Which of the following statements is correct? A) The markup pricing rule that is derived from the rule for profit maximization can be used as a substitute for determining the profit-maximizing level of output by equating marginal revenue and marginal cost. B) It is reasonable to assume that a profit-maximizing firm will never operate in […]
Exports are: A) positively related to the level of foreign income and negatively related to the exchange rate. B) positively related to the level of foreign income and positively related to the exchange rate. C) negatively related to the level of foreign income and negatively related to the exchange rate. D) negatively related to the […]
Capital inflows occur if: A) domestic interest rates are higher than foreign interest rates. B) domestic interest rates are lower than foreign interest rates. C) domestic and foreign interest rates are the same. D) none of the above. ANSWER A
Increased profits provide more internal funds to finance capital investments and a major factor in lenders’ and investors’ decisions to provide external funds to the firm. Indicate whether the statement is true or false ANSWER TRUE
When I purchase a corporate ________, I am lending the corporation funds for a specific time. When I purchase a corporation’s ________, I become an owner in the corporation. A) bond; stock B) stock; bond C) stock; debt security D) bond; debt security ANSWER A
On ________, October 19, 1987, the stock market experienced its worst one-day drop in its entire history with the DJIA falling by 22%. A) “Terrible Tuesday” B) “Woeful Wednesday” C) “Freaky Friday” D) “Black Monday” ANSWER D
In order to import German goods into the United States, U.S. importers must buy those goods with German currency, i.e., Euros. Assume, all else constant, there is a decrease in the price of U.S.-made cars compared to the price of German cars. Based on this information, we can conclude, with certainty, that in the market […]
A closer relationship exists between GDP and nonresidential investment than between business profits and investment spending. Indicate whether the statement is true or false ANSWER TRUE
At the profit-maximizing level of output, the amount by which the firm can mark up price is: A) inversely related to the price elasticity of demand for item in question. B) directly related to the price elasticity of demand for item in question. C) totally unrelated to the price elasticity of demand for item in […]
File-sharing programs such as Napster, Kazaa, and iMesh make it possible for individuals to exchange music files over the Internet. All else constant, which of the following statements best describes how the development of these programs has affected the retail market for new music CDs? A) Demand for CDs has decreased, causing equilibrium price and […]
