Monique is planning to increase the size of the manufacturing business that she operates as a sole proprietorship. She has a number of older assets that she will replace as part of the expansion. In addition, to finance this expansion she will have to sell some of her personal assets. Because it is close to the end of the tax year, she can time the sales of the assets to take the greatest advantage of the tax laws. Monique is currently in the 35 percent tax bracket.

Following are the assets that Monique plans to sell; assume that she will realize their fair market value on the sales:

Business Assets            Acquisition             Fair Market           Department                    Adjusted                          Original

                                           Date                          Value                   Method                          Basis                                   Cost

1. Truck                             1995                           3,000                   MACRS                           0.00                             20,000

2. 0/Bldg                            1990                           300,000              MACRS                         160,000                        285,000

3. Machine 1                      2000                          10,000                  MACRS                          25,000                           80,000

4. Machine 2                    2001                           60,000                 MACRS                          55,000                           95,000

Personal Assets                                Acquisition Date                             Fair Market Value                            Original Cost

1. Sculpture                                            1991                                                  400,000                                         260,000

2. Painting                                              1998                                                   400,000                                          525,000

3. 100,000 Shares ACC                         2004                                                   800,000                                         1,050,000

4. 10,000 Shares BBL                          2006                                                   400,000                                            350,000  

 

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Monica is hurrying off to her physics class, jogging down the sidewalk at a speed of 3.95 m/s. Her friend Manny suddenly realizes that she left in such a hurry that she forgot her lunch of bagels, so he runs to the window of their apartment, which is a height 53.0 m above the street level and directly above the sidewalk, to throw them to her. Manny throws them horizontally at a time 8.50 s after Monica has passed below the window, and she catches them on the run. You can ignore air resistance.(a)With what initial speed must Manny throw the bagels so Monica can catch them just before they hit the ground?Hint: The bagels move along a projectile trajectory. Find Monica’s location when the bagels reach the ground and demand that the bagels have this same range. When the bagels reach the ground, y_final=0m, and they start at y_initial at hieght of window. Since v_initial has only an x-component, it is straightforward to calculate the time that they will be in the air. You have to add that time onto the jog time.(b)Where is Henrietta when she catches the bagels?

Here, H = 53 m and initial vertical speed waszero. Hence time of flight V √HNow, Monica is jogging with uniform speed of3.95 m/s and manny throws the bagels 8.50 safter Monica has passed…

 

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1. Mongkut lives on a farm. On his farm, he grows vegetables and raises animals to be used for meat. He consumes some of his output and trades the rest. In the current period his farm yielded 30 kg of vegetables and 10 kg of meat. For Mongkut, and his trading partners in the nearby villages, types of meat are perfect substitutes for each other, and types of vegetables ae perfect substitutes with each other. Currently, both 1kg of mixed vegetables and 1kg of mixed meats are priced at 5 units of the local currency.

(a) What is the value of Mongkut’s endowment? Show his budget constraint.

(b) Mongkut has his own ideas about the meaning of a ‘balanced’ diet and will only eat vegetables and meat in a 1:1 ratio. What are the quantities in his optimal bundle? What are his net demands? Illustrate his preferences and optimal choice.

(c) Imagine that before Mongkut got to trade, the price of meat increased to 15 while the price of vegetables stayed at 5. How would this effect his gross and net demands? Illustrate.

(d) What is the size of the substitution effect on the demand for meat? The ordinary income effect? The endowment income effect?

(e) How would this case be different if Mongkut was always happy to swap 1 kg of vegetables for 1 kg of meat in consumption?

 

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1.Money solves the problem of double coincidence of wants that would regularly occur under a system of A.credit cards B. Debit cards C. Money or D.Barter

2. Credit Cards. Credit cards are not considered part of the money supply​ because:

A.

they are a unit of account.

B.

they represent a store of value.

C.

they are a loan which you have to use money to pay for later.

D.

they make it easier to conduct business.

3. Currency and Underground Economy. People that engage in illegal transactions prefer to use currency relative to other forms of money. Which of the following is not a reason illegal transactions are usually made in​ currency?

A.

Currency can be used to make other transactions.

B.

It is not easy to track transactions made with currency.

C.

People know the value of currency.

D.

It is easy to track transactions made with currency.

4. If the reserve ratio is

0.20

and a deposit of

​$200

is placed into a​ bank, that bank can lend out

​$nothing

.

​5. Money Market Mutual​ Funds, Banks, and Reserves. Money market mutual funds typically invest in government securities and other financial instruments that can be easily bought and sold. They are not subject to reserve requirements​ and, in​ fact, hold minimal reserves.​ Banks, on the other​ hand, make loans to businesses for investment purposes.

Prior to​ 2008, banks did not normally earn interest on reserves.

Suppose that banks still do not earn any interest on reserves. If there were no reserve requirements for​ banks, how do you think their reserve holdings would compare to money market mutual​ funds?

A.

The level of bank reserve holdings would be similar to those held by money market mutual funds since banks can earn more money by keeping reserves at minimal levels.

B.

The level of bank reserve holdings would be lower than those held by money market mutual funds since banks can borrow from each other.

C.

The level of bank reserve holdings would still be higher than those held by money market mutual funds since banks have to provide funds to depositors.

D.

The level of bank reserve holdings would be higher than those held by money market mutual funds since bank lending is riskier than investments of money market mutual funds.

6. If a bank has

$ 50

billion in demand deposits and required reserves are

8

​%,

the maximum amount of money it can lend is

​$nothing

billion.

​

7. The Treasury Secretary and the Fed. ​Occasionally, some economists or politicians suggest that the Secretary of the Treasury become a member of the Federal Open Market Committee. This would most likely

▼

increase

decrease

have no impact on

the independence of the Federal Reserve.

8. Where Should Regional Banks Be Located​ Today? Given the changes in the location of economic activity that have occurred since the founding of the Federal​ Reserve, how would the location of the regional banks change if they were allocated by economic​ activity?

The locations of the banks and the branches would be

▼

the same

different

since economic activity has geographically shifted. There would probably be more banks in the

▼

West

East

​,

and the

▼

Philadelphia

Cleveland

San Francisco

district would be​ smaller, or have more banks.

9. Which of the following is NOT a function of the Federal​ Reserve?

A.

conducting monetary policy

B.

lending money to individuals who can not receive loans from anyone else

C.

ensuring check clearing

D.

distributing new currency for the U.S. Treasury​ Department, which prints it

10. In the banking​ system, when clearing​ checks, the difference between the Federal​ Reserve’s credits and debits is​ the:

A.

liability.

B.

money.

C.

reserve.

D.

float.

 

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