General accounting Last year a small country collected total tax revenuesof $1.3 billion and spent $1.5 billion. It currently owes investorsowning its bonds and other debt obligations $5.0 billion. Wewould say the country's deficit was:a. $0.2 billion.b. $5.0 billion.c. $3.7 billion.d $5.2 billion.e. None of the above.

Step 1: Define Tax revenueTax revenue can be defined as the proportion of revenue that a government…

Answered: Last year a small country collected…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Get Answer
Why are U. S. Treasury bonds considered to be safe? O They are repaid from user fees. O They are secured by the full-faith-and-credit of the U. S. government. O They mature in one year or less. O They provide income exempt from all forms of income taxes.
The chapter demonstrated that a firm borrowing in a foreign currency could potentially end up paying a very different effective rate of interest than what it expected. Using the same baseline values of a debt principal of SF1.5 million, a one year period, an initial spot rate of SF1.5000/$, a 5.000% cost of debt, and a 34% tax rate, what is the effective cost of debt for one year for a U.S. dollar-based company if the exchange rate at the end of the period was: a. SF1.5000/$ b. SF1.4400/$ c. SF1.3860/$ d. SF1.6240/%
Number 2
Answer
US government's credit rating is high mainly because US has had the highest GDP in the world for more than the past half century. Source of US gov't income is the tax revenue, which is proportionate to the GDP. It can sell new issues of bonds to partially retire maturing debts. It can print dollars that are also accepted all over the world. All of the above
Explanation
(a) During the 1997 Asian financial crisis, the Thai baht was trading at $0.02475 per Thai baht. The Thai baht is trading at $0.03093 per Thai baht now. What is the percentage change in the Thai baht’s value? Would you consider it an appreciation or depreciation? (b) Calculate the income gap for a bank with rate-sensitive assets of $40 million and rate-sensitive liabilities of $96 million. If interest rates rise from 8% to 9.6%, what is the expected change in income? () (c) An investor in England purchased a 91-day T-bill for $987.65. At that time, the exchange rate was $1.75 per pound. At maturity, the exchange rate was $1.83 per pound. What was the investor’s holding period return in pounds? (
Table 2 shows the elements of national income accounts of a country. The economy is in equilibrium. Accounts Consumption (total) Investment Government Expenditures Imports Exports £bn 80 12 8 10 16 A) What is the current equilibrium value of national income? B) What are the levels of injections and withdrawls? C) Assume that the national income rises to £108 bn and the consumption of the domestically produced goods rises to £72 bn. What is the marginal propensity to consume (use 2 decimal places)? D) What is the multiplier for this economy? E) Comment on the results in part c) ad d).
Suppose Lufthansa buys 10 Boeing 747s for $150 million in 1991, financed by a five-year loan from the US Export-Import Bank. There is a one-year grace period on principal and interest payments. Which one of the following would NOT be one of the net impacts of this sale in 1991? a . a $150 million reduction in the U.S. trade deficit b . zero change in the U.S. balance of payments in 1991 c . a $150 million reduction in the U.S. capital account surplus d . a $150 million increase in the U.S. trade deficit
Assume the following to be a portion of the simplified balance of payments statement for a hypothetical country. The values are given in billions of dollars. Exports Imports Capital Outflows Capital Inflows $900 - $675 - $225 $135 If the central bank has not changed its holding of foreign-currency reserves during this period, then the capital-service account for this country should be equal to billion.
The U.S. has imported more than it has exported every year for the last couple of decades. The persistent American trade deficits have been possible because the US has had a persistent surplus in the capital account. True False

SEE MORE QUESTIONS

Recommended textbooks for you

FINANCIAL ACCOUNTING

Accounting

ISBN:

9781259964947

Author:

Libby

Publisher:

MCG

Accounting

ISBN:

9781337272094

Author:

WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.

Publisher:

Cengage Learning,

Accounting Information Systems

Accounting

ISBN:

9781337619202

Author:

Hall, James A.

Publisher:

Cengage Learning,

FINANCIAL ACCOUNTING

Accounting

ISBN:

9781259964947

Author:

Libby

Publisher:

MCG

Accounting

ISBN:

9781337272094

Author:

WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.

Publisher:

Cengage Learning,

Accounting Information Systems

Accounting

ISBN:

9781337619202

Author:

Hall, James A.

Publisher:

Cengage Learning,

Horngren's Cost Accounting: A Managerial Emphasis…

Accounting

ISBN:

9780134475585

Author:

Srikant M. Datar, Madhav V. Rajan

Publisher:

PEARSON

Intermediate Accounting

Accounting

ISBN:

9781259722660

Author:

J. David Spiceland, Mark W. Nelson, Wayne M Thomas

Publisher:

McGraw-Hill Education

Financial and Managerial Accounting

Accounting

ISBN:

9781259726705

Author:

John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS