Reference no: EM132948869

Problem 1: Kathleen's company produces computer monitors and other peripheral devices for computers. About six months ago, Kathleen began to keep track of number of hours worked, and the resulting output at her particular work site. Comparing the results, she found that the number of workers (and the hours they worked) remained relatively steady over the past six months, however, the work site's output increased significantly. This indicates that:

Option 1: Productivity at the work site has increased.

Option 2: The work site sold-off some of its excess inventory.

Option 3: The company's prices have increased faster than the wages paid to workers.

Option 4: The company should hire more workers.

Problem 2: Lance owns Lance Lawns Irrigation Systems, LLC, a company that installs and maintains underground lawn irrigation systems. Business is down due to new housing starts being negatively impacted by a deep recession. To make things worse, his bank called yesterday to inform him that his credit limit (interest fee of 12.5%) will be cut from $30,000 per year to $15,000 per year, unless he is willing to pay a higher interest rate of 20%. As Lance drives to the first job this morning, he knows that his last task of the day will be to reduce the hours for his two employees. He can't afford to work employees eight hours per day, with only a $15,000 line of credit. Which of the following strategies will help Lance's situation?

Option 1: Increase government spending on public parks.

Option 2: Decrease government spending so that banks can keep more reserves.

Option 3: Fed decreases interest rates.

Option 4: Fed increases the federal funds rates to jump-start the economy.