Economic profit is equal to the difference between: A) total revenue and the full opportunity cost of all the resources used in production. B) total revenue and implicit costs. C) accounting profit and explicit costs. D) implicit and explicit costs. ANSWER A
Date: September 10th, 2020
Distinguish between direct finance and indirect finance. Which of these is the most important source of funds for corporations in the United States? What will be an ideal response? ANSWER With direct finance, funds flow directly from the lender/saver to the borrower. With indirect finance, funds flow from the lender/saver to a financial intermediary […]
Date: September 10th, 2020
________ may antagonize customers and thus can be a very costly way of acquiring funds to meet an unexpected deposit outflow. A) Selling securities B) Selling loans C) Calling in loans D) Selling negotiable CDs ANSWER C
Date: September 10th, 2020
Which of the following is the best example of “depreciation”? A) An individual worker becoming tired at the end of an eight-hour work day. B) The notion that individuals obtain less utility from paying taxes than giving to charities. C) A truck used by a pizzeria to make deliveries is worth less at the end […]
Date: September 10th, 2020
In 2002 – 2003, some McDonalds’ franchise owners reported that profits were declining from selling the discounted items from the Dollar Menu. This suggests that: A) those items are price elastic. B) those items are price inelastic. C) those items are price unitary elastic. D) none of the above. ANSWER B
Date: September 10th, 2020
Open market operations are an appropriate tool for day-to-day changes in monetary policy. Indicate whether the statement is true or false ANSWER TRUE
Date: September 10th, 2020
Small-denomination time deposits refer to certificates of deposit with a denomination of less than A) $1,000. B) $10,000. C) $100,000. D) $1,000,000. ANSWER C
Date: September 10th, 2020
If a good is price inelastic, a decrease in price will: A) decrease total revenue. B) increase total revenue. C) not affect income. D) none of the above. ANSWER A
Date: September 10th, 2020
If, after a deposit outflow, a bank needs an additional $3 million to meet its reserve requirements, the bank can A) reduce deposits by $3 million. B) increase loans by $3 million. C) sell $3 million of securities. D) repay its discount loans from the Fed. ANSWER C
Date: September 10th, 2020
With direct finance, funds are channeled through the financial market from the ________ directly to the ________. A) savers, spenders B) spenders, investors C) borrowers, savers D) investors, savers ANSWER A
Date: September 10th, 2020
