Quiz 2

A 25 percent decrease in the price of breakfast cereal leads to a 20 percent increase in the quantity of cereal demanded. As a result: A. total revenue will decrease. B. total revenue will increase. C. total revenue will remain constant. D. the elasticity of demand will increase.

A

A bond is a form of ___________ through which a corporation agrees to repay the amount that was borrowed together with ___________ over a period of time in the future. A. financial contract; a rate of interest B. financial instrument; a rate of return C. initial public offering; a rate of interest D. financial investment; guarantees the investment

A

Refer to Figure 5-1. The movement from __________ to __________ is consistent with a decrease in the price of cotton (a substitute). A. Point A; Point H B. Point A; Point D C. Point A; Point F D. Point A; Point B

A

Billy Bob's Barber Shop knows that a 5 percent increase in the price of their haircuts results in a 15 percent decrease in the number of haircuts purchased. What is the elasticity of demand facing Billy Bob's Barber Shop? A. 0.15 B. 3.0 C. 0.10 D. 0.05

B

Demand is said to be _____________ when the quantity demanded is not very responsive to changes in price. A. independent B. inelastic C. unit elastic D. elastic

B

In the investment industry, the principle of _______________ supports investing in a wide range of companies to reduce the level of risk. A. subprime loans B. diversification C. fundamentals trading D. buying low and selling high

B

Refer to Table 5-1. If D2 and S2 represent the demand and supply schedules in a particular market, then the equilibrium price and quantity are __________ and __________, respectively. A. $12; 12 B. $10; 12 C. $8; 15 D. $6; 18

B

Improvements in the productivity of labor will tend to: A. decrease wages. B. decrease the supply of labor. C. increase wages. D. increase the supply of labor.

C

Suppose that Bobo purchases 1 pizza per month when the price is $19 and 3 pizzas per month when the price is $15. What is the price elasticity of Bobo's demand curve? A. 0.235 B. 2.00 C. 4.25 D. 6.33

C

Suppose that Mimi plays golf 5 times per month when the price is $40 and 4 times per month when the price is $50. What is the price elasticity of Mimi's demand curve? A. 0.1 B. 0.8 C. 1.0 D. 10.0

C

The imposition of a price ceiling on a market often results in: A. an increase in investment in the industry. B. a surplus C. a shortage D. a decrease in discrimination on the part of sellers.

C

When consumers and businesses have greater confidence that they will be able to repay in the future, _______________________. A. the quantity demanded of financial capital at any given interest rate will remain unchanged. B. the quantity demanded of financial capital at any given interest rate will shift to the left. C. the quantity demanded of financial capital at any given interest rate will shift to the right. D. the quantity demanded of financial capital at any given interest rate will achieve equilibrium.

C

Whenever there is a shortage at a particular price, the quantity sold at that price will equal: A. the quantity demanded at that price. B. the quantity supplied minus the quantity demanded. C. the quantity supplied at that price. D. (quantity demanded plus quantity supplied)/2.

C

Which of the following will not result in a rightward shift of the market supply curve for labor? A. a decrease in non-wage income B. an increase in the working-age population C. an increase in labor productivity D. an increase in immigration

C

If the demand for software engineers __________ slower than does supply, then wages of software engineers will __________. A. increases; remain constant B. increases, rise C. increases; fall D. decreases; fall

C

A ________ is a direct payment from a firm to its shareholders. A. dividend B. bond C. capital gain D. share

A

If a $1,000 five-year bond that was issued at an interest rate of 7% is offered for sale one year before it matures, and the current interest is 5%, how much should an investor be willing to pay for it? A. $1,019 B. $1,124 C. $1,050 D. $952

A

As the _____________ complement for high-skill labor becomes cheaper, the demand curve for high-skill labor will shift to the right. A. technology B. low-skill labor C. market D. lower wage

A

Investors who believe that the stock is _____________ , relative to the fundamental value of its future expected profits, will sell their shares to those who believe that the stock is __________. A. overvalued; undervalued B. undervalued; overvalued C. momentum trading; less risky D. high risk; disadvantaged

A

When economists are sketching examples of a demand or supply curve that is close to horizontal, they refer to that demand or supply curve as ____________. A. elastic B. inelastic C. having zero elasticity D. price inelasticity

A

A 10 percent decrease in the price of potato chips leads to a 30 percent increase in the quantity of soda demanded. It appears that: A. elasticity of demand for potato chips is 3. B. cross-price elasticity of demand for soda is -3. C. elasticity of demand for potato chips is 3. D. elasticity of demand for soda 3.

B

A ________________ operates directly between a saver with financial assets to invest and an entity who will receive those assets in exchange for paying a ________________ . A. public company; higher rate of interest B. financial intermediary; rate of return C. private company; higher rate of interest D. stock market; rate of return

B

Demand is said to be __________ when the quantity demanded changes at the same proportion as the price. A. elastic B. unit elastic C. inelastic D. independent

B

During the recent U.S. recession, some large automakers required bailouts from the federal government to avoid being forced into bankruptcy by their _________________ . A. shareholders B. bondholders C. Chief Executive Officer D. Board of Directors

B

Each year banks typically offer a wide range of ____________ comprised of ______________________from a variety of different companies. A. index funds; guaranteed equity investments B. mutual funds; a range of stocks or bonds C. index funds; capital gains from trading stocks D. mutual funds; a range of stocks

B

Refer to Figure 5-1. The movement from __________ to __________ is consistent with a successful advertising campaign that claims wool keeps you warm. A. Point A; Point B B. Point A; Point F C. Point A; Point D D. Point A; Point H

B

The evidence on the supply curve of financial capital is controversial, but at least in the short run, the elasticity of savings with respect to the interest rate appears to be __________. A. elastic B. inelastic C. perfectly elastic D. negative

B

Why do business firms need financial capital? A. to lend to other businesses B. to make real physical capital investments C. to provide an alternate source of revenue for households D. to make diversified capital investments

B

A 10 percent increase in income leads to a 15% decrease in the quantity of macaroni and cheese demanded but no change in the price of macaroni and cheese. From this information, we can assume: A. macaroni is a normal good and price elasticity of demand is greater than 1. B. macaroni is an inferior good and price elasticity of supply is equal to zero. C. macaroni is an inferior good and price elasticity of supply is infinite. D. macaroni is an inferior good and price elasticity of demand is less than 1.

C

A _____________ is a firm that has sold its stock by making it available to be bought and sold by outside investors. A. business entity B. private company C. public company D. public proprietorship

C

A checking account typically pays __________________, but gives easy access to your money, either by writing a check or by using ______________. A. no interest; a credit card B. between 3% and 5% interest; a credit card C. little or no interest; a debit card D. between 2% and 4% interest; a debit card

C

A demand or supply curve with ______________ would be horizontal in appearance. A. unitary elasticity B. zero elasticity C. infinite elasticity D. infinite cost elasticity

C

A more efficient means of processing algae to produce an anticancer drug is discovered. As a result, the supply curve for the drug will: A. shift to the right, increasing the price of the drug. B. shift to the left, increasing the price of the drug. C. shift to the right, decreasing the price of the drug D. shift to the left, decreasing the price of the drug.

C

A perfectly elastic supply curve is: A. upward sloping to the right. B. downward sloping to the left. C. horizontal. D. vertical.

C

The labor ____________ curve(s) will shift _______________ if there is an increase in productivity or an increase in the demand for the final product. A. demand; left B. supply; left C. demand; right D. supply; right

C

The longer the time period considered, the more the elasticity of supply tends to: A. decrease B. remain constant C. increase D. converge to zero

C

Treasury bonds are issued by the federal government through the _____________________ . A. Federal Reserve B. Central Bank C. U.S. Department of the Treasury D. U.S. Office of the Comptroller of Currency

C

A 10 percent increase in the price of soda leads to a 20 percent increase in the quantity of iced tea demanded. It appears that: A. elasticity of demand for soda 0.5 and is inelastic. B. elasticity of demand for iced tea is 2 and is elastic. C. cross-price elasticity of demand for soda is -0.5. D. cross-price elasticity of demand for iced tea is -2.

D

A price cut will increase the total revenue a firm receives if the demand for its product is: A. unit inelastic. B. unit elastic. C. inelastic. D. elastic.

D

How would a sustained increase in the market price of its shares directly benefit a publically traded company? A. It will be able to lower the dividend yield on its preferred shares. B. It will be able to borrow larger sums from other companies. C. It would be able to borrow larger sums from banks. D. It could sell any shares it owns in itself at the higher valuation.

D

If the supply curve for housing is perfectly inelastic, then a reduction in demand will cause the equilibrium price to: A. rise and the equilibrium quantity to fall. B. rise and the equilibrium quantity to stay the same. C. fall and the equilibrium quantity to fall. D. fall and the equilibrium quantity to stay the same.

D

Demand is said to be ___________ when the quantity demanded is very responsive to changes in price. A. elastic B. unit elastic C. inelastic D. independent

A

If cola and iced tea are good substitutes for consumers, then it is likely that: A. their cross price elasticities are greater than zero. B. their price elasticities of demand are less than one. C. their income elasticities are less than zero. D. their price elasticities of supply are less than one

A

If the supply curve for a product is horizontal, then the elasticity of supply is: A. equal to infinity. B. greater than 1 but less than infinity. C. equal to 1. D. equal to zero.

A

If the supply curve for a product is vertical, then the elasticity of supply is: A. equal to zero. B. equal to 1. C. greater than 1 but less than infinity. D. equal to infinity.

A

If the supply curve for aspirin is perfectly elastic, then a reduction in demand will cause the equilibrium price to: A. stay the same and the equilibrium quantity to fall. B. fall and the equilibrium quantity to fall. C. rise and the equilibrium quantity to stay the same. D. rise and the equilibrium quantity to fall.

A

In 2004, Ted and Diane paid 20% down and took out a five-year mortgage for the balance of the $265,000 price of a home. After deducting interest, their monthly payments toward the principle balance owed on the mortgage was reduced by $2,000.00 each year. If they were to sell their home in 2009, it would sell for $215,000. What is the equity in their home? A. $13,000 B. $50,000 C. $163,000 D. $202,000

A

In 2010, Americans had about _____________ outstanding in credit card debts not paid on time. A. $900 billion B. $90 billion C. $900 million D. $90 million

A

Last year Stealth Bank received $60 million in interest payments from borrowers. $20 million in loans were written off as uncollectible. It paid out $22 million in interest to its depositors and collected $35 million for various fees it charged. Administration costs were $15 million and taxes were $3 million. What was the value of Stealth Bank's accounting profits? A. $35 million B. $15 million C. $50 million D. $57 million

A

On April 1, 2009, in the middle of a recession, the government of the province of Ontario, Canada increased the provincial minimum wage from $8.75 to $9.50. What will the likely effect of this policy be? A. Both the leftward shift in the labor demand curve and the higher minimum wage will lead to an increase in the unemployment rate. B. Low income workers will be better able to survive the recession at the new, higher wage rate. C. More people will be hired at the higher wage rate offsetting the effects of the recession. D. The higher wage will increase the supply of labor offsetting the effects of the recession.

A

Refer to Figure 7-1. Graph B represents a demand curve that is relatively __________. Total revenue __________ as the price decreases from $10 to $5. A. inelastic; decreases B. elastic; decreases C. elastic; increases D. inelastic; increases

A

Refer to Table 5-1. If D2 and S1 represent the demand and supply schedules in a particular market, then the equilibrium price and quantity are __________ and __________, respectively. A. $8; 15 B. $10; 17 C. $12; 9 D. $12; 10

A

Since Baltimore passed the first _______________ in 1994, several dozen cities enacted similar laws in the late 1990s and into the 2000s. A. living wage law B. price ceiling C. price floor D. minimum wage

A

Since stock prices will shift in response to unpredictable future news, these prices will tend to follow what mathematicians call _________________. A. a random walk with a trend B. momentum trading C. long-term fundamental value D. unpredictable changes in expectations

A

Stock markets often experience a frenzy of buying or selling when investors are ___________________ by following the current trend in a very actively traded company. A. momentum trading B. trading on fundamentals C. diversifying their portfolios D. decreasing investment yields

A

The "law of supply" functions in labor markets; that is, a higher __________ for labor leads to a higher quantity of labor supplied. A. price B. demand C. supply D. quantity

A

The price elasticity of demand for tickets to local baseball games is estimated to be equal to 0.89. In order to boost ticket revenues, an economist would advise: A. increasing the price of game tickets because demand is inelastic. B. not changing the price of game tickets because demand is unit elastic. C. increasing the price of game tickets because demand is elastic. D. decreasing the price of game tickets because demand is elastic.

A

The stock of a business firm is divided into _________________ . A. individual shares B. voting shares C. non-voting shares D. individual stocks

A

Trevor and Lynda bought a home in 20013 for $185,000 with a 20% down payment. Their mortgage payments were only applied to interest on the mortgage balance. If they have to sell their home in 2016 for $148,000, what would be the value of their equity? A. 0 B. $37,000 C. $11,100 D. $29,600

A

When economists are sketching examples of demand and supply, it is common to sketch a demand or supply curve that is close to vertical, and then to refer to that curve as _________. A. inelastic B. elastic C. unitary elasticity D. income elasticity

A

Which of the following belongs in the range of financial investment options available to U.S. households? A. tangible assets B. venture capital funds C. direct loans to established businesses D. direct loans to start-up business firms

A

Which of the following is a feature that typically distinguishes a savings account from a checking account? A. pays interest B. less liquidity C. automatic teller machine access is available for checking accounts D. withdrawals require a trip to the bank by the account holder

A

Which of the following is considered to be a method that firms can use to raise the financial capital that they need to pay for modernizing their production plants? A. reinvesting profits B. investments by late stage investors C. borrowing large sums directly from households D. increasing dividends to attract new investors

A

Which of the following would legally qualify you to be registered as a shareholder of Microsoft Corporation? A. buying the stock on the New York Stock Exchange B. investing in bonds issued by the Microsoft C. ownership of debt issued by the firm D. a Microsoft employee given options to buy the firm's shares

A

XYZ Corporation plans to open a manufacturing plant in China, but the company has not retained any of its yearly profits for this purpose. How will XYZ Corporation likely raise the money to finance its offshore expansion? A. sale of bonds to institutional investors B. sale of bonds to municipal households C. by issuing Treasury bills D. by encouraging momentum selling of its stock

A

__________ is the change in what is on the horizontal axis (quantity) divided by the change in what is on the vertical axis (price). A. Elasticity B. Demand C. Supply D. Revenue

A

A financial gain earned by purchasing stock in a publically traded company and subsequently selling the investment at higher price is commonly referred to as a _____________ . A. dividend B. capital gain C. interest payment D. rate of return

B

A mutual fund that seeks to imitate the overall behaviour of the stock market is called ____________________ . A. a long-run collectibles fund B. an index fund C. a mortgage-backed securities fund D. an indexed retirement age fund

B

Alysa and Todd purchased a home in 1999 for $80,000 with no down payment. In 2004, they were able to refinance their mortgage on the home for $140,000. They reinvested $75,000 into the home, adding a new addition and making upgrades. In 2006, the couple sold the home for $320,000. What was the value of Alysa and Todd's equity in 2006? A. $250,000 B. $180,000 C. $240,000 D. $60,000

B

Are markets always in equilibrium? A. No, they never "settle down" into a stable price and quantity. B. No, but if there is no outside interference, they tend to move toward equilibrium. C. Yes, because very few things tend to alter supply and demand. D. Yes, they are always at the equilibrium point, or very close to it.

B

Holly and Josh paid 10% down for their $245,000 home in 2004. If they sell their house for $255,000 in 2010, what will the value of their equity be? A. $5,000 B. $29,500 C. $24,500 D. $30,000

B

How do apple growers react to the news of medical research findings that suggest that eating apples leads to greater health benefits than were previously known? A. They increase the supply of apples. B. They increase the quantity of apples supplied. C. They decrease the supply of apples. D. They decrease the quantity of apples supplied.

B

I'MAStart-UP Corp. issued and sold 2,500,000 common voting shares during its first public stock sale. What is the minimum number of shares needed to be able to elect a new director to the Board? A. 1.275 million B. 1.25 million C. 1.225 million D. 2.5 million

B

If the demand curve for a life-saving medicine is perfectly inelastic, then a reduction in supply will cause the equilibrium price to: A. rise and the equilibrium quantity to fall. B. rise and the equilibrium quantity to stay the same. C. rise and the equilibrium quantity to rise. D. stay the same and the equilibrium quantity to fall.

B

If the demand curve is perfectly elastic, then an increase in supply will: A. decrease the price but result in no change in the quantity exchanged. B. increase the quantity exchanged but result in no change in the price. C. increase the price but result in no change in the quantity exchanged. D. increase both the price and the quantity exchanged

B

In choosing between the range of alternative investments typically available to U.S. households, which of the following will play a role in influencing their selection of a particular investment type? A. the expected rate of return, risk, and liquidity of each kind of investment B. the interest rate and the expected rate of return C. whether or not the majority of households are early stage investors D. the form of dividends, angel investors, future expectations

B

Many cooks view butter and margarine to be substitutes. If the price of butter rises, then in the market for margarine: A. the equilibrium price will fall and the equilibrium quantity will fall. B. both the equilibrium price and quantity will rise. C. the equilibrium price will rise and the equilibrium quantity will decrease. D. the equilibrium price will rise, while the change to equilibrium quantity is indeterminate

B

Many economists believe that the trend toward greater wage inequality across the U.S. economy was primarily caused by _____________. A. the recession B. new technologies C. the rise of global markets D. inflation

B

Many states do have ____________, which impose an upper limit on the interest rate that lenders can charge. A. price ceiling laws B. usury laws C. price floor laws D. minimum interest rate

B

Michael purchased 5,000 shares of IMAGoldMiner Inc. in May for $0.55 each. He purchased 5,000 more at $0.75 cents in June and another 5,000 for $1.02 in July. In October, IMAGoldMiner began production at its new gold mine and Michael was able to sell 5,000 shares at $2.05, another 5,000 at $3.25 and the remaining 5000 at $4.50. In this instance, Michael A. is trading on fundamentals. B. profited by momentum trading. C. is diversifying his investments. D. traded based on future expected profits.

B

Refer to Table 5-1. If D1 and S1 represent the demand and supply schedules in a particular market, then the equilibrium price and quantity are __________ and __________, respectively. A. $4; 11 B. $4; 16 C. $6; 13 D. $8; 15

B

Steel mill wage costs increase by 18 percent over a year. What is the likely economic effect on the market for steel? A. There is an increase in the cost of producing steel, which shifts the supply curve of steel to the right, thereby increasing the price of steel. B. There is an increase in the cost of producing steel, which shifts the supply curve of steel to the left, thereby increasing the price of steel. C. There is a decrease in the cost of producing steel, which shifts the supply curve of steel to the left, thereby increasing the price of steel. D. The increase in wage costs will shift the demand curve for steel to the left, increasing the cost of steel.

B

The City of Washington needs to upgrade its levies and its water drainage systems. The cost will exceed the amount of tax revenue the City expects to receive over the next 10 years. How will the City be able to raise the funds needed to finance this upgrade? A. issue Treasury Bonds B. issue municipal bonds C. borrow from Banks D. borrow from large corporations

B

The supply curve of textbooks (which are produced using paper made from trees) will shift to the left in response to: A. a decline in college tuition. B. a sharp increase in the demand for and construction of wood-frame homes. C. an increase in the supply of lumberjacks. D. an end to government regulations that limit timber harvesting in national forests.

B

The term __________ refers to the __________ that a bond is expected to pay at the time of purchase. A. rate of interest; yield rate B. bond yield; rate of return C. rate of interest; rate of return D. yield rate; bond rate

B

When demand is inelastic: A. price elasticity of demand is greater than 1. B. consumers are not very responsive to changes in price. C. the percentage change in quantity demanded resulting from a price change is greater than the percentage change in price. D. demand curves appear to be fairly flat.

B

Which of the following is not an ironclad rule in the financial markets? A. borrowing from a bank works better for large, well-known corporations B. banks fund small business loans and large firms issue bonds to raise money C. a bank can monitor a large established firm's better than a new small business D. relatively large and well-known firms typically never borrow from banks

B

Why would a large publically traded corporation likely prefer issuing bonds as a way to raise new money as opposed to issuing more shares? A. the rate of return the corporation promised will be more difficult to deliver B. more shares will dilute the existing value of the stock, causing its market price to fall C. the market will view the new share issue as a sign the company is in financial difficulty D. issuing bonds is a more secure method for corporations to raise needed money

B

A straightforward example of a _______________, often used for simplicity, is the interest rate. A. price ceiling B. financial investment C. rate of return D. price floor

C

As the __________ substitute for low-skill labor becomes available, the demand curve for low-skill labor will shift to the left. A. high-skill labor B. lower wage C. technology D. market

C

If labor demand is downward sloping and labor supply is upward sloping, then when labor demand rises faster than labor supply, it is expected that real wages __________. A. will stay the same B. will decrease C. will increase D. may increase, decrease or stay the same depending on the relative slopes

C

In contrast to goods and services markets, _____________ are rare in labor markets, because rules that prevent people from earning income are not politically popular. A. minimum wages B. price floors C. price ceilings D. living wage laws

C

In order to be classified as a _______________, a firm must be owned by the people who run it on a day-to-day basis. A. business firm B. public company C. private company D. corporation

C

In the United States, a typical credit card interest rate ranges from ______________ per year. A. .2% to .8% B. 2% to 8% C. 12% to 18% D. 22% to 28%

C

Refer to Figure 7-1. With reference to Graph A, at a price of $10, total revenue equals: A. $1,000. B. $500. C. $400. D. $200.

C

Refer to Figure 7-1. With reference to Graph A, at a price of $5, total revenue equals: A. $200. B. $400. C. $500. D. $1,000.

C

Refer to Table 5-1. Suppose that D2 and S1 are the prevailing demand and supply curves for a product. If the demand schedule changes from D2 to D1, then: A. equilibrium price increases from $6 to $8. B. equilibrium quantity increases from 13 to 18 C. equilibrium quantity decreases from 15 to 13. D. equilibrium price decreases from $6 to $4.

C

Riley and Sue paid 30% down for a house valued at $135,000 in 2013. If they sell the house in 2017 for $140,000, what will the value of their equity be? A. $40,500 B. $35,500 C. $45,500 D. $5,000

C

Small companies typically prefer____________ to borrowing from a bank because it is a source of funding where the company is not obligated to _____________________ . A. issuing bonds; to proceed with an IPO B. an IPO; issue bonds C. an IPO; make interest payments D. issuing bonds; make interest payments

C

Taxes on goods with __________ demand curves will tend to raise more tax revenue for the government than taxes on goods with __________ demand curves. A. elastic; unit elastic B. elastic; inelastic C. inelastic; elastic D. unit elastic; inelastic

C

The _________ of an investment is determined by how easy it is to sell an asset at any given time. A. profitability B. expected profitability C. liquidity D. sustainable outcome

C

The demand for a product is unit elastic. At a price of $20, 10 units of a product are sold. If the price is increased to $40, then one would expect sales to equal: A. 20 units. B. 10 units. C. 5 units. D. 0 units.

C

The elasticity of demand is defined as the percentage change in quantity demanded divided by the percentage change in __________. A. quantity supplied B. the slope of the demand curve C. price D. the slope in the supply curve

C

The old proverb: "Don't put all your eggs in one basket" is synonymous with which of the following? A. an average rate of return B. predicting value of tangible assets C. diversified investments D. a flexible rate of return

C

The price elasticity of demand measures the: A. responsiveness of quantity demanded to a change in quantity supplied. B. responsiveness of price to a change in quantity demanded. C. responsiveness of quantity demanded to a change in price. D. responsiveness of quantity demanded to a change in income.

C

Venture capitalists typically create wealth by investing in a start up firm when its stock is less valuable, and then subsequently selling that stock for a higher price during the firm's _____________________ , A. initial bond issue B. initial liquidity offering C. initial public offering D. initial private offering

C

What do stocks, bonds, securitized mortgage assets and other financial investments all have in common? A. they are all forms of investments bought by demanders of capital B. they all guarantee rates of return C. they can only be purchased in financial markets D. their values are tracked by the Dow Jones Industrial Average

C

Which of the following is not a typical question that must be answered with regard to a private company that is owned by a large number of shareholders? A. How and when does the company get money from the sale of its stock? B. What rate of return does the company promise to pay when it sells stock? C. What is the dividend yield on preferred shares of companies that hold this stock? D. Who makes decisions in a company owned by a large number of shareholders?

C

Which of the following will not result in a leftward shift of the market demand curve for labor? A. a decrease in labor productivity B. a decrease in demand for the firm's product C. an increase in the wage rate D. a decrease in the firm's product price

C

Which of the following would be the least likely method for firms to raise the financial capital they need to pay for new equipment? A. issuing bonds B. reinvesting profits C. borrowing from households D. selling stock

C

Youth smoking seems to be more __________ than adult smoking—that is, the quantity of youth smoking will fall by a greater percentage than the quantity of adult smoking in response to a given percentage increase in price. A. unitary elastic B. inelastic C. elastic D. cross-price elastic

C

_______________ of well-to-do individuals often put their own money into small new companies at an early stage of development, in exchange for owning some portion of the firm. A. A venture fund B. A collateral group C. A network D. Partnerships

C

________________ are a form of _______ bonds that offer relatively high interest rates to compensate for their relatively high chance of default. A. Bonds; government B. High-yield bonds; municipal C. Junk bonds; corporate D. Certificates of deposit; bank

C

_______________________ find ways to take the inflow of funds from many separate _________ of financial capital and transform it into the funds desired by _______________ of financial capital. A. Financial intermediaries; high risks; suppliers B. Governments; suppliers; demanders C. Financial capital markets; suppliers; demanders D. Venture capital funds; the risks; demanders

C

Bill and Cathy built a new home in 1985 at a cost of $90,000.00. They paid 20% of the cost to build the home themselves and financed the remainder by way of a mortgage. They paid the mortgage off in 15 years. They used $35,000 from Bill's inheritance to upgrade the home in 2004. When they sold the home for $335,000.00 in 2006, what was the value of their equity? A. $35,000 B. $245,000 C. $210,000 D. $335,000

D

During the U.S. stock market collapse of 2007, Paula's financial advisor recommended that she invest in a number of pharmaceutical companies while their stock values were down considerably. He expected these companies to maintain high dividend yields, making them attractive to investors. If Paula follows her financial advisor's recommendations, she is A. likely investing in an index fund. B. diversifying her investment portfolio. C. following momentum trading advice. D. following fundamental trading advice.

D

How has the widespread adoption of debit cards as the preferred method of payment for consumer purchases likely affected bank administration costs? A. the cost of bank administration is unaffected by widespread use of debit cards B. costs increased due to high cost of developing and maintaining debit card technology C. administration costs increased because the cost of electricity means high-cost for electronic transactions D. costs are reduced because the cost of purchase is immediately debited from purchaser's checking account

D

In January 2001, Bianca invested $5,000 for three years at 4.20%; in January 2010, she invested $5,000 for two years at 3.81%; and, in January 2011, she invested $5,000 for one year at 3.55%. Bianca's savings account in each year paid 2.8%, 1.59%, and 1.13% respectively. In January, 2014, if Bianca reinvests her initial capital of $15,000., plus the interest it has earned for another two-year term, her bank will likely offer to pay a higher rate of return A. to compensate for junk bonds relatively high chance of default. B. as compensation for the relatively high chance of bank failures. C. to match the rate of return that its bonds are expected to pay at the time of purchase. D. on the CD in exchange for her promise to leave the funds invested for the set-term.

D

In the United States, venture capital firms invested __________ in 2009. A. two-thirds less B. in certificates of deposit C. $3 billion in NINJA loans D. $21 billion

D

Jackie has invested $25,000 for a 10 period at a guaranteed interest rate of 9%. If Jackie decides to sell her investment before the 10 year period has ended, she may receive less if the interest rates at that time are lower. Jackie is a A. shareholder B. owner of a certificate of deposit C. angel investor D. bondholder

D

Last year Stealth Bank received $100 million in interest payments from borrowers. $25 million in loans were written off as uncollectible. It paid out $30 million in interest to its depositors and collected $25 million for various fees it charged. Administration costs were $22 million and taxes were $3 million. What was the value of Stealth Bank's accounting profits? A. $135 million B. $80 million C. $75 million D. $45 million

D

Levi and Beverly paid 20% down on a house valued at $165,000 in 1994. They upgraded the house entirely in 2003, when they refinanced their mortgage for $165,000. If they sell the house in 2018 for $190,000, what would be the value of their equity in the home? A. $68,000 B. $58,000 C. $33,000 D. $25,000

D

Other things being equal, a __________ supply of workers tends to __________ real wages. A. smaller; not change B. larger; increase C. smaller; decrease D. larger; decrease

D

Price elasticity of demand is defined as: A. the slope of the demand curve. B. the slope of the demand curve divided by the price. C. the percentage change in price divided by the percentage change in quantity demanded. D. the percentage change in quantity demanded divided by the percentage change in price.

D

Refer to Figure 7-1. With reference to Graph B, at a price of $5, total revenue equals: A. $150. B. $250. C. $300. D. $200

D

Refer to Table 5-1. Suppose that D1 and S1 are the prevailing demand and supply curves for a product. If the demand schedule changes from D1 to D2, then: A. equilibrium price decreases from $6 to $4. B. equilibrium quantity decreases from 15 to 13. C. equilibrium quantity increases from 13 to 18. D. equilibrium price increases from $6 to $8

D

Refer to Table 5-1. Suppose that D1 and S2 are the demand and supply schedules for Product A. If the government imposes a price ceiling of $4, then: A. a 5 unit shortage will result. B. a 5 unit surplus will result. C. a 10 unit surplus will result. D. a 10 unit shortage will result.

D

Supply is said to be ____________ when the quantity supplied is very responsive to changes in price. A. independent B. inelastic C. unit elastic D. elastic

D

The United States has approximately ___________ credit card holders. A. 1.8 million B. 18 million C. 80 million D. 180 million

D

The bottom line on investing in individual stocks is: _______________ on average over lengthy periods of time; ________________, especially in the short run; _______________, since stock does need to be sold to turn gains into spendable money. A. low rate of return; high risk; low liquidity B. moderate rate of return; low risk; high liquidity C. high rate of return; moderate risk; low liquidity D. high rate of return; high risk; moderate liquidity

D

The elasticity of supply is defined as the ________ change in quantity supplied divided by the _______ change in price. A. total; percentage B. percentage; marginal C. marginal; percentage D. percentage; percentage

D

The ownership in a company is represented by ________________ and those who are legally recognized as having ownership in a company are called _____________. A. ownership of the shares with voting rights; shareholders B. shares with voting rights; stockholders C. ownership of stock; stockholders D. ownership of shares in the company's stock; shareholders

D

Whenever there is a surplus at a particular price, the quantity sold at that price will equal: A. (quantity demanded plus quantity supplied)/2. B. the quantity supplied at that price. C. the quantity supplied minus the quantity demanded. D. the quantity demanded at that price.

D

Which of the following results in a rightward shift of the market demand curve for labor? A. a decrease in labor productivity B. a decrease in the firm's product price C. an increase in the wage rate D. an increase in demand for the firm's product

D

Which of the following will provide an investor with a legally valid claim of partial ownership of a firm? A. entitlement to bond interest B. ownership of a treasury bond C. entitlement to dividends D. ownership of stock

D