Economics Flashcards
What does the Federal Government can do to impact the economy (money supply)?
Fiscal Policy such as; increasing/decreasing Tax Rates and increase/decrease government spending
What does the Federal Reserve can do to impact the economy (money supply)?
Monetary Policy such as;
Reduce/Increase Discount rate and Increase/decrease Reserver Requirements
Transaction Risk
Risk exposure faced by an entity of foreign currency
what does a declining local currency (USA dollar) implies relative to foreign currency?
It becomes less expensive in the foreign country which means the domestic firm will take advantage of the Strength of the Foreign Currency
what will happen if the Government gives price support or increase in minimum wage?
will lead to surpluses or excess
Condition During Recession
Potential output will exceed actual output
High price elasticity of demand characteristics?
The item has many similar substitutes
Michael Porter (5) components that affect profitability
(1) barriers to market entry
(2) market competitiveness
(3) existence of substitute products
(4) bargain power of customers
(5) bargain power of suppliers
What happened if DEMAND increases and SUPPLY decreases?
Equilibrium price will increase
What happened if
$.90 = 1 EUR changes to $.80 = 1 EUR ?
USA dollar appreciates, it takes LESS dollar to obtain EUR.
Account payable will be a gain, AR will be a loss
What happened if
$.80 = 1 EUR changes to $.90 = 1 EUR ?
USA dollar depreciates, it takes MORE dollar to obtain EUR.
Account payable will be a loss, AR will be a gain
what does “High Leverage” means and what can affect negatively the profits of a firm?
High leverage means that the firm is heavily utilizing debt in capital structure. A increase in the prime rate can increase the interest expense hurting the bottom line.
What’s the only difference between ABC and Variable Costing?
Is treatment of Fixed Cost.
Variable = treats fixed cost as periodic expenses
ABC = treats fixed as periodic and/or variable cost
