# According to the "J curve effect," a weakening of the U.S. dollar relative to its trading partners' currencies would result in an initial ____ in the current account balance, followed by a subsequent ____ in the current account balance. a. decrease; decrease b. decrease; increase c. increase; increase d. increase; decrease

Option B

Explanation:

In economics, the J-curve impact is frequently used to explain, for example, how a nation's trade balance negatively affects briefly after a depreciation of its exchange rate, then gradually recovers, and eventually exceeds its previous results.

If the currency of a country is appreciated, economists note, there may be a reverse J-curve. For importing nations, the country 's products unexpectedly become more competitive. When other countries will meet the gap at a cheaper profit, the stronger currency would weaken its advantage on exports.

According to the 'J curve effect', a weakening of the U.S. dollar would cause an initial decrease in the current account balance due to the instant effects on import and export prices. However, with time, the balance is likely to increase due to adjustments in export and import volumes. Therefore, the correct response to your question is (b) decrease; increase.

### Explanation:

The 'J curve effect' is a theory in international economics that describes the likely effects of a currency devaluation on a country's trade balance. In specific, when the U.S. dollar weakens relative to its trading partners' currencies, it could initially cause a decrease in the current account balance. The reason is that the immediate effect of a weaker dollar is to make foreign imports more expensive and the U.S. exports less valuable, deteriorating the trade balance. However, in the longer term, the trade balance may increase in the current account balance. This is because over time, the cheaper U.S. exports become more appealing to overseas buyers and imports into the U.S. decrease due to their higher price, improving the balance.

So the answer to your question is: a weakening of the U.S. dollar relative to its trading partners' currencies would result in an initial decrease in the current account balance, followed by a subsequent increase in the current account balance. Hence, the correct option is (b) decrease; increase.

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## Related Questions

7. Identifying costs of inflation Shen manages a grocery store in a country experiencing a high rate of inflation. He is paid in cash twice per month. On payday, he immediately goes out and buys all the goods he will need over the next two weeks in order to prevent the money in his wallet from losing value. What he can't spend, he converts into a more stable foreign currency for a steep fee. This is an example of the of inflation.

Shoe-leather Costs.

Explanation:

In Business management, Shoe-leather costs can be defined as the costs of time and effort people take to counteract the effect of high inflation on the depreciative purchasing power of money by visiting banks or other financial institutions regularly in order to limit inflation tax they pay on holding cash.

Metaphorically speaking, in a bid to protect the value of money or assets, people wear out the sole of their shoes by going to the bank regularly.

Hence, Shen is practicing a shoe-leather cost.

Suppose that LilyMac Photography has annual sales of \$290,000, cost of goods sold of \$155,000, average inventories of \$3,500, average accounts receivable of \$21,000, and an average accounts payable balance of \$10,000. Assuming that all of LilyMac's sales are on credit, what will be the firm's cash cycle?

11.12

Explanation:

See attached files

Explanation:

Suppose that LilyMac Photography has annual sales of \$233,000, cost of goods sold of \$168,000, average inventories of \$4,800, average accounts receivable of \$25,600, and an average accounts payable balance of \$7,300.

Assuming that all of LilyMac’s sales are on credit, what will be the firm’s cash cycle? (Use 365 days a year. Do not round intermediate calculations. Round your final answer to 2 decimal places.)

On December 31, 2018, the balance in Megan's Products Accounts Receivable was \$680,000 and net credit sales amounted to \$3,800,000 during 2018. An aging analysis of the accounts receivable indicated that \$40,000 in accounts are expected to be uncollectible. Prepare the adjusting entries to record estimated bad debt expense using the percentage-of-receivables basis under each of the following independent assumptions:

The Journal entry is shown below:-

a. Bad Debt Expense Dr, \$36,800            (\$40,000 – \$3,200)

To Allowance for Doubtful Accounts \$36,800

(Being the bad debt expense is recorded)

For recording this we debited the bad debt expense as it increased the expenses and at the same time it reduced the assets so the allowance for doubtful accounts is credited

b. Bad Debt Expense Dr, \$40,730          (\$40,000 + \$730)

To Allowance for Doubtful Accounts \$40,730

For recording this we debited the bad debt expense as it increased the expenses and at the same time it reduced the assets so the allowance for doubtful accounts is credited

The Manufacturing Overhead account shows debits of \$30,000, \$24,000, and \$28,000 and one credit for \$86,000. Based on this information, manufacturing overhead: not been applied.
shows a zero balance.
has been underapplied.
has been overapplied.

has been overapplied.

Explanation:

The net balance of debit and credit of manufacturing overhead account is under or over applied overhead. On debit sides the Actual costs incurred is recorded and overhead applied is recorded in credit side of manufacturing overhead account. Total actual costs are \$82,000 ( \$30,000 + \$24,000 + \$28,000 ) and overhead applied is \$86,000. Net balance of account is overapplied overhead of \$4,000 ( \$86,000 - \$82,000 ).

Blakely charges manufacturing overhead to products by using a predetermined application rate, computed on the basis of machine hours. The following data pertain to the current year: Budgeted manufacturing overhead: \$480,000 Actual manufacturing overhead: \$440,000 Budgeted machine hours: 20,000 Actual machine hours: 16,000 Overhead applied to production totaled:Select one:a. \$352,000b. \$384,000c. \$550,000d. \$600,000e. some other amount

The correct answer is B: \$384,000

Explanation:

Giving the following information:

Blakely charges manufacturing overhead to products by using a predetermined application rate computed based on machine hours.

The following data pertain to the current year:

Budgeted machine hours: 20,000

Actual machine hours: 16,000

First, we need to calculate the manufacturing overhead rate:

manufacturing overhead rate= total estimated manufacturing overhead/ total amount of allocation base

manufacturing overhead rate= 480000/20000= 424 per hour

A process cost system would be appropriate for a a.custom cabinet builder b.jet airplane builder c.natural gas refinery d.catering business

The correct answer is letter "C": natural gas refinery.

Explanation:

Process cost systems are used by companies which production process go through several steps manufacturing large batches of homogeneous products. Process costing uses a Work-In-Progress (WIP) account for the progress of the production. Typical examples of industries that use the process costings system are petroleum and paint.

A process cost system would be appropriate for a jet airplane builder and natural gas refinery.

### Explanation:

A process cost system would be most appropriate for a jet airplane builder and natural gas refinery. Both of these industries involve the production of a large number of identical units and require the accumulation of costs by department or process.

In a jet airplane builder, each department would be responsible for a specific process such as assembling the fuselage, attaching the wings, or installing the engine. The costs incurred in each department, such as labor, materials, and overhead, would be accumulated separately to determine the total cost of producing each airplane.

In a natural gas refinery, the production process involves multiple stages such as separating impurities, distillation, and purification. Each stage would have its own associated costs, and a process cost system would allow for the tracking and allocation of costs to each stage.

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