[jeff]

Resources:

Free Study Planner + BEC NINJA Notes (Economics): https://www.another71.com/cpa-exam-study-plan/

BEC Exam Experience: https://www.another71.com/cpa-exam-forum/topic/bec-exam-experience-official-thread

AUD - 79
BEC - 80
FAR - 76
REG - 92

Jeff Elliott, CPA (KS)
NINJA CPA | NINJA CMA | NINJA CPE | Another71

[frecklescpa]

Could someone provide clarification on a WILEY question on ECONOMICS Chapter 42 on how the solution derives the answer of .75? I don't see how the formula for the multiplier effect gets this answer nor do I understand how they are applying the concept with the information given. Any help is greatly appreciated. Here it goes:

50. If an increase in government purchases of goods and services of $ 20 billion causes equilibrium GDP to rise by $ 80 billion, and if total taxes and investment are constant, the marginal propensity to consume out of disposable income is

a. 0.75

b. 0.25

c. 1.25

d. 4.00

50. (a) The requirement is to determine the marginal propensity to consume given the multiplier. The multiplier refers to the fact that an increase in spending has a multiplied effect on GDP. The effect of the multiplier can be estimated using the economy’s marginal propensity to consume, or vice versa. In this case, the multiplier is 4( $ 80/ 20) and the marginal propensity to save is 25% (1.00/ 4). Therefore, answer (a) is correct because the marginal propensity to consume is one minus the marginal propensity to save, or 75% (100% – 25%).

[Mr.NiceWatch]

Anyone study and pass BEC in 10 days? I started studying last weekend and taking the exam on Tuesday. I still have two chapters to go (B5 &B6) and don't remember much, but I just want to take the exam and be done with the exams.

Journey begins in July 2012.

FAR - 87 (8/7/2012)
REG - 89 (11/19/2012)
AUD - 95 (1/17/2013)
BEC - 81 (2/26/2013)

[no.cruncher]

@frecklescpa

Per “Fiscal Policy”: Government Can Increase or Decrease Aggregate Demand, which effects GDP

“Expansionary Fiscal Policy” Stimulates Economy : Increases + Aggregate Demand Outward, Right via

Decrease Taxes

(Increase Government Spending)

============================

(Deficit)

============================

“(Contractionary Fiscal Policy)” Cools Off Economy : Decreases (-) Aggregate Demand Inward, Left via

Increases Taxes

(Decreases Government Spending)

============================

~Surplus

============================

*NOTE: (Government Spending) Has a greater direct impact on Aggregate Demand, than does Government Taxing, which happens to be an indirect impact. In any case, Increased (Government Spending) would directly impact Aggregate Demand positively, which would encourage GDP Growth.

**REMEMBER too GDP Expenditure Approach: C + I + G + N = GDP

Consumer Consumption

+Investment by Business (i.e. Capital Investment)

+Government Spending – + $20B, in this case

+Net Exports = (Exports – Imports)

=====================================

GDP – + $80B, in this case

=====================================

I KNOW: Per my text that “Marginal Propensity to Consume is the change in consumption for a given change in Disposable Income… If a consumer is given $1.00 more of disposable income, how much of that $1.00 is spent on consumption?”

1 = “Marginal Propensity to Consume” + “Marginal Propensity to Save”

1 = Total Consumption / Total Income + Total Savings / Total Income

HOWEVER, in Regards to the MULTIPLIER, I'm lost…

But hoping someone can drive it home from here, so I can comprehend this as well… I think the 1.00 is in reference to the $1.00 additional dollar of disposable income but not sure why the denominator is 4 ( = 400% = $80B Consumer Consumption / $20B Government Spending ) unless its based on a formula that I'm missing…

FAR - 7/16/2012 *76 : 2.5mo [Exp. 1/2014]
AUD - 8/31/2012 *82 : 1mo
REG - 11/27/2012 *83 : 2.5mo
BEC - 2/27/2013 *80 : 2.5mo LET'S DO THIS!!!
Ethics - 3/13

[ 2011 Kaplan Self Study - Textbook, MP3s, FlashCards ]

CMA... Hmmm...???

[missjones513]

BEC retake tomorrow. Didn't do all the reviewing I had planned. Just going to read my notes a few times today and try to do a couple wiley practice sets. I might try to do some practice sets over the sections I did weaker on.

REG - 5/29/12 (64), 10/1/12 (74), 5/20/13 (75, expires 12/31/14)
FAR - 8/14/12 (64), 8/5/14 (75)
BEC - 11/19/12 (70), 2/25/13 (72), 11/21/13 (73), 1/21/14 (73), 8/30/14 (72), 11/24/14 (75)
AUD - 4/22/13 (65), 10/12/13 (79)

I'm done!!!

Ethics - Pass

[Anonymous]

@frecklescpa & no.cruncher,

Formula for the Equilibrium Multiplier = (1 / MPS) x change of spending.

We are told the Equilibrium Multiplier is 80 billion and told the change of spending is 20 billion.

So now we solve for MPS. 80 billion = (1 / MPS) x 20 billion. So MPS equals .25.

But problem asked for MPC and not MPS. MPS + MPC = 1. So MPC is .75 = (1-.25).

[Anonymous]

@sw100177, the short answer is that WC status does NOT have to be at least “comparable” in order to pass. I have read on here where candidates were weaker in the WC section and still passed. The first time I took BEC, I was randomly guessing on every MC with numbers in it (except for variances) and I was weaker in WC and I scored a 74. That day started off bad for me and I couldn’t hardly think during the test. So if I wasn’t guessing so much in the MC I would have passed easily with being weaker in the WC.

@Mr.NiceWatch, I have read on here with people passing BEC with a week of study time … very unlikely that most can do it but it is possible.

[no.cruncher]

@Carver7, Thanks, it seems real simar to Money Supply Multiplier, formulas:

Potential Deposit Expansion Multiplier = 1 / Required Bank Reserve Ratio % = 1 / RR%

Potential Money Supply Increase = Potential Deposit Expansion Multiplier x Excess Reserves Increase = ( 1 / RR% ) x Customer Deposit Amount ( 1 – RR% )

i.e. RR% = 25%, Excess Reserves Increase $1,000

Money Supply Growth = ( 1 / .25 ) x $1,000 = 4 x $1,000 = $4,000

This Money Supply Growth is assuming subsequent customer bank deposits, and bank continued and willing lending of excess reserves, and of course continued and willing customer borrowing.

FAR - 7/16/2012 *76 : 2.5mo [Exp. 1/2014]
AUD - 8/31/2012 *82 : 1mo
REG - 11/27/2012 *83 : 2.5mo
BEC - 2/27/2013 *80 : 2.5mo LET'S DO THIS!!!
Ethics - 3/13

[ 2011 Kaplan Self Study - Textbook, MP3s, FlashCards ]

CMA... Hmmm...???

[kappa1032]

@Iwantmylifeback – Thanks for the encouragement! I'm definitely going to have to put the hours in to pass this test, but it's definitely doable. I hope you did well on your test!

FAR - 81
REG - 74, 87
AUD - 88
BEC - 88

Finally.

“The only guarantee for failure is to stop trying”
― John C. Maxwell

[kappa1032]

@Iwantmylifeback – Thanks for the encouragement! I'm definitely going to have to put the hours in to pass this test, but it's definitely doable. I hope you did well on your test!

FAR - 81
REG - 74, 87
AUD - 88
BEC - 88

Finally.

“The only guarantee for failure is to stop trying”
― John C. Maxwell

[Anonymous]

@ no.cruncher, I guess multipliers are alike. I wonder if there is multiplier for E = MC squared ?

[Anonymous]

Hello BEC folks!

What's the policy on starting another thread for the second testing window? Is Jeff the only one who can start it? I already have my first attempt at BEC (and hopefully my last exam) scheduled for April 20th.

So…I kinda want to get the ball rolling on the next thread. Should I just wait?

[Anonymous]

Thank you @Carver7! WC is killing me since I am so weak on WC all the time..

[frecklescpa]

Thanks Carver7 and no.cruncher!

Got it!

[Anonymous]

Written communication is only 15% of your score for BEC. That's pretty small when you consider REG is 40%. I took REG and was WEAK WEAK WEAK in the simulations and still passed with a 78. That being said, if you kill the MCQ and are WEAK on WC, you should still be fine. It just all depends if you're able to compensate for the points you lose in WC.

[Anonymous]

Just got back from taking BEC. I feel really good about it. Only used Becker for review. There were only two questions on my exam that I know were not covered in the Becker review, so pretty pleased about that. I thought the writing simulations were very easy. None of my three were more difficult than the other two. I felt like the first testlet was very easy, the second was a little more challenging and the third was definitely harder than the first two. Anyone know if this is normal or just random?

[Author]

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