On 1 January 2017,Zing Services Issued $167,000 of Six Year

question 2

Multiple Choice

On 1 January 2017,Zing Services issued $167,000 of six year debentures with a stated rate of 12%.The market rate at time of issue was 11%,so the debentures were issued with a premium and sold for $191,110.Zing uses the effective-interest method to amortise debentures premium.Half-yearly interest payments are made on 30 June and 31 December of each year.How much Interest expense will be recorded when the first interest payment is made? (Round to the nearest dollar. )

• A)$10,020
• B)$10,511
• C)$11,467
• D)$9185

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Definitions:

Potential Output

Potential output is the maximum amount of goods and services an economy can produce when it is most efficient and fully employed, without causing inflation.

Expansionary Gap

A situation where real GDP exceeds potential GDP, often leading to inflationary pressures due to high demand in an economy.

Equilibrium Output

The level of output where the quantity of goods and services produced equals the quantity of goods and services demanded.

Expansionary Gap

A situation in macroeconomics where the actual output in an economy exceeds the potential output, traditionally leading to inflation.