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chapter 23.doc

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Department
Economics
Course
ECON 1010
Professor
Steven Edwards
Semester
Winter

Description
Economics Canada in the Global Environment 7e ParkinChapter 23 Finance Saving and Investment231 Financial Institutions and Financial Markets1 Capital isA the tools instruments machines buildings and other items that have been produced in the past and that are used today to produce goods and servicesB financial wealthC the sum of investment and government expenditure on goodsD net investmentE gross investmentAnswerATopicFinancial Institutions and Financial MarketsSkillRecognitionAACSBReflective Thinking2 Gross investmentA is the total amount spent on new capitalB includes only replacement investmentC equals wealth minus savingD equals saving minus wealthE is the change in the value of capitalAnswerATopicFinancial Institutions and Financial MarketsSkillRecognitionAACSBReflective Thinking3 The total amount spent on new capital isA wealthB gross investmentC depreciationD net investmentE savingAnswerBTopicFinancial Institutions and Financial MarketsSkillRecognitionAACSBReflective Thinking1 2010 Pearson Education Canada4 In January 2008 Tims Gyms Inc owned machines valued at 1 million During the year the market value of the machines fell by 30 percent During 2008 Tim spent 200000 on new machines During 2008 Tims gross investment wasA 1 millionB 300000C 200000D 900000E 100000AnswerCDiff 1TopicFinancial Institutions and Financial MarketsSkillAnalyticalAACSBAnalytical Skills5 Net investment equalsA capital minus depreciationB gross investment minus depreciationC the total quantity of plant equipment and buildingsD gross investmentdepreciationE wealth minus savingAnswerBTopicFinancial Institutions and Financial MarketsSkillRecognitionAACSBReflective Thinking6 The increase in the value of capital isA gross investmentB depreciationC net investmentD private sector spendingE wealthAnswerCTopicFinancial Institutions and Financial MarketsSkillRecognitionAACSBReflective Thinking7 Capital stock increases when A gross investment exceeds net investmentB net investment exceeds gross investmentC gross investment is negativeD net investment is positiveE net investment is zeroAnswerDTopicFinancial Institutions and Financial MarketsSkillConceptualAACSBReflective Thinking2 2010 Pearson Education Canada8 If the economys capital increases over timeA net investment is positiveB depreciation is less than zeroC depreciation exceeds gross investmentD gross investment equals depreciationE gross investment is zeroAnswerATopicFinancial Institutions and Financial MarketsSkillConceptualAACSBReflective Thinking9 If the economys capital decreases over timeA net investment is positiveB depreciation is less than zeroC depreciation exceeds gross investmentD gross investment equals net investmentE gross investment is zeroAnswerCTopicFinancial Institutions and Financial MarketsSkillConceptualAACSBReflective Thinking10 In January 2008 Tims Gyms Inc owned machines valued at 1 million During the year the market value of the machines fell by 10 percent During 2008 Tim spent 200000 on new machines During 2008 Tims net investment wasA 1 millionB 300000C 200000D 100000E 11 millionAnswerDDiff 1TopicFinancial Institutions and Financial MarketsSkillAnalyticalAACSBAnalytical Skills11 The Acme Stereo Company had a capital stock of 24 million at the beginning of the year At the end of the year the firm had a capital stock of 20 million Thus itsA net investment was some amount but we need more information to determine the amountB net investment was 4 million for the yearC gross investment was zeroD net investment was 4 million for the yearE depreciation was 4 millionAnswerDTopicFinancial Institutions and Financial MarketsSkillAnalyticalAACSBAnalytical Skills3 2010 Pearson Education Canada
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