Answer:
The expected rate of return on this investment is:
21%
Explanation:
Cost of computer = $200,000
Annual cash flows for 5 years = $48,271
Total cash flows = $241,355 ($48,271 x 5)
Returns = $41,355 ($241,355 - $200,000)
The expected rate of return = Returns/Costs * 100
or the average of returns and the average of investments (they yield the same results)
Using the total returns and investment:
= $41,355/$200,000 * 100
= 21%
Using the average returns and investment:
= $8,271/$40,000 * 100
= 21%
Scatterbrain Samantha often forgets to lock her house. This has caused the probability of a burglary to be 30%. If her house gets broken into, she faces a property loss of $10,000, otherwise she gets to keep her $100,000. If Samantha is offered full coverage for her house at $1,500, what is her expected wealth with the insurance policy
Answer:
$98,500
Explanation:
The computation of her expected wealth with the insurance policy is shown below:
= Amount keeps with her - offered amount with respect to the full coverage for her house
= $100,000 - $1,500
= $98,500
Hence, the expected wealth of Samantha with the insurance policy is $98,500
All other information i.e mentioned in the question is to be ignored as it is not to be considered
A 20 year property lease classified as an operting lease provides a 10% increase in annual payments every 5 years. In the 6th year compared to the 5th year the lease will cause the following expenses to increase
rent interest
a no yes
b yes no
c yes yes
d no no
d. no no
Answer: d. no no
Explanation:
When using operating leases, the rent is paid on a straight line basis meaning that rent will not increase and uses an even figure over the entire term of the lease.
The even figure already accounts for the increase in rent and incorporates it so there is no need to increase the rent figure in the 6th year.
Interest payment is not part of an Operating lease as this kind of lease involves on rental payments.
Historical returns (1900-2015) suggest that in a year when Treasury bills offered 7.5 the approximate return on portfolio of common stocks should be in the region of:
Answer: 15%
Explanation:
The expected return on stock is expressed as;
Expected Return on Stock = Treasury Bill Yield + Risk Premium
Historical returns from 1900 - 2015 generally show the risk premium on stock to be 7.6% so;
Expected Return on Stock = 7.5% + 7.6%
= 15.1%
= 15%
Firm X is considering a project and its analysts have projected the following outcomes and their probabilities. 30% chance of Net Income being $4,600; 45% chance of Net Income being $7,800 and 25% chance of Net Income being $13,500. What is the expected value of the outcomes?
Answer:
$8,265
Explanation:
S/n Probability Net Income Expected Income
1 30% $4,600 $1,380
2 45% $7,800 $3,510
3 25% $13,500 $3,375
Total 100% $8,265
Note
Expected Income = Probability * Net income
Probability is termed as the branch of mathematics that is concerned with the numerical calculations or the descriptions with a chance for the event to occur. The probability of any of the events carries the number from 0 to 1.
The expected value of outcomes is $8,265
Serial no. Probability Net Income Expected Income
1 30% $4,600 $1,380
2 45% $7,800 $3,510
3 25% $13,500 $3,375
Total 100% $8,265
The formula to calculate the expected value of the outcomes is:
[tex]\begin{aligned}\text{Expected Income} = \text{Probability} \times\text{ Net income}\end{aligned}[/tex]To know more about the probability and the expected value of the outcomes, refer to the link below:
https://brainly.com/question/14262217
The DAMIC (Define, Messure, Alalyze, Improve, and Control) methodology of the six sigma project, is used to improve an exsisting business project. true false
Answer:
True
Explanation:
Company XYZ's DMAIC (Define, Measure, Analyze, Improve, and Control) tools are the five steps or processes in Six Sigma projects. They can be used by Company XYZ to improve its existing business project. Six Sigma is a set of tools for process improvement, started at Motorola and popularized by American Engineer Bill Smith in the 1980s. It attempts to reduce defects in the production process with its disciplined and data-driven approach.
On January 1, 2017, Abbey acquires 90 percent of Benjamin's outstanding shares. Financial information for these two companies for the years of 2017 and 2018 follows:
2017 2018
Abbey Company:
S ales $ (742,000 ) $ (994,000 )
Operating expenses 512,000 564,000
Intra-entity gross profits in ending
inventory (included in above figures) (185,000 ) (232,000 )
Dividend income—Benjamin Company (22,500 ) (27,000 )
Benjamin Company:
Sales (237,000 ) (279,000 )
Operating expenses 128,000 162,000
Dividends paid (25,000 ) (30,000 )
Assume that a tax rate of 40 percent is applicable to both companies.
a. On consolidated financial statements for 2018, what are the income tax expense and the income tax currently payable if Abbey and Benjamin file a consolidated tax return as an affiliated group?
b. On consolidated financial statements for 2018, what are the income tax expense and income tax currently payable if they choose to file separate returns?
Answer:
Abbey and Benjamin's 90% shares
a. Income tax expense for 2018 = $214,120
Income tax payable = $214,120
b. Income tax expense for 2018:
Abbey Benjamin
Income Tax Expense (40%) $172,000 $46,800
Income tax payable $172,000 $46,800
Explanation:
a) Data and Calculations:
1. Abbey Company:
2017 2018
Sales $ (742,000) $ (994,000)
Operating expenses 512,000 564,000
Intra-entity gross profits in ending 230,000 430,000
inventory (included in above figures) (185,000 ) (232,000 )
Dividend income—Benjamin Company (22,500 ) (27,000 )
2. Benjamin Company:
2017 2018
Sales (237,000 ) (279,000 )
Operating expenses 128,000 162,000
Dividends paid (25,000 ) (30,000 )
3. Consolidated Statements
Abbey Benjamin Consolidated
Sales $ (994,000) $ (279,000 ) $ 1,245,100
Operating expenses 564,000 162,000 709,800
Intra-entity gross profits in ending 430,000 117,000 535,300
Income Tax Expense (40%) 172,000 46,800 214,120
A firm produces its products by a continuous process involving three production departments, 1 through 3. Present entries to record the following selected transactions related to production during August:
(a) Materials purchased on account, $120,000.
(b) Material requisitioned for Use in Department 1, $125, 700, of which $124, 200 entered directly into the product
(c) Labor cost incurred in Department 1, $195, 400, of which $174,000 was used directly in the manufacture of the product
(d) Factory overhead costs for Department 1 incurred on account, $54, 700
(e) Depreciation on machinery in Department 1, $29, 200
(f) Expiration of prepaid insurance chargeable to Department 1, $7,000
(g) Factory overhead applied to production in Department 1, $106, 300
(h) Output of Department 1 transferred to Department 2, $362, 700
Answer:
a.
Raw Materials $120,000 (debit)
Accounts Payable $120,000 (credit)
b.
Work In Process : Direct Materials $124,200 (debit)
Work In Process : Indirect Materials $1,500 (debit)
Raw Materials $125,700 (credit)
c.
Work In Process : Direct Labor $174,000 (debit)
Work In Process : Indirect Labor $21,400 (debit)
Salaries and Wages Payable $195,400 (credit)
d.
Factory Overheads $54,700 (debit)
Accounts Payable $54,700 (credit)
e.
Work In Process : Depreciation $29,200 (debit)
Accumulated Depreciation $29,200 (credit)
f.
Work In Process : Insurance Expense $7,000 (debit)
Prepaid Insurance $7,000 (credit)
g
Work In Process : Factory Overheads $106, 300 (debit)
Factory Overheads $106, 300 (credit)
h.
Work In Process : Department 1 $362,700 (debit)
Work In Process : Department 1 $362,700 (credit)
Explanation:
Costs accumulate in the Work In Process Account during Manufacturing Process.
Only Factory Overheads Applied are transferred to Work In Process Account during Manufacture.
During transfer from Department 1 to Department 2, De-recognize Manufacturing Cost from Department 1 Work In Process Account into Department 2 Work In Process Account
Why does only systematic risk exposure matter for the risk premium, i.e., how does the price adjust to make only systematic risk affect the expected risk premium
Answer:
Because it can be mitigated through hedging or by using the correct asset allotment technique, unlike unsystematic risk that can be diversified away.
Explanation:
Systematic risk is a term in finance and economics that describes the available risk to the whole market or portion of the market.
Also, given that, systematic risk is sometimes referred to as “undiversifiable risk,” which concerns the all-around market, and it is considered to be unpredictable and impossible to completely avert.
Hence, only systematic risk exposure matter for the risk premium because it can be mitigated through hedging or by using the correct asset allotment technique, unlike unsystematic risk that can be diversified away.
The manager of Gilbert Company used the production cost report to compare budgeted costs to actual costs and then based bonuses on the results. This is an example of using the reports to
Answer:
Motivate the workforce
Explanation:
Performance appraisals based on the performance can be seen as a motivation tool for the work force to achieve more, over and above what has been set as standard or budget.
However this method is not always effective as this may demotivate workforce if the budgets are unrealistic.
Palmona Co. establishes a $330 petty cash fund on January 1. On January 8, the fund shows $237 in cash along with receipts for the
Answer:
The following information was missing:
"... with receipts for the following expenditures: postage, $36; transportation-in, $13; delivery expenses, $15; and miscellaneous expenses, $25. Palmona uses the perpetual system in accounting for merchandise inventory.
Prepare journal entry to establish the fund on January 1, reimburse it on January 8, and reimburse the fund and increase it to $450 on January 8, assuming no entry in part 2."
Part 1:
January 1, petty cash fund established
Dr Petty cash fund 330
Cr Cash 330
Part 2:
January 8, petty cash expenses
Dr Postage expenses 36
Dr Transportation expenses 13
Dr Delivery expenses 15
Dr Miscellaneous expenses 25
Dr Cash short and over 4
Cr Petty cash fund 93
Part 3:
January 8, petty cash expenses
Dr Postage expenses 36
Dr Transportation expenses 13
Dr Delivery expenses 15
Dr Miscellaneous expenses 25
Dr Cash short and over 4
Cr Petty cash fund 93
January 8, petty cash fund is replenished
Dr Petty cash fund 213
Cr Cash 213
National Geographic is replacing an old printing press with a new one. The old press is being sold for $350,000 and it has a net book value of $75,000. Assume that National Geographic is in the 40% income tax bracket. How much will National Geographic net from the sale?
Answer:
$240,000
Explanation:
National geographic is replacing an old printing machine with a new one
The old printing machine is sold at the price of $350,000
It has a net book value of $75,000
The income tax is 40%
= 40/100
=0.4
The first step is to calculate the taxable value
= $350,000-$75,000
= $275,000
Income tax= taxable value×tax rate
= $275,000×0.4
= $110,000
Therefore, the net from sales can be calculated as follows
= $350,000-$110,000
= $240,000
Hence the net from sale of National Geographic is $240,000
If the CPI is 230 in year 1 and 249 in year 2, what is the approximate percentage change in prices between the two years
Answer: 8.3%
Explanation:
From the question, we are informed that the consumer price index is 230 in year 1 and 249 in year 2. The approximate percentage change in prices between the two years goes thus:
= (New CPI - Old CPI)/Old CPI × 100
=(249 - 230)/230 × 100
= 19/230 × 100
= 0.083 × 100
= 8.3%
If the old machine is replaced, it can be sold for $32800. Which of the following amounts is a sunk cost? $246000 $820000 $287000 $328000
Answer: $287,000
Explanation:
Sunk costs are costs that have already been incurred and so should make no impact on the decision to be made. In the case of fixed assets to be replaced, the Sunk cost would be the Book value of the Asset.
Sunk Cost of Old Machine = Book Value of old machine
Sunk Cost of Old Machine = Cost Price - Accumulated Depreciation
Sunk Cost of Old Machine = 410,000 - 123,000
Sunk Cost of Old Machine = $287,000
The management of Bonga Corporation is considering dropping product D74F. Data from the company's accounting system for this product for last year appear below: Sales $ 830,000 Variable expenses $ 390,000 Fixed manufacturing expenses $ 266,000 Fixed selling and administrative expenses $ 232,000 All fixed expenses of the company are fully allocated to products in the company's accounting system. Further investigation has revealed that $111,000 of the fixed manufacturing expenses and $103,000 of the fixed selling and administrative expenses are avoidable if product D74F is discontinued. What would be the financial advantage (disadvantage) from dropping product D74F?
Answer:
the financial disadvantage of dropping D74F = $226,000. This means that if the company drops D74F, its operating income will decrease by $226,000.
Explanation:
income from product D74F = $830,000 - $390,000 - $266,000 - $232,000 = -$58,000
unavoidable costs = ($266,000 - $111,000) + ($232,000 - $103,000) = $284,000
the financial disadvantage of dropping D74F = total unavoidable costs - net loss = $284,00 - $58,000 = $226,000.
Which of the following is the most important determinant of productivity in the U.S.?
a. human capital
b. physical capital
c. technology
d. none of the above
Answer:
c. technology
Explanation:
The US has been known for being the land of opportunity, and opportunity is generally the result of technology. The US is number one for entrepreneurship and that results in higher economic growth and higher productivity. When you look at the largest companies in the US (and the world), most of them were formed by entrepreneurs that were able to develop new technologies. E.g. Steve Jobs (Syrian immigrant), Elon Musk (South African), Serguei Brin (Russian) and Jeff Bezos (has a Cuban father). If we look a little farther away (grandparents), virtually all the rest of high tech firms were formed by descendants of immigrants that developed new technologies, products and services.
Your great aunt left you an inheritance in the form of a trust. The trust agreement states that you are to receive $2,400 on the first day of each year, starting immediately and continuing for 20 years. What is the value of this inheritance today if the applicable discount rate is 6.75 percent
Answer:
The value of this inheritance today is $30,541.12.
Explanation:
Since the $2,400 is to be received the first day of each year, this is shows that this an annuity due and the relevant formula to use is the formula for calculating the present value (PV) of an annuity due given as follows:
PV = P * [{1 - [1 / (1 + r)]^n} / r] * (1 + r) .................................. (1)
Where ;
PV = Present value or the value of this inheritance today =?
P = Annual receipt = $2,400
r = discount rate = 6.75%, or 0.0675
n = number of years = 20
Substituting the values into equation (1) above, we have:
PV = $2,400 * [{1 - [1 / (1 + 0.0675)]^25} / 0.0675] * (1 + 0.0675)
PV = $2,400 * 11.9208107635642 * 1.0675
PV = $30,541.12
Therefore, the value of this inheritance today is $30,541.12.
Floyd and Gert enter into a contract by which Floyd promises to deliver fertilizer to Gert. Floyd subsequently transfers this duty to Hazel. Floyd is
Answer: an obligor
Explanation:
From the question, we are informed that Floyd and Gert enter into a contract by which Floyd promises to deliver fertilizer to Gert and that Floyd subsequently transfers this duty to Hazel.
In this case, Floyd is an obligor. An obligor os defined as an individual who by contract or due to a legal procedure, undertakes an obligation for another individual.
Personal pronouns can be written in___ cases. A. five B. three C. two D. four
Answer:
B) three cases
Explanation:
Personal pronouns can be written in three cases
Answer:
The English language has just three cases
Explanation:
Answer: B
The best way in which to view portfolios among other competing forms of assessment would be to see the portfolio as:
Answer: means of capturing authentic behavior in a life-like environment.
Explanation:
Portfolio assessment is a form of assessment form which is done by the teachers and the learners. It should be noted that portfolio assessment is used as an alternative to classroom test.
The portfolio will show the work of the learner and how he or she has developed. The best way in which to view portfolios among other competing forms of assessment would be to see the portfolio as means of capturing authentic behavior in a life-like environment.
The higher the forgetting rate associated with a brand, product category, or message, the lower the warranted level of repetition.
A. True
B. False
Answer:
False
Explanation:
Forgetting curve depicts how a person tends to forget about a particular information over time when there is no attempt to retain it.
Normally memory retention declines over time without repetition.
The lower the forgetting rate of customers associated with a brand the lower the number of repetition required to retain the information.
When rate of forgetting is high customers easily forget about the product. So there is need for higher repetition to keep the information fresh in their minds.
A company has a chief executive officer and a limited corporate staff, with line managers in dominant organizational areas, such as production, accounting, marketing, engineering, and human resources. What type of structure is in place here
Answer:
The answer is functional structure
Explanation:
The type of structure in this question is functional structure.
Functional structure divides the organization into different functions based on their specialization. Functional departments are production department, accounting department, marketing department etc. Each functional department has a line manager or head of department which reports to CEO.
This structure is the most common.
And its advantages are that it increases specialization and also productivity.
Your monthly statement from your bank credit card shows that the monthly rate of interest is 1.5%. What is the annual effective rate of interest you are being charged on your credit card
Answer:
the effective annual rate of interest is 19.56%
Explanation:
The computation of the annual effective rate of interest is shown below:
Since the monthly rate of interest is 1.5%
So,
Annual interest is
= 1.5 % × 12 months
= 18 %
Now
Effective annual rate of interest is
= ( 1 + 0.18 ÷ 12)^12 - 1
= 0.1956
= 19.56 %
hence, the effective annual rate of interest is 19.56%
Answer:
i believe your annual rate of interest is 19.56%
Explanation:
I just answered that question
According to the Crash Course video on the Industrial Economy, in which of the following ways did the US Civil War spur rapid industrialization of the country?
A. Forced introduction of a national currency.
B. Provided federal contracts to arms and clothing manufacturers.
C. Improved infrastructure particularly in the form of the transcontinental railroad and telegraph systems.
D. Led to the invention of the Bessemer process of steel production.
E. Introduced flight.
Answer:
A. Forced introduction of a national currency.
B. Provided federal contracts to arms and clothing manufacturers.
C. Improved infrastructure particularly in the form of the transcontinental railroad and telegraph systems.
Explanation:
The Civil War was a war between the then Northern States who comprised the Union and the then Southern States who comprised ti Confederacy in an attempt to get the Confederacy to rejoin the United States of America.
The war had many casualties but some good was done to the economy in terms of the following;
There was a forced introduction of a national currency known as the Greenbacks after Congress passed the Legal Tender Act of 1862.The Federal Government increased spending in the economy by providing federal contracts to arms and clothing manufacturers to aid the troops.Improved infrastructure to enable information get to soldiers faster as well as to move soldiers faster especially in the areas of telegraph development and the construction of the transcontinental railroad.How much must be deposited today into the following account in order to have 35000
in 6 years for a down payment on a house? Assume no additional deposits are made.
An account with monthly compounding and an APR of 8%
Answer:
$21,691.43
Explanation:
We are to determine the present value of 35,000
the formula for determining present value is :
PV = FV (1 + r)^-nm
FV = Future value
P = Present value
R = interest rate = 8%/ 12
N = number of years
m = number of compounding = 12
35,000( 1 + 0.00667)^-72 = $21,691.43
Your neighbor approached you about a dilemma he has with his mortgage. He purchased his house in 2006 with a $600,000, 6% fixed rate, 30 year mortgage. Then the great recession hit. Today his house is estimated to be worth less than the balance he owes on the mortgage. Furthermore, he was forced to take a new job at 20% less than what he was earning when he purchased the house. Here in 2012, 72 months later, he is contemplating entering into a mortgage modification program sponsored by the government. It offers 3 options.reducing the interest rate to 4.5%forgiveness of $100,000 of the principle due and continuing at 6%refinancing the balance due with a new 15 year, 4% mortgageWhich option would minimize his monthly mortgage payment? Assume all refinancing costs will be paid by the government.
Answer:
the option that will result in a lower monthly payment is the second option that reduces the principal balance by $100,000. The monthly payment will decrease to $2,941.33.
Explanation:
i first prepared an amortization schedule to determine the principal that the neighbor owed after 72 months:
the monthly payment = $3,597.30
principal after 72 months = $548,388
option one:
reducing the interest rate to 4.5% would result in a monthly payment = $3,117.17
option two:
forgiveness of $100,000 of the principle will result in a monthly payment = $2,941.33
option three:
getting a new 15 year mortgage with a 4% interest rate will result in a monthly payment = $4,056.36
If you were an advisor at a global summit on alternative energy, which source of energy would you recommend countries invest more money in
Answer:
If I were an advisor at the alternative energy summit I would support investing in solar energy.
Explanation:
The reasons are various:
- The cost of implementation is much cheaper than that of wind turbines or hydrogenerators, which is why it is more economically profitable.
- It can be implemented in any area of the world or in any place where you find sunlight (such as areas of the Middle East), regardless of the hours of daily sunlight (The sun is an inexhaustible source of energy).
- It is a clean energy, since it produces energy without expense or damage to nature.
- In addition to this, the useful life of photovoltaic panels is 20 years, a fairly long time with respect to the amount of energy generated.
Answer:
If I was an advisor, I would choose to support Solar energy. The cost of implementing such a thing is cheaper than the cost of implementing wind turbines or hydrogenerators. With a lower cost, it makes it more economically profitable. It can be installed in any place where you can find sunlight. These can be used regardless of how many hours of sunlight you have daily.
It is a clean energy source due to the fact that it produces energy without expense or damage to nature. The usual lifespan of photovoltaic panels is 20 years. Which is a fairly long time considering how much energy can be generated from the panels.
Why choose solar energy? Solar energy is one of the most abundant sources of energy due to the fact that it relies on the sun in order to produce energy. Solar energy is cheaper than most fossil fuels, the cheapest option for fossil fuels is natural gas which costs between 4.2 and 7.8 cents per kWh while solar energy costs 4.3 cents per kWh. It is also quicker to install the solar panels than it is to set up any of the other sources of energy. Considering that it is also a clean source of renewable energy that certainly helps the cause and lowers the effects of global warming.
Explanation:
a coupon bond that pays seminanual interest is reported in the wall street journal as having an ask price of 120% of it 1000 par value if the last interest payment was made 3 months ago and the coupon rate is 4% the invoice price of the bond will be
Answer:Invoice on price of bond =$1209.89
Explanation:
Annual coupon amount = 1000 x 4%= 40
Payments made semi annually, therefore number of days before every payment = 365/ 2 = 182.5 = 182 days
Last interest payment = 3 months ago, taking each ,month = 30 days , we have 30 x 3 = 90 days
Flat price = par value x asking price percent = 1000 x 120%= $1200
Accrued interest = (Annual coupon interest /2)x ( days since last payment/ days separating coupon payments
= (40/2) x (90/182) = 20 x 0.4945= $9.890
Invoice on price of bond = flat price + accrued interest
$1200 +$9.890
=$1209.89
Subway is targeting a more narrow market segment among college students than the segment on which McDonald’s focuses. Subway is focusing on students interested in healthy fast food. To select this business strategy, Subway would have used information from all the following categories EXCEPT:________.
a. demographic factors.
b. psychological factors.
c. consumption-pattern factors.
d. end-use segments.
Answer:
d. end-use segments.
Explanation:
Since in the question it is mentioned that Subway is targetting more markets especially for college students instead of focusing on what McDonald focused on. Their motive is to provide healthy fast food
So here they focused on the consumption patterns, demographic factors, and the psychological factors but not in end-use segments
So the same is to be considered
Hence, the correct option is d. end-use segments
An inexperienced bookkeeper prepared the following trial balance that does not balance.
Prepare a correct trial balance, assuming all account balances are normal.
CINELLI COMPANY
Trial Balance
December 31, 2014
Debit Credit
Cash $22,460
Prepaid Insurance $ 5,400
Accounts Payable 4,160
Unearned Service Revenue 4,340
Common Stock 10,000
Retained Earnings 6,600
Dividends 7,600
Service Revenue 27,500
Salaries and Wages Expense 12,000
Rent Expense 5,140
$38,800 $66,400
CINELLI COMPANY
Trial Balance
December 31, 2014
Debit Credit
$ $
$ $
Answer:
Debit Totals $ 52600
Credit Total $ 52600
Explanation:
CINELLI COMPANY
Trial Balance
December 31, 2014
Debit Credit
$ $
$ $
Cash $22,460
Prepaid Insurance $ 5,400
Accounts Payable 4,160
Unearned Service Revenue 4,340
Common Stock 10,000
Retained Earnings 6,600
Dividends 7,600
Service Revenue 27,500
Salaries and Wages Expense 12,000
Rent Expense 5,140
$ 52600 52600
Accounts Payable and Unearned Service Revenue are liabilities.
Prepaid Insurance is an asset account so it is debited.
Salaries and Wages Expense and Rent Expense are expense account and are debited.
Common Stock ,Retained Earnings and Service Revenue are credit accounts.
When aggregate demand is low enough to drive unemployment above the natural rate:_____.
a. there is downward pressure on the price level and the government may want to conduct expansionary fiscal policy.
b. there is downward pressure on the price level and the government may want to conduct contractionary fiscal policy.
c. there is upward pressure on the price level and the government may want to conduct contractionary fiscal policy.
d. the economy is entering into an expansion and the government may want to conduct contractionary fiscal policy.
e. there is upward pressure on the price level and the government may want to conduct expansionary fiscal policy.
Answer: a. there is downward pressure on the price level and the government may want to conduct expansionary fiscal policy.
Explanation:
With such a low aggregate demand curve, the equilibrium price which is where the Aggregate demand curve intersects the Aggregate Supply curve will be lower which will led to a downward pressure on the price level.
With such low aggregate demand and prices which will lead to increased unemployment over the natural rate, the Government would need to stimulate the Economy and can do this by embarking on an expansionary fiscal policy.
With this they can increase spending or reduce taxes which will increase income levels thereby increasing demand and thus lead to more companies opening up and hiring more people.