Suppose the economy is thought to be 5 percent below potential (i.e., the output gap is ?5 percent), when potential output grows 3 percent per year. Suppose the Fed is following the Taylor rule, with an inflation rate of 6 percent over the past year. The equilibrium real fed funds rate is 3 percent and the weights on the output gap and inflation gap are 0.5 each. The inflation target is 1 percent. What should the federal funds rate be?
A. 4 percent
B. 6 percent
C. 8 percent
D. 9 percent
Answer: D
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Using different depreciation methods for book purposes versus tax purposes for the same asset is
a. not allowed since the amount can only be calculated one way or the other, not both. b. the direct result of the differing goals of financial and tax accounting. c. contrary to GAAP. d. against the Internal Revenue Code, and as such, against the law.
Consider Figure 4.1. With free trade, Mexico imports
a. 40 calculators. b. 60 calculators. c. 80 calculators. d. 100 calculators.
In situations where the respondents are expected to have no opinions, as opposed to simply being reluctant to disclose it, the accuracy of data may be improved by a non-forced scale that includes a "no opinion" category
Indicate whether the statement is true or false
Pheasant Co can further process Product B to produce Product C. Product B is currently selling for $30 per pound and costs $28 per pound to produce. Product C would sell for $60 per pound and would require an additional cost of $24 per pound to produce. What is the differential cost of producing Product C?
A) $30 per pound B) $24 per pound C) $28 per pound D) $60 per pound