Question 1

If a firm can borrow or lend at a 6 percent annual interest rate, it will

Accepted Answer

A) buy more capital if it has the funds on hand than if it has to borrow them 
B) ignore the market rate of interest when making capital investment decisions 
C) buy less capital if it has the funds on hand than if it has to borrow them 
D) ignore the market rate of interest when making saving decisions 
E) buy the same amount of capital whether it has the funds on hand or has to borrow them 
A) buy more capital if it has the funds on hand than if it has to borrow them 
B) ignore the market rate of interest when making capital investment decisions 
C) buy less capital if it has the funds on hand than if it has to borrow them 
D) ignore the market rate of interest when making saving decisions 
E) buy the same amount of capital whether it has the funds on hand or has to borrow them

Question 2

The present value of receiving $200 one year from now when the prevailing rate of interest is 8 percent is less than the present value of receiving $200 two years from today when the prevailing rate of interest is 8%

Accepted Answer

A) True 
 B)False

Question 3

Saving is necessary for production because

Accepted Answer

A) more roundabout production is better 
B) less roundabout production is better 
C) production takes time 
D) production is expensive 
E) production requires labor 
A) more roundabout production is better 
B) less roundabout production is better 
C) production takes time 
D) production is expensive 
E) production requires labor

Question 4

Once ABC Corp.sells shares of stock to the public, the stock's price tends to

Accepted Answer

A) fluctuate inversely with the profit prospects of ABC Corp. 
B) fluctuate inversely with the dividend payout of ABC Corp. 
C) fluctuate directly with the dividend payout of ABC Corp. 
D) fluctuate directly with the profit prospects of ABC Corp. 
E) remain constant 
A) fluctuate inversely with the profit prospects of ABC Corp. 
B) fluctuate inversely with the dividend payout of ABC Corp. 
C) fluctuate directly with the dividend payout of ABC Corp. 
D) fluctuate directly with the profit prospects of ABC Corp. 
E) remain constant

Question 5

Exhibit 13-2   One reason for the decline in output with the seventh machine in Exhibit 13-2 could be that

Accepted Answer

A) the increase in the company's power consumption when seven machines are being used causes its electricity bills to be much higher 
B) the increase in the company's power consumption when seven machines are being used causes fuses to blow more often 
C) no one uses the seventh machine; only six are necessary 
D) no one uses the seventh machine; only five are necessary 
E) workers no longer have to wait in line to make copies because more machines are available 
A) the increase in the company's power consumption when seven machines are being used causes its electricity bills to be much higher 
B) the increase in the company's power consumption when seven machines are being used causes fuses to blow more often 
C) no one uses the seventh machine; only six are necessary 
D) no one uses the seventh machine; only five are necessary 
E) workers no longer have to wait in line to make copies because more machines are available

Question 6

Saving is

Accepted Answer

A) helpful for production but not necessary 
B) not useful for production because they imply a decrease in consumption 
C) required for production 
D) not useful for production because it is not a resource 
E) not useful for production because savers must be paid interest 
A) helpful for production but not necessary 
B) not useful for production because they imply a decrease in consumption 
C) required for production 
D) not useful for production because it is not a resource 
E) not useful for production because savers must be paid interest

Question 7

The marginal rate of return on investment is equal to capital's

Accepted Answer

A) MRC ´ MRP/2 
B) MRC/MRP 
C) MRP/MRC 
D) MRC ´ MRP ´ the interest rate 
A) MRC ´ MRP/2 
B) MRC/MRP 
C) MRP/MRC 
D) MRC ´ MRP ´ the interest rate

Question 8

Interest is a payment for deferred

Accepted Answer

A) taxation 
B) saving 
C) consumption 
D) investment 
E) none of the above 
A) taxation 
B) saving 
C) consumption 
D) investment 
E) none of the above

Question 9

Increased saving today means

Accepted Answer

A) more consumption today and in the future 
B) less consumption today and in the future 
C) more consumption today and less in the future 
D) less consumption today and more in the future 
E) more income today, but the net effect of increased income on the balance between consumption and saving cannot be determined in advance 
A) more consumption today and in the future 
B) less consumption today and in the future 
C) more consumption today and less in the future 
D) less consumption today and more in the future 
E) more income today, but the net effect of increased income on the balance between consumption and saving cannot be determined in advance

Question 10

If the annual interest rate is 4 percent, a consumer who spends $100 today

Accepted Answer

A) will have to pay back $104 to the bank 
B) would have to pay $104 next year to get the same goods 
C) will receive $96 from the bank next year 
D) would have to pay $96 next year to get the same goods 
E) is giving up the ability to spend $104 on goods next year 
A) will have to pay back $104 to the bank 
B) would have to pay $104 next year to get the same goods 
C) will receive $96 from the bank next year 
D) would have to pay $96 next year to get the same goods 
E) is giving up the ability to spend $104 on goods next year

If a firm can borrow or lend at a 6 percent annual interest rate, it will

The present value of receiving $200 one year from now when the prevailing rate of interest is 8 percent is less than the present value of receiving $200 two years from today when the prevailing rate of interest is 8%

Saving is necessary for production because

Once ABC Corp.sells shares of stock to the public, the stock's price tends to

Exhibit 13-2 One reason for the decline in output with the seventh machine in Exhibit 13-2 could be that

Saving is

The marginal rate of return on investment is equal to capital's

Interest is a payment for deferred

Increased saving today means

If the annual interest rate is 4 percent, a consumer who spends $100 today

The Art and Science of Economic Analysis

Appendix--Understanding Graphs

Economic Tools and Economics Systems

Economic Decision Makers

Demand, Supply, and Markets

Elasticity of Demand and Supply

Appendix--Price Elasticity and Tax Incidence

Consumer Choice and Demand

Appendix--Indifference Curves and Utility Maximization

Production and Cost in the Firm

A--Perfect Competition

B--Perfect Competition

A--Monopoly

B--Monopoly

Monopolistic Competition and Oligopoly

Resource Markets

Labor Markets and Labor Unions

Transaction Costs, Imperfect Information, and Behavioral Economics

Economic Regulation and Antitrust Policy

Public Goods and Public Choice

Externalities and the Environment

Income Distribution and Poverty

International Trade

International Finance

Economic Development

Filters

Exam 13: Capital, Interest, and Corporate Finance

If a firm can borrow or lend at a 6 percent annual interest rate, it will

The present value of receiving $200 one year from now when the prevailing rate of interest is 8 percent is less than the present value of receiving $200 two years from today when the prevailing rate of interest is 8%

Saving is necessary for production because

Once ABC Corp.sells shares of stock to the public, the stock's price tends to

Exhibit 13-2 One reason for the decline in output with the seventh machine in Exhibit 13-2 could be that

Saving is

The marginal rate of return on investment is equal to capital's

Interest is a payment for deferred

Increased saving today means

If the annual interest rate is 4 percent, a consumer who spends $100 today

The Art and Science of Economic Analysis

Appendix--Understanding Graphs

Economic Tools and Economics Systems

Economic Decision Makers

Demand, Supply, and Markets

Elasticity of Demand and Supply

Appendix--Price Elasticity and Tax Incidence

Consumer Choice and Demand

Appendix--Indifference Curves and Utility Maximization

Production and Cost in the Firm

A--Perfect Competition

B--Perfect Competition

A--Monopoly

B--Monopoly

Monopolistic Competition and Oligopoly

Resource Markets

Labor Markets and Labor Unions

Transaction Costs, Imperfect Information, and Behavioral Economics

Economic Regulation and Antitrust Policy

Public Goods and Public Choice

Externalities and the Environment

Income Distribution and Poverty

International Trade

International Finance

Economic Development

Filters