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Discuss what kinds of products or services should be procured from outside the organization Answer

Discuss what kinds of products or services should be procured from outside the organization. Also discuss what contract type(s) you might use and why.

 

The decision to make or buy depends on several factors.  According to the text (p. 844), an analysis should be done as outlined below. While this method can be utilized for just about anything, I know that my organization uses this method for manufacturing of handsets, which in tern the same parts are used for repair operations.  The repair operations have been outsourced but the decision to do so and where certain products are allocated is done by a different method.  I don’t know or understand all of the detail around that part. Make Decision:

  • Less Costly
  • Easy integration of operations
  • Utilize existing capacity that is idle
  • Maintain direct control
  • Maintain design/production secrecy
  • Avoid unreliable supplier base
  • Stabilize existing workforce

Buy Decision:

  • Less Costly
  • Utilize skills of suppliers
  • Small volume requirement
  • having limited capacity or capacity
  • Augment existing labor force
  • Maintain multiple sources (qualified vendor list)
  • Indirect control
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List the steps involved in selecting and evaluating a nonstatistical or a statistical sample for tests of controls Answer

List the steps involved in selecting and evaluating a nonstatistical or a statistical sample for tests of controls. Identify the professional judgments that must be made associated with each step.

There are nine steps to evaluating the nonstatistical and statistical sample:

  1. Determining the Objectives of the Test Controls: This involves the use of rate of deviation in the test controls to the overall population.
  2. Determining Procedures to Evaluate Internal Controls: This step determines the nature and timing of the audit. The auditors observes how people work and use the controls, inspecting physical documents and electronic files to determine if procedures are effective.
  3. Make a Decision about the Audit Sampling Technique: This step is when an auditor decides whether to use sampling that is nonstatistical or statistical. The smaller system usually uses nonstatistical, larger systems usually use statistical sampling.
  4. Define the Population and Sampling Unit: The population is determined by where the control should be used. The sampling unit show the auditor identifies the program changes made in the population over a period of time.
  5. Use Professional Judgment to Determine Sample Size: Determining size of the sample involves several factors. “The nature of control, frequency of operations, importance of the control, risk assessing control risk, tolerable deviation rate, expected population deviation rate, and population size either direct or indirect below 5000” (Boynton & Johnson, 2006, p. 561 – 562).
  6. Select Representive Sample: If using nonstatistical sample the use of professional judgment is involved. Statistical samples are usually a random sampling out of the population being tested.
  7. Apply Audit Procedures: The auditor determines if controls are operating effectively and are applied right within the sample selected.
  8. Evaluate the Sample Results: This evaluation comes from comparing tolerable deviation rate and deviation rate with quantitative results. The closer the rate the more reasonable that low risk is wrong for the evaluation. The evaluation must determine from the evidence if the rating is low, medium, or high. The qualitative consideration is determining errors in deviation and how the deviation relates to the auditing process in other areas.
  9. Document Conclusion; this step involves documenting test results into working papers and the basis for a conclusion.

 

Reference

 

Boynton, W. & Johnson, R. (2006). Modern Auditing: Assurance Services and the Integrity of Financial Reporting (8th ed.). Wiley, Hoboken, N.J.

 

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Change in Climate of Earth and Challenges faced by Dinosaurs Answer

Change in Climate of Earth and Challenges faced by Dinosaurs

Introduction

The Earth probably came into existence about 4 – 6 billion years ago. It is presumed that life originated on Earth about millions of years ago and since then innumerable varieties of living beings have evolved. The original temperature of earth is estimated to be around 5,000-6,000 c. There was well formed atmosphere at that time, but it did not contain free Oxygen. With the cooling of the Earth, free atoms in the atmosphere came together and formed inorganic molecules. Further evolution resulted in the diverse forms of existing organisms. The history of evolution of life on Earth is constructed by the study of fossil plants and animals from various strata of the Earth. The most abundant fossils are formed by petrifaction in which hard parts like bones, teeth and exoskeleton of organisms were preserved in the rock strata. By studying different types of fossils in different rock strata and determining their age, geologists have constructed a geological time scale which is the calendar of Earth’s past history.

Mezozoic Era is the “Age of Dinosaurs”. This Era began about 251 million years ago and ended about 65 million years ago. It is divided into three periods: Triassic (251 to 199 Ma), Jurassic (199 to 147 Ma) and Cretaceous (147 to 65 Ma). Reptiles evolved in this era and became rulers of the Earth. They occupied land (Dinosaurs), sea (Ichthyosaurs) and air (Pterosaurs). Dinosaurs evolved in Triassic period and spread during the Jurassic period. However they dominated Cretaceous period. Since then there has been a great transition in the climate and atmosphere of Earth.

Comparison of Climate, Flora and Fauna of Earth today and 65 million years ago (Late Cretaceous period)

Cretaceous period was marked with the growth and spread of Angiosperms (flowering plants). They had dense leaves, stems and branches. Plants like magnolias, roses, willows and redwood trees were found in large numbers. Even grass, oak, maple, grape, el also came into existence.

Due to large number of flowering plants, this period also saw the presence of insects similar to today’s insects. Termites and ants appeared in the late Cretaceous period. Evolution of aquatic organisms is also observed. Crabs, lobsters, sea urchins, foraminifers, nautiluses are some of the marine invertebrates which were found in the Cretaceous period. Appearance of modern sharks was also seen. Recently, it has been found out that Myledaphus bipartitus (a guitar fish) was also present 75Ma (Wilson and Newbrey et al., 2013). Diversification of birds was also seen in this period. However, reptiles dominated the Earth 65 million years ago and this period was marked with large numbers of dinosaurs. Reptiles reached their zenith, including the dinosaurs Triceratops, Tyrannosaurus, Stegosaurus, Apatosaurus (Brontosaurus), and Iguanodon, and ranged from herbivores to carnivores. The flying retiles like pterosaurs and aquatic ichthyosaurs, plesiosaurs were also developed. Even the reptiles like snakes, lizards, crocodiles appeared (Infoplease.com, 2013). However, mammals were small and rare.

During the start of Mezozoic Era, temperature was warm and dry. Before appearance of Dinosaurs, temperature was around 10-15C and the climate had become warmer by the end of Triassic period. During the beginning of Cretaceous period, Pangea had already drifted apart and it had also split into many continents. About 65 million years ago, near the end of Mezozoic era, North America separated from Europe. This generated new coastline, growing of seasons and thus cooling of global climate took place. Thus during the end of Cretaceous period, lowering of temperature was seen. Thus dinosaurs also had to suffer from climate change.

The temperature of Cretaceous period was warmer than today although there was a cooling trend (Hallam A.J., 1985). The mean temperature during Cretaceous period is estimated to be around 21 degree Celsius which is 6C higher than current mean temperature (15C) (Ncdc.noaa.gov, 2013). There was higher concentration of greenhouse gases like carbon dioxide in the Cretaceous period (Sellwood and Price et al., 1994). Mammals have evolved to more complex human beings today as compared to Cretaceous period where there we very less and small mammals. One of the major reasons of extinction of dinosaurs is abrupt cooling of temperature (abrupt climate change). Earth is facing abrupt climate change now also which is one of the reasons for non-existence of dinosaurs today.

Challenges faced by dinosaurs

Apart from abrupt changes in temperature, there are some other reasons which might account for non-existence of non-avian dinosaurs today. An animal like dinosaurs requires large amount of Oxygen to carry out its metabolism due to its large body size. But the concentration of Oxygen has decreased now which might be a hindrance in its survival. Also due to deforestation, there is lack of habitat and prey.

Conclusion

Based on past climate patterns it is be likely that Earth’s climate would be directed back into an Ice Age within the next few thousand years. But current data shows that much of the climate system is in fact heating up due to global warming. Some recent evidences also suggest that dinosaur’s were warm blooded and had survived in a warmer climate than today but the abrupt climatic and geographical changes suggest for the non-existence of non-avian dinosaurs.

Reference:

Hallam, A. J. geol. Soc. Lond. 142, 433−445 (1985).

Infoplease.com (2013). Cretaceous period: Evolution of Plant and Animal Life |

Infoplease.com. [online] Retrieved from: http://www.infoplease.com/encyclopedia/science/cretaceous-period-evolution-plant-animal-life.html [Accessed: 16 Sep 2013].

Ncdc.noaa.gov (2013). Future Forecasts. [online] Retrieved from:

http://www.ncdc.noaa.gov/paleo/ctl/future1.html [Accessed: 16 Sep 2013].

Sellwood, B., Price, G. and Valdest, P. (1994). Cooler estimates of Cretaceous temperatures.

Nature Publishing Group. 370, 453 – 455

Wilson, A., Newbrey, M., Brinkman, D., Cook, T. and Neuman, A. (2013). Age and growth

in Myledaphus bipartitus, a Late Cretaceous freshwater guitarfish from Alberta, Canada. Canadian Journal of Earth Sciences, 50(9): 930-944, 10.

 

 

 

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From the scenario for Katrina’s Candies, examine the key factors affecting the demand for and the supply of a good in general and Katrina’s Candies specifically Answer

Fundamental Economic Concepts” Please respond to the following: From the scenario for Katrina’s Candies, examine the key factors affecting the demand for and the supply of a good in general and Katrina’s Candies specifically.

Answer – The key factors affecting the demand for a good in general and Katrina’s Candies specifically are:-

    1. Price of substitute goods – Substitute goods are the ones which can be used in place of the similar other good. For eg, Tea and coffee are substitute of each other. If the price of substitute goods rises, then it will lead to rise in the demand of other good. Similarly, if the price of the substitute of Katrina’s candy rises, then it will lead to rise in the demand of Katrina’s candies.
    2. Price of complementary goods- complimentary goods are the one which are used with the consumption of the other good. For example car and petrol are used side by side. Similarly, Katrina’s candies are used with the other complementary good such as chocolate shake or strawberry shake. When the price of complementary goods rises, the quantity demanded of the other good falls.
    3. Income – When the income of an individual rises, the quantity demanded of Katrina’s candy rises because people can afford more of candies now at same price.
    4. Preference or tastes, advertising expenditures – As preferences or tastes of an individual changes towards Katrina’s candy and more people would like to buy Katrina’s candy, then the quantity demanded of Katrina’s candy will rise.
  • Number of buyers – As the number of buyers in the market for a particular product increases, there will be rise in the quantity demanded of the candy.

 

Distinguish between a change in demand and a change in the quantity demanded (movement along the demand curve). From the above, indicate the factors that are responsible for a shift in demand; and explain how the change is effected by these factors.

Answer – Change in demand consists of two things –

  1. Change in quantity demanded
  2. Change in demand.Change in quantity demanded means when there is change in price of the Katrina’s candy, then there is movement along the demand curve. Only factor affecting the quantity demanded is the price, keeping other things constant. Next is change in demand, it means that there is change in demand of a Katrina’s candy due to other factors affecting demand such as:-

The price of the sugar-free chocolate;

The price of caffeinated coffee;

The price of water;

The median income of consumers; and

PRICE

The number of buyers in the market.

 

PRICE
QUANITY
SHIFT IN THE DEMAND CURVE
QUANTITY
MOVEMENT ALONG THE SAME DEMAND CURVE

Indicate the factors that are responsible for a shift in supply; and explain how the change is affected by these factors.

Answer – Shift in supply of Katrina’s candy will occur only when there is change in the factors affecting supply of the good other than price.

Factors such as change in costs such as change in labor or raw material costs will shift the position of the supply curve.

If costs rise, then there will be less production at any given price and the supply curve will shift to the left.

However, if there is fall in the costs of production then more quantity will be produced at the same price.

Other factors affecting the supply of the candy are such as change in the availability of factors, or changes in weather, taxes and subsidies will shift the supply curve to the right.

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Classification of Costs – BE 5-1 Answer

From the given table, indirect labor can be classified as a variable cost. This is because it increases in proportion with an increase in activity level. Specifically, when production is 2000 units, indirect labor costs are $10,000 and when production increases to 4,000 units, indirect labor increases to $20,000.

Supervisory salaries are fixed costs because they do not change with changes in the activity level. For instance, supervisory salaries are $5,000 when production is both 2,000 and 4,000 units.

Maintenance costs are variable costs. These costs changes from $4,000 to $6,000 when the production increases from 2,000 units to 4,000 units.

 

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Assume that the risk-free rate is 6% and that the expected return on the market is 13%. What is the required rate of return on a stock Answer

Assume that the risk-free rate is 6% and that the expected return on the market is 13%. What is the required rate of return on a stock that has a beta of 0.7?

Ans:

Expected return on the market = 13 %

Market Risk Premium = Expected return on the market – risk-free rate

Market Risk Premium = 13% – 6% = 7%

Required rate of return on a stock = Rf + ( Rm – Rf) * beta

Required rate of return on a stock = 0.06 + ( 0.13-0.06) * 0.7 = 0.06 + 0.07 *0.7

= 0.06 + 0.049 = 0.109 = 10.9%

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What is the “current macroeconomic situation” in the U.S. (e.g. is the U.S. economy currently concerned about unemployment Answer

Question: What is the “current macroeconomic situation” in the U.S. (e.g. is the U.S. economy currently concerned about unemployment, inflation, recession, etc.)? What fiscal policies and monetary policies would be appropriate at this time? Write your individual answers to the questions listed above together in essay format (minumum of 300 words combined in APA style), using correct economic terms covered in the discussions. If you only write 300 words, you probably won’t be able to fully answer the questions. Use the APA Template in Doc Sharing as a guide. You will also find the grading rubric for this assignment in Doc Sharing. Key concepts to include in your paper–data trends on unemployment, inflation, GDP growth, expansionary fiscal policy tools, FOMC, easy money policy tools and other terms from this class. You must use at least one article. Note: The textbook is not an article and cannot be the only source for the assignments. Use the DeVry Library as a resource for finding your references.

 

Answer:

The United States macroeconomic situation is one of manufactured uncertainty. The US economy is at the end of the greatest economic experimentation of our lifetime. Financial leaders are grappling with how to return to self-sustaining economic performance, in hopes that the economy can perform without artificial stimulation. The 2007-2008 economic malaise resulted from a number of market manipulations at several key market areas. The US opted for economic stimulation to combat the simultaneous collapse of several financial and business institutions, a collapse in stock market and real property values, and high unemployment over 10% due to layoffs of millions of workers (Lenzner, 2012). The US faced a ‘perfect storm’ of deflating prices and values of assets, reductions in demand for workers, and a collapse of a number of financial institutions. The most lingering economic action was FOMC selling securities at absurdly high quantities to drive US Treasury interest rates down to near zero. This economic tool has never been used to this extent for this long, and removing the easy money from the economy may not be easy. Using this economic expansion tool allowed for debts to be refinanced, new projects to be undertaken, and both businesses and households to restructure their finances. Those rates have remained artificially low for years. The Federal Reserve has been trying for more than a year to raise rates, to remove the artificial sweetener in the economic coffee. They have tried with public notices, what some would call ‘trial balloons’, each of which sent negative shock waves through the financial markets. Their recent public policy disclosures, suggesting September 2015 as the start of a series of interest rate hikes, have been met with less resistance. Unemployment rates are now measured at half of the 2010 highs of 10% (Trading Economics, 2015). While the rate is now lower, it is lower for several reasons not normally mentioned. First, the definition of unemployed was revised to extend the period of unemployment duration. (Hampson, 2010). Second, although unemployment benefits were extended, in some cases for nearly two years (99 weeks), people have had to return to whatever work they could find. Thirdly, some ‘long term unemployed’ are now deemed unnecessary to the formula to determine unemployment, and are removed from consideration, reducing the ‘real’ unemployment rate. It seems when the statistics aren’t telling a good story, changing how they are measured will do.

Businesses and households able to do so have restructured their finances with this lower cost debt. Home sales and values have returned to pre-malaise levels, and stock market investors have likely regained the declines in their portfolios.

These steps have been taken in similar measure by many other countries seeking to stimulate their economies. Japan has been doing this for decades and pledges to continue, and China only recently saw the folly in artificially stimulating its stock market with easy credit. The United States has used interest rate policy for decades to control inflation. Inflation of near 2% is considered normal, and we are not at that level yet, which might suggest a delay in rate hikes may be appropriate (Coin News, 2015).

References Lenzner, R. “The 2008 Meltdown And Where The Blame Falls”, Forbes Magazine, June 2, 2012. Retrieved 8/15/15 from: http://www.forbes.com/sites/robertlenzner/2012/06/02/the-2008-meltdown-and-where-the-blame-falls/ Trading Economics, United States Unemployment Rate, 2005-2015. Retrieved 8-15-15 from: http://www.tradingeconomics.com/united-states/unemployment-rate Hampson, R., “U. S. Changes how It measures long-term unemployment”, USA Today, 12-28-10. Retrieved 8-15-15 from: http://usatoday30.usatoday.com/news/nation/2010-12-28-1Ajobless28_ST_N.htm Coin News Media Group LLC, US Inflation Calculator, retrieved 8-15-15 from: http://www.usinflationcalculator.com/inflation/current-inflation-rates/

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What competitive advantage does technology give to business? How does aging hardware affect this advantage Answer

What competitive advantage does technology give to business? How does aging hardware affect this advantage?

Technology gives businesses a very competitive edge through the use of computers, systems, networks, and a variety of software and hardware to manage business, handle departments, and even apply support and information through a web presence. However, there are other areas to consider other than simply just hardware and software. Technology is only as useful as a solid business plan. The use of technology should fit the business plan or model to be both efficient and effective. Organization and maintaining policies can also keep and effective and efficient file management through the use of file share or even an intranet. Technology also helps companies visualize information to make it more understandable and easier to analyze. The proper use of technology enables businesses to be more efficient. Our recent research into technology for business innovation found that 56 percent indicate innovative technology is very important, yet only 9 percent are very satisfied with theirs, showing plenty of room for improvement (Smith, 2013). Other uses of technology include using big data to manage and use information, business analytics, business and social collaboration, cloud computing, mobile technology, and social media. Getting back into hardware, it is important that a company considers the future of technology when purchasing new hardware and always consider what is the best choice for the business overall. Aging or outdated hardware can actually hold a company back from gaining a competitive edge through newer hardware and practices used by their competitors. Keeping outdated equipment running properly by servicing it constantly ends up costing companies more than if they had just purchased newer, more advanced equipment and also can cause security holes (Lester, 2010).

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The Door Company manufactures doors. Classify each of the following quality costs as prevention costs Answer

The Door Company manufactures doors. Classify each of the following quality costs as prevention costs Answer

Problem 1 –
The Door Company manufactures doors. Classify each of the following quality costs as prevention costs, appraisal costs, internal failure costs, or external failure costs (13 points)
a. Retesting of reworked products
b. Downtime due to quality problems
c. Analysis of the cause of defects in production
d. Depreciation of test equipment
e. Warranty repairs
f. Lost sales arising from a reputation for poor quality
g. Quality circles
h. Rework direct manufacturing labor and overhead
i. Net cost of spoilage
j. Technical support provided to suppliers
k. Audits of the effectiveness of the quality system
l. Plant utilities in the inspection area
m. Reentering data because of keypunch errors

Problem 2 – For supply item ABC, Andrews Company has been ordering 125 units based on the recommendation of the salesperson who calls on the company monthly. A new purchasing agent has been hired by the company who wants to start using the economic-order-quantity method and its supporting decision elements. She has gathered the following information:

Annual demand in units 250
Days used per year 250
Lead time, in days 10
Ordering costs $100
Annual unit carrying costs $20

Determine the EOQ, average inventory, orders per year, average daily demand, reorder point, annual ordering costs, and annual carrying costs (17 points)
1. (TCO 11) Nonfinancial measures for internal quality performance include all but which of the following? (Points: 3)
Employee empowerment
Process yields
Feedback
Product defect levels
2. (TCO 11) Which of the following is NOT a nonfinancial performance measure for customer satisfaction? (Points: 3)
Number of defective units shipped to customers as a percentage of the total units of product shipped
Number of customer complaints
On-time delivery
Number of defects for each product line
3. (TCO 11) Which of the following is NOT one of the steps in managing bottlenecks under the theory of constraints? (Points: 3)
Identify the bottleneck resource by searching for resources with large quantities of inventory waiting to be worked on.
Increase the efficiency and capacity of the nonbottleneck resources.
Subordinate all nonbottleneck operations to the bottleneck operation.
Increase the efficiency and capacity of the bottleneck operation.
4. (TCO 11) Design engineering is an example of: (Points: 3)
external failure costs
internal failure costs
prevention costs
appraisal costs
5. (TCO 11) Regal Products has a budget of $900,000 in 20X6 for prevention costs. If it decides to automate a portion of its prevention activities, it will save $60,000 in variable costs. The new method will require $18,000 in training costs and $120,000 in annual equipment costs. Management is willing to adjust the budget for an amount up to the cost of the new equipment. The budgeted production level is 150,000 units. Appraisal costs for the year are budgeted at $600,000. The new prevention procedures will save appraisal costs of $30,000. Internal failure costs average $15 per failed unit of finished goods. The internal failure rate is expected to be 3% of all completed items. The proposed changes will cut the internal failure rate by one-third. Internal failure units are destroyed. External failure costs average $54 per failed unit. The company’s average external failures average 3% of units sold. The new proposal will reduce this rate by 50%. Assume all units produced are sold and there are no ending inventories. How much will internal failure costs change if the internal product failures are reduced by 50% with the new procedures? (Points: 3)
$500,000 decrease
$750,000 decrease
$33,750 decrease
$67,500 decrease

Internal failure rate (150,000 x 0.03) 4,500
Cost per unit x $15
Total $67,500
Savings rate x 0.50
Savings $33,750
6. (TCO 12) Which of the following categories of costs are important when managing inventories of goods for sale according to the authors of the text? (Points: 3)
Purchasing, ordering, supply, spoilage, and opportunity
Purchasing, stockout carrying, ordering, and quality
Buying, holding, invoicing, opportunity, and investment
Supply, obsolescence, holding, stockout, and transportation-in
7. (TCO 12) Obsolescence is an example of which cost category? (Points: 3)
ordering costs
carrying costs
labor costs
quality costs
8. (TCO 12) Which of the following is an assumption of the economic-order-quantity decision model? (Points: 3)
There will be timely labor costs.
The quantity ordered can vary at each reorder point.
No stockouts occur.
Demand ordering costs and carrying costs fluctuate.
9. (TCO 12) ) The ________ describes the flow of goods, services, and information from the initial sources of materials and services to the delivery of products to consumers. (Points: 3)
supply chain
material requirements plan (MRP)
customer list
enterprise requirements plan (ERP)
10. (TCO 12) Liberty Celebrations, Inc., manufactures a line of flags. The annual demand for its flag display is estimated to be 100,000 units. The annual cost of carrying one unit in inventory is $1.60, and the cost to initiate a production run is $30. There are no flag displays on hand but Liberty had scheduled 60 equal production runs of the display sets for the coming year, the first of which is to be run immediately. Liberty Celebrations has 250 business days per year. Assume that sales occur uniformly throughout the year and that production is instantaneous. If Liberty Celebrations does not maintain a safety stock, the estimated total carrying cost for the flag displays for the coming year is the estimated total setup cost for the flag displays for the coming year is (Points: 3)
$1,800
$2,000
$1,600.
$1,500.

 

To get the answer for the above tutorial, please click on the below purchase link.

 

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Assume that Country A has a population of 500,000 and only produces one good—cars Answer

Assume that Country A has a population of 500,000 and only produces one good—cars. Country A produces 100,000 cars per year. The people in Country A purchase 90,000 cars, but there are not enough cars to fulfill all the demand. They decide to import 50,000 more. The government buys 25,000 cars for its police force, and 10,000 cars are bought by companies to transport employees to other locations to work. They also export 65,000 cars to nearby countries for sale.

What is Country A’s GDP?

What is the composition of GDP by percentage?

What is the GDP per capita?

How does this relate to Keynesian economics?

Part II Go to the Bureau of Economic Analysis on the Department of Commerce’s Web site, and look up the latest new release for real GDP. Address the following questions after reading the latest release:

Where are we in the business cycle?

What is the real GDP today?

What is the largest component of GDP?

What is the smallest component of GDP?

What is the fastest growing component of GDP and why?

What components of GDP were involved in the change from last month to this month?

What is the price index today?

What caused the change?

 

 

Part-I

Given:

Population = 500,000

Consumption C = 90,000 cars

Import = 50,000

Government expenditure G = 25,000 cars

Business Investment I = 10,000 cars

Export = 65,000 cars

 What is Country A’s GDP?

GDP is calculated as:

GDP = C+I+G+Net Export

GDP = C+I+G+(Export – Import)

= 90,000+10,000+25,000+(65,000-50,000) = 140,000 cars

What is the composition of GDP by percentage?

Percentage of consumption = C/GDP = 90,000/140,000 = 64.29%

Percentage of business investment = I/GDP = 7.14%

Percentage of Government expenditure = G/GDP = 17.85%

Percentage of net export = (Export-Import)/GDP = 10.71%

What is the GDP per capita?

GDP Per capita = GDP/Population = 140,000/500,000 = 0.28 cars

If government purchases go up in the short run, what happens to GDP?

Government Purchase (G) is an important component of GDP. When G goes up, GDP also increases. But, in short run increase in government spending may not have significant impact on GDP as supply may not increase to meet increased government purchases. To meet the increased demand from government, country will have to import. Thus, positive impact of increase in government purchase would be partially negated by increase in import (as increase in import reduces net export). But in long term, domestic supply will increase to meet increased demand from government. This will reduce import and increase GDP significantly.

If consumption and government purchases go up, what happens to GDP in the long run? Why?

Increase in consumption (C ) and government purchases (G) increases GDP in long run. To meet the increased demand from consumers and government, production is increased. Increase in production increases business investment (I). The increase in production also increases employment opportunities and hence disposable income in the hands of consumers increases. The consumers spend a part of the increased income on consumption (which is determined by MPC), and hence consumption further increases. In long run, the GDP will increase significantly.

Part-II

Where are we in the business cycle?

A business cycle is defined as a process by which the economy grows, contracts, and recovers over time. An economy goes through all these phases and process repeats itself. An economy grows in expansion phase and reaches peak. After that it begins to contract and reaches trough, and then again recovers and starts growing.

Presently we are in recovery phase of business cycle. After financial crisis of 2008 and recent debt crisis in Eurozone, economy is recovering. Demand has started to rise, production has increased, unemployment level has come down. Businesses have become optimistic and started investing. Consumer confidence level has gone up. . Real GDP has increased by 2.5 percent in the second quarter of 2013. The price index also rose by 0.9% in second quarter quarter. Real personal consumption expenditure increased by 2.7% during second quarter. (BEA, 2013) Thus, we are in recovery phase of business cycle.

 

What is the real GDP today?

The real GDP of USA is $13.75 trillion.

What is the largest component of GDP?

The largest component of GDP is personal consumption ($9.75 trillion)

What is the smallest component of GDP?

The smallest component of GDP is Net Export. Net export of USA is negative.

What is the fastest growing component of GDP and why?

The fastest growing component of GDP is Gross private domestic investment. In recovery phase, businesses become optimistic and invest more. The government policies are also supportive,. So, business investment grows at high rate. .

What components of GDP were involved in the change from last month to this month?

The main contributors in change in GDP from last month to this month are personal consumption expenditure, and Gross private domestic investment.

What is the price index today?

Price index today: 116.416

What caused the change?

Personal consumption expenditures (2.4%), Gross private domestic investment (1.16%), Net export (-0.21%), Import (1.9%), Government consumption and gross investment (-0.97%)

 

 

References

BEA. (2013). National Income and Product Accounts; Gross Domestic Product, 1st quarter 2013 (second estimate);Corporate Profits, 1st quarter 2013 (preliminary estimate). Retrieved From: http://www.bea.gov/newsreleases/national/gdp/gdpnewsrelease.htm

 

BEA(2013). National Data. Retrieved From: http://www.bea.gov/scb/pdf/2013/06%20June/D%20Pages/0613dpg_a.pdf