Entrepreneurial Finance Chapter 1

Which of the following is an example of financial capital?

A share of stock issued by IBM.

Refer to Table 1-1. At a market price of $1,600, there will be

A shortage of 2,000 computers.

Which of the following can be used to finance a small business?

All of the above.

An athlete making $7,000,000 pays 6.2% on the full $7,000,000 in Social Security taxes.

False.

The mental and physical talents of human beings are entrepreneurial resources.

False.

In order to increase the money supply, the Fed will sell government securities.

False. The Fed buys securities with cash.

First National Bank is the central bank of the United States.

False. The Federal Reserve is the central bank of the US.

There are several markets in the United States. The market where stocks, bonds, and money are exchanged is the

Financial Market.

When a college hires a professor, they are employing a(n)

Human Resource

An organized effort where goods and services are freely exchanged is known as a

Market.

Changing the supply of money to expand or contract economic activity is

Monetary Policy

A tree in a forest is an example of a(n)

Natural resource.

Jane just graduated from college with a Bachelor of Science Degree in Computer Information Systems. She received the following job offers. Jones and Associates at a starting salary of $30,000. Smith Brothers at a starting salary of $33,000. Joan Cannery Consulting at a starting salary of $35,000. Consultants-R-We at a starting salary of $32,000. Andrews Computer Vendors at a starting salary of $36,000. If she takes the job with Andrews Computer Vendors, her opportunity cost is

Nothing because she took the highest salary.

The highest value surrendered when a decision is made is

Opportunity cost.

John Gates made $25,000 last year and paid $1,500 in taxes on this income. Jane Smith made $30,000 last year and paid $3,000 in taxes on this income. What type of tax is the government using?

Progressive taxes.

Which of the following is an example of a regressive tax?

Sales tax.

There are several markets in the United States. The market where property is exchanged is the

The real estate market.

Finance is any transaction where money is exchanged for money or a money-like instrument.

True.

The United States operates with a free enterprise system.

True.

Wheat, soybeans, oil, and gold are commodities.

True.

The Medicare tax of 1.45% is a proportionate tax for all.

True. The Medicare tax is a proportional (flat) tax. Remember that the Medicare tax is 1.45% of income. There is no upper limit. Therefore, the Medicare tax takes the same percent of income (1.45%) away from all taxpayers.

Refer to Table 1-1. At a market price of $1,800, there will be

a surplus of 2,000 computers.

Refer to Table 1-1. At a market price of $1,700, there will be

neither a surplus nor a shortage of computers as the market is in equilibrium at this price.

Which of the following is NOT a form of taxes that governments use?

proposed taxes. The three types of taxes are the proportional tax, the progressive tax, and the regressive tax. A proportional tax imposes the same percentage of taxation on everyone, regardless of income. ... The second tax, the progressive tax, imposes a higher percentage rate of taxation on those with higher incomes.

The four basic factors that affect the price paid (interest rate) for money are

the supply of money saved, the demand for borrowed funds, Federal Reserve policy, and risk.