13. Fred is considering expanding his dress shop. If interest rates rise he is
a.
less likely to expand. This illustrates why the supply of loanable funds slopes downward.
b.
more likely to expand. This illustrates why the supply of loanable funds slopes upward.
c.
less likely to expand. This illustrates why the demand for loanable funds slopes downward.
d.
more likely to expand. This illustrates why the demand for loanable funds slopes upward.
14. You are thinking of buying a bond from Knight Corporation. You know that this bond is long term and you know that Knight's business ventures are risky and uncertain. You then consider another bond with a shorter term to maturity issued by a company with good prospects and an established reputation. Which of the following is correct?
a.
The longer-term would tend to make the interest rate on the bond issued by Knight higher, while the higher risk would tend to make the interest rate lower.
b.
The longer-term would tend to make the interest rate on the bond issued by Knight lower, while the higher risk would tend to make the interest rate higher.
c.
Both the long-term and the higher risk would tend to make the interest rate lower on the bond issued by Knight.
d.
Both the long-term and the higher risk would tend to make the interest rate higher on the bond issued by Knight.
15. In an imaginary economy, consumers buy only sandwiches and magazines. The fixed basket consists of 20 sandwiches and 30 magazines. In 2006, a sandwich cost $4 and a magazine cost $2. In 2007, a sandwich cost $5. The base year is 2006. If the inflation rate in 2007 was 16 percent, then how much did a magazine cost in 2007?
a.
$1.87
b.
$2.08
c.
$2.32
d.
$3.00
16. An increase in the price of Irish whiskey regularly purchased by Americans will be reflected in
a.
both the U.S. GDP deflator and the U.S. CPI.
b.
neither the U.S. GDP deflator nor the U.S. CPI.
c.
the U.S. GDP deflator, but not the U.S. CPI.
d.
the U.S. CPI, but not the U.S. GDP deflator.
17. Which of the following would be human capital and physical capital, respectively?
a.
for an accounting firm, the accountants' knowledge of tax laws and the number of hours worked by those accountants
b.
for a grocery store, grocery carts, and cash registers.
c.
for a restaurant, the chefs' knowledge about preparing food and equipment in the kitchen
d.
for a library, the building, and the reference librarians' knowledge of the Internet
18. If a production function has increasing returns to scale, the output can be more than doubled if
a.
labor alone doubles.
b.
all inputs but labor double.
c.
all of the inputs double.
d.
None of the above is correct.
19.Suppose that an American company opens and operates a restaurant in Ireland. This is an example of
a. foreign direct investment. American saving is used to finance Irish investment.
b. foreign direct investment. American saving is used to finance American investment.
c. foreign portfolio investment. American saving is used to finance Irish investment.
d. foreign portfolio investment. American saving is used to finance American investment.
13. Fred is considering expanding his dress shop. If interest rates rise he is
|
a. |
less likely to expand. This illustrates why the supply of loanable funds slopes downward. |
|
b. |
more likely to expand. This illustrates why the supply of loanable funds slopes upward. |
|
c. |
less likely to expand. This illustrates why the demand for loanable funds slopes downward. |
|
d. |
more likely to expand. This illustrates why the demand for loanable funds slopes upward. |
14. You are thinking of buying a bond from Knight Corporation. You know that this bond is long term and you know that Knight's business ventures are risky and uncertain. You then consider another bond with a shorter term to maturity issued by a company with good prospects and an established reputation. Which of the following is correct?
|
a. |
The longer-term would tend to make the interest rate on the bond issued by Knight higher, while the higher risk would tend to make the interest rate lower. |
|
b. |
The longer-term would tend to make the interest rate on the bond issued by Knight lower, while the higher risk would tend to make the interest rate higher. |
|
c. |
Both the long-term and the higher risk would tend to make the interest rate lower on the bond issued by Knight. |
|
d. |
Both the long-term and the higher risk would tend to make the interest rate higher on the bond issued by Knight. |
15. In an imaginary economy, consumers buy only sandwiches and magazines. The fixed basket consists of 20 sandwiches and 30 magazines. In 2006, a sandwich cost $4 and a magazine cost $2. In 2007, a sandwich cost $5. The base year is 2006. If the inflation rate in 2007 was 16 percent, then how much did a magazine cost in 2007?
|
a. |
$1.87 |
|
b. |
$2.08 |
|
c. |
$2.32 |
|
d. |
$3.00 |
16. An increase in the price of Irish whiskey regularly purchased by Americans will be reflected in
|
a. |
both the U.S. GDP deflator and the U.S. CPI. |
|
b. |
neither the U.S. GDP deflator nor the U.S. CPI. |
|
c. |
the U.S. GDP deflator, but not the U.S. CPI. |
|
d. |
the U.S. CPI, but not the U.S. GDP deflator. |
17. Which of the following would be human capital and physical capital, respectively?
|
a. |
for an accounting firm, the accountants' knowledge of tax laws and the number of hours worked by those accountants |
|
b. |
for a grocery store, grocery carts, and cash registers. |
|
c. |
for a restaurant, the chefs' knowledge about preparing food and equipment in the kitchen |
|
d. |
for a library, the building, and the reference librarians' knowledge of the Internet |
18. If a production function has increasing returns to scale, the output can be more than doubled if
|
a. |
labor alone doubles. |
|
b. |
all inputs but labor double. |
|
c. |
all of the inputs double. |
|
d. |
None of the above is correct. |
19.Suppose that an American company opens and operates a restaurant in Ireland. This is an example of
a. foreign direct investment. American saving is used to finance Irish investment.
b. foreign direct investment. American saving is used to finance American investment.
c. foreign portfolio investment. American saving is used to finance Irish investment.
d. foreign portfolio investment. American saving is used to finance American investment.
