a contract that is within the statute of frauds. Now, Bob wants to get out of the contract on the basis that it is unenforceable pursuant to the statute of frauds. In response, Alice produces a writing that she says evidences the contract. In order for this writing to support the claim that the contract is enforceable against Bob, it must have been signed by:

Answers

Answer:

The writing must be signed by Bob himself, or his representative or any person who has the authority to act for him.  

Explanation:

Statute of frauds is defined as a provision that only allows certain transactions will be valid only when they are in writing.

Such transactions include sale of land, transactions that are above $500, and transactions that will last over a year.

In the given scenario Bob wants to pull out of the contract because it is not enforceable according to the statue of frauds.

Alice produces a writing that she says evidences the contract.

However for this to be enforceable it must be signed by Bob himself, or his representative or any person who has the authority to act for him.  

Last year, you purchased a stock at a price of $64.00 a share. Over the course of the year, you received $2.20 per share in dividends and inflation averaged 2.7 percent. Today, you sold your shares for $69.00 a share. What is your approximate real rate of return on this investment

Answers

Answer:

8.55%

Explanation:

Calculation to determine your approximate real rate of return on this investment

First step is to calculate the Nominal return

Nominal return = ($69 - $64+ $2.20)/$64

Nominal return=7.2/$64

Nominal return= 0.1125

Now let calculate the Approximate real return

Approximate real return = 0.1125 - 0.027

Approximate real return= 0.0855*100

Approximate real return=8.55%

Therefore your approximate real rate of return on this investment is 8.55%

Differences in net operating income between absorption costing and variable costing are due to the ______. Multiple choice question. amount of sales revenue reported timing of when fixed manufacturing overhead is expensed amount of selling and administrative cost expensed format of the income statements

Answers

Answer:

timing of when fixed manufacturing overhead is expensed

Explanation:

When there is the difference with respective to the net operating income under the absorption costing and the variable costing so it is because of the timing when the fixed manufacturing overhead should be incurred or expensed

So as per the given situation, second option is correct

And, the same should be relevant

Sunland Company reports the following operating results for the month of August: sales $382,500 (units 5,100), variable costs $259,000, and fixed costs $99,000. Management is considering the following independent courses of action to increase net income.
1. Increase selling price by 12% with no change in total variable costs or units sold.
2. Reduce variable costs to 65% of sales.
a. Compute the net income to be earned under each alternative.
b. Which course of action will produce the higher net income?

Answers

Answer:

Sunland Company

                                        Alternative 1        Alternative 2

a. Net income                      $70,400                $34,875

b. Alternative 1 (increasing selling price by 12% with no change in total variable costs or units sold) produces the higher net income.

Explanation:

a) Data and Calculations:

August sales = $382,500

Sales units = 5,100

Unit selling price = $75 ($382,500/5,100)

Variable costs = $259,000

Unit variable cost = $50.78 ($259,000/5,100)

Fixed costs = $99,000

Increase in selling price = 12% = $84 ($75 * 1.12)

Reduction in variable costs = 65% of sales

                                        Alternative 1        Alternative 2

Sales revenue                  $428,400            $382,500

Variable costs                    259,000              248,625

Contribution margin        $169,400              $133,875

Fixed costs                          99,000                 99,000

Net operating income      $70,400                $34,875

Preparing an Accounts Payable Schedule Wight Inc. purchases raw materials on account for use in production. The direct materials purchases budget shows the following expected purchases on account: April $374,000 May 412,000 June 415,900 Wight typically pays 25% on account in the month of billing and 75% the next month.
Required:
1. How much cash is required for payments on account in May?
2. How much cash is expected for payments on account in June?

Answers

Answer:

Wight Inc.

1. The cash required for payments on accounts in May

= $383,500

2. The cash required for payments on accounts is:

= $412,975

Explanation:

a) Data and Calculations:

                                                             April             May            June

Expected purchases on account   $374,000    $412,000    $415,900

Cash Payments:

Month of billing (25%)                     $93,500    $103,000     $103,975

Next month (75%)                                               280,500      309,000

Cash required for payments on accounts      $383,500     $412,975

There are four consumers willing to pay the following amounts for haircuts, and there are four haircutting businesses with the following costs: Consumers' Willingness to Pay Shen: $35 Manuel: $50 Poornima: $40 Valerie: $25 Firms' Costs Firm A: $25 Firm B: $40 Firm C: $30 Firm D: $45 Each firm has the capacity to produce only one haircut. For efficiency, should be given.

Answers

Answer:

a. 4 haircuts

b. $10

Explanation:

a. Calculation to determine For efficiency how many haircuts can be given?

Basd on the information given For efficiency only 4 haircuts can be given reason been that every of consumer are willing to pay in order to cover the producers costs.

b. Calculation to find out how large will be the total surplus

Total surplus =($35 Manuel+$50 Poornima+$40 Valerie+$25 Firms)-(25 Firm B+ $40 Firm C+$30 Firm D+ $45)

Total surplus =$150-$140

Total surplus =$10

ThereforeTotal surplus is $10

Exercise swer the following questions: Why is audit important in any organization? Give reasons.​

Answers

Answer:

An audit is an official accounting of a company's account by an independent body to check for irregularities in the account.

Therefore, an audit is important because it shows that the facts and figures submitted are correct. It is also important because, it improves credibility and helps improve the internal controls of a company.

The budgeted income statement presented below is for Burkett Corporation for the coming fiscal year. If Burkett Corporation achieves the budgeted level of sales, what will be its margin of safety in dollars? (Do not round Intermediate calculations.): $1,020,000 8 08:49 Sales (51,000 units) Costs: Direct materials Direct labor Fixed factory overhead Variable factory overhead Fixed marketing costs Variable marketing costs Pretax income $278, 800 240, 100 100, 500 150, 100 119, 100 50, 100 929,700 90,300
a. $150300
b. $305302
c. $169,831
d. S234282
e. $327,539

Answers

Answer:

The correct option is 306,102 (i.e. the second option in the attached pdf file.). That is, the margin of safety is $306,102.

Explanation:

Note: This question contains some errors and its data are merged together. The original sorted question is therefor provided before answering the question. See the attached pdf file for the complete sorted question.

The explanation of the answers is now provided as follows:

Actual dollar sales = $1,020,000

Variable cost = Direct materials + Direct labor + Variable factory overhead + Variable marketing costs = $278,800 + $240,100 + $150,100 + $50,100 = $719,100

Contribution margin = Actual dollar Sales - Variable cost = $1,020,000 - $719,100 = $300,900

Contribution margin ratio = Contribution margin / Actual dollar sales = $300,900 / $1,020,000 = 0.295, or 29.50%

Fixed Cost = Fixed factory overhead + Fixed marketing costs = $100,500 + $110,100 = $210,600

Breakeven point in dollar dales = Fixed Cost / Contribution margin ratio = $210,600 / 29.50% = $713,898

Margin of safety = Actual dollar sales - Breakeven point in dollar dales = $1,020,000 - $713,898 = $306,102

From the attached pdf file, the correct option is 306,102 (i.e. the second option in the attached pdf file.). That is, the margin of safety is $306,102.

A number of factors influence the sample size for a substantive test of details of an account balance. All other factors being equal, which of the following would lead to a larger sample size?
a. Greater reliance on internal control
b. Greater reliance on substantive analytical procedures
c. Smaller expected frequency of errors
d. Smaller measure of tolerable misstatement

Answers

Answer: D. Smaller measure of tolerable misstatement.

Explanation:

The sample size simply means the number of participants that are included in a study. They're the group of subjects which are picked and selected from the population and represents the general population for that study.

From the options given, it should be noted that a smaller measure of tolerable misstatement will lead to a larger sample size.

After examining the records of Theta Company for the month of October, the following information is obtained: Beginning cash balance $2,700 Cash receipts 56,000 Cash payments 36,000 Minimum cash balance 1,000 Loan repayments 10,000 Based on the given information, calculate Theta's cash surplus (deficiency) for the month of October.

Answers

Answer:

the surplus of the cash is $21,000

Explanation:

The computation of the cash surplus (deficiency) for the month of October is given below:

Cash surplus is

= opening balance + cash receipt - cash payment - minimum cash balance

= $2,700 + $56,000 - $36,000 - $1,000

= $21,000

hence, the surplus of the cash is $21,000

Marginal revenue product can be calculated using the formula marginal product × output price Group of answer choices only if the marginal product of labor is constant. only if output price is constant. only if the both marginal product of labor and the output price are constant. only if the firm has market power in the labor market

Answers

Answer:

only if output price is constant.

Explanation:

Marginal revenue can be defined as the amount of money (revenue) generated from the sales of an additional unit of a product.

Marginal revenue product can be calculated using the formula; (marginal product × output price), only if output price is constant i.e the amount of money charged by a seller remains the same.

Assuming that the desired rate of return is 12%, determine the net present value for the
proposal.

Answers

Answer:

Error

Explanation

1

Reggie and Bebe own an apartment building in Portland, Oregon, with 8 identical units. They live in one and rent the remaining units. Their rental income for the year was $45,000. They incurred the following expenses for the entire building: Advertising for available units $ 850 Maintenance 9,000 Repairs 7,500 Utilities 12,000 Depreciation 8,000 What amount of net income should Reggie and Bebe report for the current year for this

Answers

Answer:

$12,213

Explanation:

Calculation to determine What amount of net income should Reggie and Bebe report for the current year for this

NET INCOME

Rental Income $45,000

Advertising for available units $850

Maintenance $7,875

($9,000*7/8)

Repairs $6,562.5

($7,500*7/8)

Utilities $10,500

($12,000*7/8)

Depreciation $7,000

($8,000*7/8)

Net Rental Income $12,213

Therefore the amount of net income that should Reggie and Bebe should report for the current year is $12,213

GDP data (billions of dollars)
Indirect business taxes $600
Depreciation 950
Change in business inventories 50
Compensation of employees 5,400
Corporate profits 700
Durable goods 600
Exports 100
Social Security taxes 360
Transfer payments 300
Fixed investment 950
Government spending 800
Imports 150
Net interest 500
Nondurable goods 2,000
Personal taxes 1,000
Rental income 200
Services 4,000
Using the expenditures approach, compute net exports (X-M). Which of the following is correct?
a. $5,178 billion.
b. $6,450 billion.
c. $5,740 billion.
d. $7,740 billion.
e. $8,350 billion.

Answers

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