Group of answer choices.
A. in new classical theory wages are assumed to be flexible, and in new Keynesian theory wages are assumed to be somewhat inflexible.
B. in new classical theory wages are assumed to be somewhat inflexible, and in new Keynesian theory wages are assumed to be flexible.
C. adaptive expectations is the dominant expectations theory in new classical theory, and rational expectations is the dominant expectations theory in new Keynesian theory.
D. in new Keynesian theory the short-run aggregate supply curve is vertical, and in new classical theory the short-run aggregate supply curve is upward sloping.
Answer:
A. in new classical theory wages are assumed to be flexible, and in new Keynesian theory wages are assumed to be somewhat inflexible.
Explanation:
The new classical theory (neoclassical view) posits that long-term expansion of potential Gross Domestic Products (GDP) due to economic growth will determine the size of a country's economy but the economy cannot sustain production above its potential Gross Domestic Products (GDP) in the long run.
John Maynard Keynes was a British economist born on the 5th of June, 1883 in Cambridge, England. He was famous for his brilliant ideas on government economic policy and macroeconomics which is known as the Keynesian theory. He later died on the 23rd of April, 1946 in Sussex, England.
According to the new Keynesian theory, government spending or expenditures should be increased and taxes should be lowered when faced with a recession, in order to create employment and boost the buying power of consumers.
Hence, the difference between the new classical theory (neoclassical view) and new Keynesian theory is that, in new classical theory wages are assumed to be flexible by economists while in new Keynesian theory wages are assumed to be somewhat inflexible.
Data concerning Lemelin Corporation's single product appear below: Per Unit Percent of Sales Selling price $ 230 100 % Variable expenses 115 50 % Contribution margin $ 115 50 % The company is currently selling 7,000 units per month. Fixed expenses are $581,000 per month. The marketing manager would like to introduce sales commissions as an incentive for the sales staff. The marketing manager has proposed a commission of $20 per unit. In exchange, the sales staff would accept a decrease in their salaries of $113,000 per month. (This is the company's savings for the entire sales staff.) The marketing manager predicts that introducing this sales incentive would increase monthly sales by 300 units. What should be the overall effect on the company's monthly net operating income of this change
Answer:
Lemelin Corporation
The overall effect on the company's monthly net operating income of this change is an increase of $1,500.
Explanation:
a) Data and Calculations:
Sales units per month = 7,000
Fixed expenses per month = $581,000
Per Unit Percent of Sales
Selling price $ 230 100 %
Variable expenses 115 50 %
Contribution margin $ 115 50 %
Income Statements
Before Change After Change Difference
Sales unit 7,000 7,300 300
Sales revenue $1,610,000 $1,679,000 $69,000
Variable cost of sales 805,000 839,500 -34,500
Sales commission 0 146,000 -146,000
Contribution margin $805,000 $693,500 ($111,500)
Fixed expenses 581,000 468,000 113,000
Net operating income $224,000 $225,500 $1,500
You are the public relations director of a nonprofit hospital in a competitive market in a midsized city located in a metro area of 350,000 people. It is sweeps week for broadcast media. One of the stations is running a series on HIV/AIDS in the community. Recent segments have included those listed below.
Homelessness related to HIV/AIDS
How persons living with HIV/AIDS suffer from being outcasts
How understanding has increased in some circles but prejudice remains in many.
An appealing case of a hemophiliac who acquired HIV/AIDS through transfusion at the university hospital has been reported in the series. The university and its teaching hospital are located elsewhere in the state.
At a staff meeting this morning, you learn that petitions are circulating in the community to request your hospital to convert its former nurses’ residence into a clinic and residential shelter for HIV/AIDS patients.
The hospital no longer maintains a school of nursing. The three-story brick building has been used for miscellaneous administrative purposes since nurses’ training was phased out. The residence is connected to the hospital by an elevated corridor, similar to a skywalk. It does not have facilities for food service or laundry. Nurses always ate at the hospital and the hospital handled their laundry. The residence and hospital are served by common systems for hot water, steam heat, ventilating and sewer. The building predates central air conditioning.
The human resources director reports that the business agent for kitchen and laundry workers, who are represented by a union, has already made informal contacts about this proposal, suggesting that grievances will result, at the very least, and a strike could ensue.
Your director of volunteers expresses concern about reaction of volunteers who now handle many peripheral duties. Your physical plant supervisor, who lives in the neighborhood, says neighbors are already anxious over the possibility of HIV/AIDS patients in their vicinity. Your hospital’s five-year Strategic Plan, which was recently updated, has no mention of developing an HIV/AIDS specialty.
Write a letter (using your own name) to the hospital CEO, John Dolman and the Board of Governors outlining your plan to resolve this issue. Remember, that your letter will be made public to the other audiences and publics. In your recommendations, you should provide both long and short-term strategies that would solve this problem. To solve this problem you should note if additional resources or expenditures would be need to achieve the goals that you define.
When writing the letter you should provide a brief description of the problems, you have found. What are the facts about major issues? Identify facts about key players in the case, the business problem(s) and then rank order the critical issues. Consider relevant information and underlying assumptions. Finally provide your recommendations.
As you write your recommendations, think about the following;
a. How do the cultural values at the hospital relate to communication, technology, information flow and openness?
b. As the hospital goes forward, should it stick to the espoused culture or should it change? How would you recommend that they change?
c. How would you suggest that they resolve this disparity? In other words what should they do?
d. Provide specific suggestions that will help the organization as they go forward.
e. In the closing, highlight benefits of your recommendations. As a PR director, you need to be honest but tactful in your recommendations
Answer:
HIV AIDS is contagious disease. It is responsibility of the healthcare professionals to handle the person with special care. This virus spread quickly in the body of the victim and the person is often unaware of the disease due to very mild or no symptoms.
Explanation:
To: CEO
Park lane Hospital
Central London,
09 - 06 -2021.
Respected Sir,
It is to bring into your knowledge about the spread of HIV/AIDS in the city. The people are unaware about the disease spread and those infected are carrying disease to others. There should be campaign run by the hospital to inform people about the spread of this contagious disease and preventions measures.
There should also be special arrangement for the people infected by the disease to stay and live in a separate house so the spread can be stopped. The hospital can allow people with symptoms for a free checkup so that more people can come and have their routine checkup.
It is high time because if the spread will increase at the same rate then controlling the disease would become difficult.
Regards,
John Andrews.
Why should you stay organized when doing a research paper
Answer:
cuz if u don't stay organized then the information may lost
Answer:
Staying organized is one of the most important skills when a student first learns
how to write a research paper. It will help your stress levels as well as make the writing process go much faster.
An editorial in the paper argues that a person only should be allowed to attend school if the marginal cost of educating that person is less than the marginal benefit of educating that person. The writer's reasoning is an application of:
Answer:
c
Explanation:
application of:
A. positive economics. B. negative economics. C. normative economics. D. economic naturalism.
Positive Economics is objective and statements are usually based on facts and economic theory. They can be tested.
For example, an increase in input would lead to a decrease in supply of the good is based on economic theory and facts. An increase in input would increase the cost of production and this would discourage sellers from producing.
Normative economics is based value judgements, opinions and perspectives. For example, the statement - social welfare spending in Sweden occupies too large a portion of the national budget - is based on opinion. To some the expenditure might be even too small. There is no economic theory that can be used to determine if this expenditure is too large or small
Which of the following statements are true? Check all that apply. When interest rates rise, the coupon rates on newly issued bonds will increase. As long as bonds are highly rated, there is very little interest rate risk. Purchasing long-term bonds reduces an investor’s interest rate risk. Bonds with similar coupons will always have the same percentage price change, no matter the maturity.
Answer:
When interest rates rise, the coupon rates on newly issued bonds will increase.
Explanation:
When there is an increase in the interest rate of the market so it decrease the price of the outstanding bonds due to which the new bond become costlier. Also the coupon made on the outsanding bond could not be adjusted but at the same time it can rise for the new bond so that the bond could become attractive. This is due to as the investors are interested in purchasing these bonds that provides the high coupon payment on periodic basis
Therefore the above should be the answer
A product needs to be processed on both Resource X and Resource Y. There is only one of each of these resources and your goal is to meet market demand, which is 20 units per day and a day has 12 hours of working time. It takes 30 minutes to process a unit on Resource X and 15 minutes on Resource Y. If Resource X feeds Resource Y and both resources are scheduled to work 12 hours per day and process items just-in-case, then which Of the following statement is correct:
a. There would be no accumulation of work-in-process inventory.
b. Work-in-process inventory would accumulate in-front-of Resource Y.
c. There would be no accumulation of finished goods inventory.
Answer:
The correct statement is:
a. There would be no accumulation of work-in-process inventory.
Explanation:
Daily demand of product A = 20 units
Working time per day = 12 hours
Time to process a unit on Resource X = 30 minutes
Time to process a unit on Resource Y = 15 minutes
Total units that can be processed on Resource X per day = 24 (12/0.5)
Total units that can be processed on Resource Y per day = 48 (12/0.25)
Since Resource X feeds Resource Y and both resources are scheduled to work 12 hours per day, there will no accumulation of work-in-process (from Resource X) because Resource Y uses half the time of Resource X.
Compute and Interpret Measures for DuPont Disaggregation Analysis
Refer to the 2015 fiscal year financial data of 3M Company to answer the following requirements (perform these computations from the perspective of a 3M shareholder).
($millions) 2015 2014
Sales $30,674
Net income, consolidated 5,056
Net income attributable to
3M shareholders 5,048
Assets 32,898 $31,389
Total equity 11,747 13,142
Equity attributable to 3M
shareholders 11,708 13,109
a. Compute the DuPont model component measures for profit margin, asset turnover, and financial leverage. Then, compute ROA.
b. Compute ROE. Confirm that ROE equals ROE computed using the component measures from part a (ROE PM AT FL).
c. Compute adjusted ROA (assume a statutory tax rate of 37% and pretax net interest expense of $123).
Answer:
solving
Explanation:
ROE = Net income/total assets
5048/(11708+13109)/2
= 0.4068
= 40.68%
A.
net margin = net profit/sales
= 5048/30674
= 0.1646
asset turnover = sales/average total asset
= 30674/(32898+31389)/2
= 0.954
equity multiplier
average total asset/average equity
= [(32898+31389)/2] / [11708+13109)]/2
= 32143.5/12408.5
= 2.59
DuPont model
ROE = 0.1646 x 0.9542 x 2.59
= 0.4068
= 40.68%
this shows that roe equals roe computed from the first roe I solved
ROA
net income/total assets
= 5048/32898+31389)/2
= 5048/32143.5
= 0.1570
= 15.47%
Macroeconomics simply focuses on the annual performance of a particular national economy and ignores its interactions with other national economies around the world.
a. True
b. False
Answer:
the answer to the question is false
kilala moba ako filipino ako panget mo
Answer:
Mas pangít ka
Mas pangít ka sa daga
Kamuka mo si babalu
Answer:
jupiter mars sun
Explanation:
its in space
One thousand dollars is invested at 5% continuous annual interest. This means the value of the investment will grow exponentially, with k equaling the decimal rate of interest. What will the value of the investment be after 7 1/2 years
Answer:
$1454.99
Explanation:
Just did this question the other day
Two firms (1 and 2) compete in a homogeneous goods market, where the firms produce exactly the same good. The firms simultaneously and independently select quantities to produce. The quantity selected by firm i is denoted q, and must be greater than or equal to zero, for i - 1,2. The market price is given by p-2 - q1 -q2. For simplicity, as sume that the cost to firm i of producing any quantity is zero. Further, assume that each firm's payoff is defined as its profit. That is, firm i's payoff is pqi, where j denotes firm i's opponent in the game.
Requried:
Describe the normal form of this game by expressing the strategy spaces and writing the payoffs as functions of the strategies.
Answer:
m
Explanation:
DRK, Inc., has just sold 110,000 shares in an initial public offering. The underwriter’s explicit fees were $66,000. The offering price for the shares was $60, but immediately upon issue, the share price jumped to $66.00. a. What is the total cost to DRK of the equity issue?
Answer: $726000
Explanation:
Based on the information given in the question, the total cost to DRK of the equity issue will be calculated thus:
Firstly, we'll calculate the implicit cost per share which will be:
= Increased price - Offering price
= $66 - $60
= $6
Then, the total implicit cost will be:
= $6 × 110000
= $660000
Then, the total cost to DRK of the equity issue will be:
= Explicit cost + Implicit cost
= $66000 + $660000
= $726000
How many months does it take the average case to move from complaint to resolution?
Answer:
Explanation:
25 months
he following data were accumulated for use in reconciling the bank account of Creative Design Co. for August 20Y6: Journalize the entries that should be made by the company that (a) increase cash and (b) decrease cash. g
Answer:
Cash (Dr.) $43,000
Sales Revenue (Cr.) $43,000
Bank (Dr.) $20,000
Cash (Cr.) $20,000
Office Supplies (Dr.) $2,300
Cash (Dr.) $2,300
Petty Cash reimbursement (Dr.) $4,500
Cash (Cr.) $4,500
Explanation:
The journal entries are recorded when transaction occurs in a business. These transactions are recoded at the time of inception of transaction. The journal entries are adjusted when there is any change in the transaction.
If you have a choice to earn simple interest on $10,000 for three years at 8% or annually compounded interest at 7% for three years which one will pay more and by how much approximately?
a. Simple interest by $50.00
b. Compound interest by $22.97
c. Compound interest by $150.75
d. Compound interest by $150.00
e. None of the above.
Answer:
e. non of the above
Explanation:
we first find the simple interest
= p * r * t
= 10000*8%*3
= 2400
the future value
= 2400 + 10000
= 12400
we find the compound interest
= 10000*(1+r)^n
= 10000(1+7%)³
= 10000*1.225043
= 12250.43
we can see that it pays more at 12400 compared to compound interest of 12250.43
the difference = 12400 - 12250.43
= 149.57
therefore the answer is e
Prepare journal entries to record the following transactions for Sherman Systems. a. Purchased 5,900 shares of its own common stock at $34 per share on October 11. b. Sold 1,225 treasury shares on November 1 for $40 cash per share. c. Sold all remaining treasury shares on November 25 for $29 cash per share.
Answer: See explanation
Explanation:
The journal entry to record the transaction for Sherman systems will be:
Oct-11
Debit Treasury Stock (5,900 × $34) =
$200,600
Credit Cash = $200,600
(To record repurchase of 5900 own shares)
Nov-01
Debit Cash (1,225 × $40) = $49,000
Credit Treasury stock (1,225 × $34) = $41,650
Credit Paid in capital-Treasury Stock = $7,350
(To record sale 1225 shares from treasury stock)
Nov-25
Debit Cash (5,900-1,225) × $29) = $135,575
Debit Paid in capital-Treasury Stock = $7,350
Debit Retained earnings = $16,025
Credit Treasury stock (5,900-1,225) × $34) = $158,950
(To record sale balance from treasury stock)
does the business generate sufficient profits
Answer:
Yes.
Explanation:
Yes, the business generate sufficient profits which provides benefits to the owner as well as to the country because the money that the business produce is used for running of state or country. The profit that the business earned by a company enhance the economy of the country by selling of goods or providing services and this money is used for the welfare and prosperity of people.
Given that inflation in the U.S. is projected at 2% annually for the next 5 years and at 8% annually in India for the same time period, and Rupee/Dollar spot rate (R/$) is currently equal to 73.2115, obtain the exact relative PPP value of the spot rate (R/$) five years from now. Group of answer choices 97.4310 69.1442 55.0125 79.4310 77.5181
Answer:
97.4310
Explanation:
Forward rate = Spot rate * (1 + Rate of inflation in India)/(1 + Rate of inflation in US)
Spot rate in 5 years = 73.2115 * (1+0.08)^5/(1+0.02)^5
Spot rate in 5 years = 73.2115 * (1.08)^5/(1.02)^5
Spot rate in 5 years = 73.2115 * (1.4693281/1.104081)
Spot rate in 5 years = 73.2115 * 1.330815493
Spot rate in 5 years = 97.4309984657695
Spot rate in 5 years = 97.4310
John makes a deposit of $12,000 in a bank at 6% Compound Interest annually, for 7 years. a) At the end of 7 years, how much John will have in his bank account
Answer:
$18,043.56
Explanation:
The formula for calculating future value:
FV = P (1 + r) n
FV = Future value
P = Present value
R = interest rate
N = number of years
12,000 x (1.06)^7 = $18,043.56
War Eagle Distributing wants to determine the most efficient method of transporting its new product- The Charles Barkley Paperweight. This item has been offered for sale for several years, but Mr. Barkley's public persona and popularity have grown steadily, and the 6-year forecast calls for year 1 sales of 1,000 pallets, with year 2-6 sales increasing by 400 pallets each year. Estimated year 1 costs of two transportation options being considered are shown below.
Mode A Mode B
Variable Costs
Transportation Costs $240,000 $270,000
Inventory Cost $100,000 $30,000
Packaging Costs $120,000 $30,000
Fixed Cost $160,000 $420,000
Total Cost $620,000 $750,000
What is the Point of Indifference (where the total cost of each option is equal) in number of pallets?
a. 1,400
b. 1,800
c. 2,000
d. 2,400
e. 2,800
Answer:
c. 2,000
Explanation:
Total Variable cost = transportation cost + inventory cost + packaging costs
Total variable cost Mode A = $240,000 + $ 100,000 + $ 120,000 = $460,000
Cost per pallets = 460,000 / 1000 = 4600
Total variable cost Mode B = $270,000 + $ 30,000 + $ 30,000 = $330,000
Cost per pallet = 330,000 / 1000 = 3300
The variable cost for both mode will be equal if the company plans to produce 2000 pallets.
Blaine, Inc., produces three products, Argon, Xon, and Zeon, from a joint production process. Data on the process are as follows:
Product Agon Xon Zeon Total
Allocated joint cost $45 $450
Sales value at split-off $90 $900
Additional processing costs $60 $150
Sales value if processed $150 $300 $1200
Contribution from processing further $15 $0 $360
Units produced 750 1250 3,000 5,000
Required:
Determine the value for each misse
Answer:
Agon
Allocated joint cost $45
Sales value split off $90
additional processing cost $60
Sales value if processed further $150
Contribution from processing further $15
Xon
Allocated joint cost $75
Sales value split off $150
additional processing cost $150
Sales value if processed further $300
Contribution from processing further $0
Zeon
Allocated joint cost $330
Sales value split off $660
additional processing cost $180
Sales value if processed further $1200
Contribution from processing further $360
Explanation:
Sales split off point Xon $300 - $150 = $150
Sales split off point Zeon $900 - $90 - $150 = $660
Joint cost of Xon = 450 / 900 * 150 = 75
Joint cost of Zeon = 450 / 900 * 660 = 330
Kiosk Jewelers borrows from Lender Inc. and Mortgage Company, using the same collateral. Only Mortgage Company has a perfected security interest. Kiosk defaults on both loans. The party with first rights to the collateral is:________
A) Kiosk Jewelers.
B) none of the choices.
C) Lender Inc.
D) Mortgage Company.
Easter Egg and Poultry Company has $2,000,000 in assets and $1,400,000 of debt. It reports net income of $200,000.
Required:
a. What is the firm's return on assets?
b. What is its return on stockholders' equity?
c. If the firm has an asset turnover ratio of 2.5 times, what is the profit margin (return on sales)?
Answer:
a. Return on assets
= Net income / Total assets
= 200,000 / 2,000,000
= 10%
b. Return on Equity:
First find leverage ratio = Debt / Assets
= 1,400,000 / 2,000,000
= 70%
ROE = Return on Assets / (1 - Leverage ratio)
= 10% / (1 - 70%)
= 33.3%
c. Return on sales = Net income / Sales
Asset Turnover = Sales / Total assets
2.5 = Sales / 2,000,000
Sales = 2.5 * 2,000,000
= $5,000,000
Return on sales = 200,000 / 5,000,000
= 4.0%
Altitude, humidity, and temperature extremes are climatic features that affect the uses and functions of products and equipment.
A. True
B. False
Answer:
The correct answer is the option A: True.
Explanation:
To begin with, in the context of productivity inside businesses' organization it is very common actually to protect as much as possible the new products from the climate factors that can affect the use of the equipment inside the company and therefore to harm the production that could cause a waste of time or money in cases of repairment. Much worse would be the case in where the product that are meant to be sold to the customers are damaged because of the humidity or other factors regarding the topography of the place of where the company resides. So all those factors do in fact become a dangerous problem to have in mind if they're not taken care of.
Mannisto Inc. uses the FIFO inventory cost flow assumption. In a year of rising costs and prices, the firm reported net income of $219,017 and average assets of $1,413,720. If Mannisto had used the LIFO cost flow assumption in the same year, its cost of goods sold would have been $36,220 more than under FIFO, and its average assets would have been $31,640 less than under FIFO.
Required:
Calculate the firm's ROI under each cost flow assumption (FIFO and LIFO).
Answer:
a) Under the FIFO method:-
ROI = 15.49%.
Under LIFO method:-
ROI = 13.2%
Explanation:
ROI = Net Income * 100 / Avverage assets.
a) Under the FIFO method
[tex]ROI= \frac{219017*100}{1413720} \\ROI = 15.49[/tex]
ROI = 15.49%.
Under LIFO method
[tex]ROI= \frac{182797*100}{1382080} \\ROI=13.2%[/tex]
ROI = 13.2%
Net income Under LIFO= Net income under FIFO-Increased cost of goods sold
= $219017-$36,220= $182797.
Average assets under LIFO= Average assets under FIFO-Average assets that are less under LIFO
= $1413720 - $31,640= $1382080.
Given the following historical demand and forecast, calculate the Tracking Signal in Week 3:Week 1 Demand: 50 Forecast: 49Week 2 Demand: 54 Forecast: 51Week 3 Demand: 58 Forecast: 57
Answer: 3
Explanation:
Week 1:
Demand forecast = 50 - 49 = 1
Week 2:
Demand forecast = 54 - 51 = 3
Week 3:
Demand forecast = 58 - 57 = 1
Then, MAD = (1+3+1) / 3 = 5/3
Then, tracking signal will be:
= (1+3+1)/5/3
= 5 ÷ 5/3
= 5 × 3/5.
= 3
The tracking signal in week 3 is 3
The tracking signal in week 3 in the historical demand and forecast given above is 3
Week 1: Demand forecast = 50 - 49 = 1
Week 2: Demand forecast = 54 - 51 = 3
Week 3: Demand forecast = 58 - 57 = 1
The mean absolute deviation is given below:
= ( 1 + 3 + 1 ) / 3 ÷ 5/3
= ( 1 + 3 + 1 ) / 5/3
= 5 ÷ 5/3
= 5 × 3/5
= 3
So therefore, the tracking signal in week 3 is 3
What is mean absolute deviation?The mean absolute deviation it is the average of values.
It is also the difference between actual values and their average value, and is usually used for the calculation of demand variability.
Learn more about mean deviation:
https://brainly.com/question/16586775
On January 1, 2021, the Merit Group issued to its bank a $38 million, five-year installment note to be paid in five equal payments at the end of each year. Installment payments of $9.417 million annually include interest at the rate of 7.6%.
Required: What would be the amount(s) related to the note that Merit would report in its statement of cash flows for the year ended December 31, 2021?
Answer:
The correct solution is provided below.
Explanation:
Given:
The cash inflow,
= $38
Interest rate,
= 7.6%
or,
= 0.076
Now,
The annually interest will be:
= [tex]38\times 0.076\times 1[/tex]
= [tex]2.89[/tex] ($)
Or,
The installment payment without interest will be:
= [tex]9.417-2.89[/tex]
= [tex]6.53[/tex] ($)
What are the desirable personal characteristics, attributes, lifestyles, skills, and traits of a prospective entrepreneur? Why are these important?
Answer:
The answer is below
Explanation
1. There are various desirable personal characteristics, attributes, lifestyles, skills, and traits of a prospective entrepreneur, some of them include
Competency,
Hardworking,
Risk-taking
Innovation
Perception
2. These characteristics or attributes of an entrepreneur are important because they guide and lead the entrepreneur in making the right decision. It also helps entrepreneurs to solve issues like conflicts, hire and fire where necessary, etc.
If reputable companies such as IBM and Apple have been charged with using bribes to obtain sales, why should you worry about being ethical
Answer:
1. Reputation.
Apple and IBM are big companies which is why their reputation was able to survive the bribery charges. You are most likely not as big as either of these companies so if you are charged with bribery, your reputation might not be able to recover like theirs did.
It is always best to be associated with a good reputation. A good reputation gives you customers who will be loyal because they appreciate the integrity you have. You should not throw this away by bribing people.
2. Consequences.
It is because Apple and IBM are so big that they were able to settle the bribery charge with the Courts. Smaller companies or people that have lesser effects on the financial system might find that their punishments will be more severe to act as a deterrent.
What are the implications of formal and informal communications to managers at the workplace
Answer:
Formal communication is communication through predefined channels set by organizations. Typically conveyed from top leadership to various departments that funnels down to lower level employees. Formal communication is backed by organizational procedure, and it is necessary to fulfill the goals of the organization. Formal communication is created to increase efficiency within an organization and provides a smooth and streamlined method of communication that travels upward and downward. It is used to easily communicate rules, procedures, and company policy to lower level employees. Also, formal communication is used in situations where documentation is needed to prove or disprove a claim or complaint.
Informal communication is more relational than formal. It is not backed by any predetermined channels and can happen anywhere within the organization. The primary goal of informal communication is to preserve and establish relationships with colleagues, superiors, and subordinates. Since it is not defined by any channels, informal communication moves a lot faster; however, it does not leave a paper trail or official documentation. Informal communication is all about relationships, but it is also critical to businesses because it allows employees to give feedback to their superiors. It facilitates the action of upward interface and enables communication to go both ways efficiently.