Suppose a sole proprietorship is earning total revenues of $100,000 and is incurring explicit costs of $75,000. If the owner could work for another company for $30,000 a year, we would conclude that: A) the firm is incurring an economic loss. B) implicit costs are $25,000. C) the total economic costs are $100,000. D) the […]
Holding the real money supply constant, an increase in real money demand will reduce interest rates. Indicate whether the statement is true or false ANSWER FALSE
Which of the following statements about the characteristics of debt and equity is FALSE? A) They can both be long-term financial instruments. B) They can both be short-term financial instruments. C) They both involve a claim on the issuer’s income. D) They both enable a corporation to raise funds. ANSWER B
Personal income less personal taxes is called: A) personal disposable income. B) national income. C) compensation of employees. D) savings. ANSWER A
Real demand for money is positively related to the level of real income in the economy. Indicate whether the statement is true or false ANSWER TRUE
As McDonald’s expanded globally, it was able to achieve: A) economies of scope. B) economies of scale. C) diseconomies of scale. D) none of the above. ANSWER B
From 2004 to 2007, the growth rates of M1 and M2 A) were identical. B) both increased but at different rates. C) both decreased but at different rates. D) moved in opposite directions. ANSWER D
The concept of ________ is based on the common-sense notion that a dollar paid to you in the future is less valuable to you than a dollar today. A) present value B) future value C) interest D) deflation ANSWER A
To counter parents’ concerns about fast foods and childhood obesity, McDonalds considered: A) a variety of menu items such as milk shakes and candy. B) a variety of menu items such as apple slices, fruit juices, peanut butter and jelly sandwiches, and carrot sticks. C) not changing the menu. D) all of the above. […]
Assume the price elasticity of supply for grade wheat has been estimated to be +0.82. This means that when the price of wheat increases by 10 percent, the quantity of wheat supplied to the market increases by 82 percent. Indicate whether the statement is true or false ANSWER FALSE
