Fiscal Policy – End of Chapter Problems 3. An economy is in long-run macroeconomic equilibrium when each of the following aggregate demand shocks occurs: a. A stock market boom increases the value of stocks held by households. b. Firms come to believe that a recession is likely in the near future. c. Anticipating the possibility of war, the government increases its purchases of military equipment. d. The quantity of money in the economy declines, and interest rates increase. Below, indicate what type of gap—inflationary or recessionary—that the economy will face after each of these shocks.

Almost 80% of business owners are clueless about the competition, resulting in a) lost market share and customers. b) needless lawsuits. c) uninspired products. d) lack of perseverance

The following transactions and events that occurred in the village of kowitt gorge during the calendar year 2019: 1. the village commissioners adopted the following budget: estimated revenues: property taxes $1,850,000 all other revenues 300,000 total revenues $2,150,000 appropriations: all departments other than police $1,000,000 police—salaries 600,000 police—fringe benefits 450,000 police—supplies 80,000 total appropriations $2,130,000 2. the village received, in cash, property taxes of $1,840,000 and all other revenues of $295,000. 3. the village made cash payments, charging the following appropriations: all departments other than police $1,000,000 police—salaries 595,000 police—fringe benefits 390,000 4. the administrator of fringe benefits received an invoice for police employee health insurance in the amount of $95,000, together with a letter from the insurance provider, explaining that the large increase was caused by a change in federal laws. the invoice could not be paid because the police—fringe benefits appropriation had a balance of only $60,000 (appropriation of $450,000 minus expenditures in item 3 of $390,000). as a result, the village commissioners amended the budget as follows: increase: appropriation for police—fringe benefits $35,000 decrease: appropriation for police—salaries 5,000 decrease: appropriation for police—supplies 25,000 use of fund balance 5,000 5. the village paid the invoice for $95,000, referred to in item 4 above, charging the appropriation for police—fringe benefits. 6. the police department placed po 2019a for firearms in the amount of $30,000 and po 2019b for uniforms in the amount of $20,000, all charged to the appropriation for police—supplies. (enter these pos as one transaction.) 7. after receiving po 2019a, the supplier notified the police department that a change in the design of the weapons would increase the cost to $32,000. the department sent the supplier an amended po, increasing it by $2,000. 8. the police department received the uniforms ordered on po 2019b, together with an invoice for $20,000. the department approved the invoice for payment. record the transactions and events applicable to the appropriations for police—fringe benefits and police—supplies in the following appropriations ledger. notes: use a negative sign with your answers if: 1. the amount entered in the appropriation column is a debit (dr.) rather than a credit (cr.); or 2. the amount entered in the expenditures column is a credit (cr.) rather than a debit ( in the available appropriation column, enter the appropriate balance after every transaction/event, even if a transaction isn't recorded in a particular ledger for that transaction. for transaction 6, enter both purchase orders (pos) as one combined transaction. appropriations ledger appropriation: police - fringe benefits appropriation encumbrances expenditures available transaction cr. dr. cr. dr. appropriation 1 answer 0 answer 0 answer 0 answer 0 answer 0 2 answer 0 answer 0 answer 0 answer 0 answer 0 3 answer 0 answer 0 answer 0 answer 0 answer 0 4 answer 0 answer 0 answer 0 answer 0 answer 0 5 answer 0 answer 0 answer 0 answer 0 answer 0 6 answer 0 answer 0 answer 0 answer 0 answer 0 7 answer 0 answer 0 answer 0 answer 0 answer 0 8 answer 0 answer 0 answer 0 answer 0 answer 0 appropriations ledger appropriation: police - supplies appropriation encumbrances expenditures available transaction cr. dr. cr. dr. appropriation 1 answer 0 answer 0 answer 0 answer 0 answer 0 2 answer 0 answer 0 answer 0 answer 0 answer 0 3 answer 0 answer 0 answer 0 answer 0 answer 0 4 answer 0 answer 0 answer 0 answer 0 answer 0 5 answer 0 answer 0 answer 0 answer 0 answer 0 6 answer 0 answer 0 answer 0 answer 0 answer 0 7 answer 0 answer 0 answer 0 answer 0 answer 0 8 answer 0 answer 0 answer 0 answer 0 answer 0 answer 0 answer 0 answer 0 answer 0 answer 0

Rebel technology maintains its records using cash-basis accounting. during the year, the company received cash from customers, $43,000, and paid cash for salaries, $23,500. at the beginning of the year, customers owe rebel $1,000. by the end of the year, customers owe $6,600. at the beginning of the year, rebel owes salaries of $5,600. at the end of the year, rebel owes salaries of $3,300. determine cash-basis net income and accrual-basis net income for the year.