Question 1

As the inventory of a firm falls

Accepted Answer

A)  there is no change in its capital. 
B)  its intangible capital decreases. 
C)  its tangible capital decreases. 
D)  its social capital increases. 
A)  there is no change in its capital. 
B)  its intangible capital decreases. 
C)  its tangible capital decreases. 
D)  its social capital increases.

Question 2

Physical capital refers to material things used as inputs in the production of future goods and services.

Accepted Answer

A) True 
 B)False

Question 3

A company requires that all new employees become certified in using Microsoft Office. This investment is in ________ capital.

Accepted Answer

A)  tangible 
B)  financial 
C)  human 
D)  productive 
A)  tangible 
B)  financial 
C)  human 
D)  productive

Question 4

All else equal, more investment takes place at

Accepted Answer

A)  higher market interest rates. 
B)  lower market interest rates. 
C)  higher nominal interest. 
D)  higher real interest rates. 
A)  higher market interest rates. 
B)  lower market interest rates. 
C)  higher nominal interest. 
D)  higher real interest rates.

Question 5

A firm's ________ is measured as a stock while ________ is measured as a flow.

Accepted Answer

A)  investment in new capital; capital 
B)  capital; investment in new capital 
C)  current labor force; current inventory 
D)  planned inventory; current inventory 
A)  investment in new capital; capital 
B)  capital; investment in new capital 
C)  current labor force; current inventory 
D)  planned inventory; current inventory

Question 6

The formula for present discounted value is ________, where R dollars is to be paid t years in the future and the agreed upon interest rate is r.

Accepted Answer

A)  R(1 + r)t 
B)  (1 + r)t/R 
C)  R/(1 + r)t 
D)  (1 + r)/Rt 
A)  R(1 + r)t 
B)  (1 + r)t/R 
C)  R/(1 + r)t 
D)  (1 + r)/Rt

Question 7

Refer to the data provided in Table 11.4 below to answer the following question(s).
Table 11.4 $$\begin{array}{l}
\begin{array} { l c c } 
&\text { Total Investment }&\text {Expected Rate of Return }\
 { \text { Project } } & \text { (dollars) } & \text { (percentage) } \
\hline \text { New bookkeeping software } & \$ 300,000 & 10 \
\text { New tractor } & \$ 400,000 & 24 \
\text { New grain storage tanks } & \$ 500,000 & 20 \
\text { Irrigation system } & \$ 1,000,000 & 30
\end{array}
\end{array}$$
-Refer to Table 11.4. When the interest rate ________, the farmer will engage in no investment.

Accepted Answer

A)  is greater than 30% 
B)  is less than 10% 
C)  is less than 30% 
D)  is greater than 10% 
A)  is greater than 30% 
B)  is less than 10% 
C)  is less than 30% 
D)  is greater than 10%

Question 8

Related to the Economics in Practice on page 235: In 2010, Tesla Motors decided to become a public company by offering shares of stock to the public on a stock exchange. The process of doing this is called

Accepted Answer

A)  a stock split. 
B)  capital gains. 
C)  an intangible capital investment. 
D)  an initial public offering. 
A)  a stock split. 
B)  capital gains. 
C)  an intangible capital investment. 
D)  an initial public offering.

Question 9

If the interest rate is 12%, the current market value of $1 to be delivered in one year is

Accepted Answer

A)  $0.89. 
B)  $0.95. 
C)  $1.00. 
D)  $1.15. 
A)  $0.89. 
B)  $0.95. 
C)  $1.00. 
D)  $1.15.

Question 10

________ is an example of tangible capital.

Accepted Answer

A)  A pet store's unsold, unopened bags of dog food 
B)  An idea for a new business 
C)  The goodwill a firm has established through charitable giving 
D)  Knowledge of how to operate a forklift 
A)  A pet store's unsold, unopened bags of dog food 
B)  An idea for a new business 
C)  The goodwill a firm has established through charitable giving 
D)  Knowledge of how to operate a forklift

Question 11

Ceteris paribus, when market interest rates ________, firms undertake ________ investment projects.

Accepted Answer

A)  decrease; no 
B)  increase; more 
C)  decrease; less 
D)  increase; fewer 
A)  decrease; no 
B)  increase; more 
C)  decrease; less 
D)  increase; fewer

Question 12

In the capital market, households ________ supply the financial resources to firms that allow them to purchase ________.

Accepted Answer

A)  indirectly; capital 
B)  directly; capital 
C)  indirectly; land 
D)  indirectly; labor 
A)  indirectly; capital 
B)  directly; capital 
C)  indirectly; land 
D)  indirectly; labor

Question 13

The payment made for the use of money is called

Accepted Answer

A)  investment. 
B)  dividends. 
C)  profit. 
D)  interest. 
A)  investment. 
B)  dividends. 
C)  profit. 
D)  interest.

Question 14

Households receive bonds when they loan money directly to a firm.

Accepted Answer

A) True 
 B)False

Question 15

The stock market, banks, and savings and loans are three examples of institutions that economists would classify as belonging to the financial

Accepted Answer

A)  savings markets. 
B)  investment market. 
C)  capital market. 
D)  labor market. 
A)  savings markets. 
B)  investment market. 
C)  capital market. 
D)  labor market.

Question 16

If the interest rate is 15%, the current market value of $1 to be delivered in one year is

Accepted Answer

A)  $0.87. 
B)  $0.91. 
C)  $1.00. 
D)  $1.15. 
A)  $0.87. 
B)  $0.91. 
C)  $1.00. 
D)  $1.15.

Question 17

Those goods produced by the economic system that are used as inputs in the production of future goods and services are known as capital.

Accepted Answer

A) True 
 B)False

Question 18

You take a class that improves your critical thinking skills. This represents an investment in your

Accepted Answer

A)  human capital. 
B)  social capital. 
C)  tangible capital. 
D)  financial capital. 
A)  human capital. 
B)  social capital. 
C)  tangible capital. 
D)  financial capital.

As the inventory of a firm falls

Physical capital refers to material things used as inputs in the production of future goods and services.

A company requires that all new employees become certified in using Microsoft Office. This investment is in ________ capital.

All else equal, more investment takes place at

A firm's is measured as a stock while is measured as a flow.

The formula for present discounted value is ________, where R dollars is to be paid t years in the future and the agreed upon interest rate is r.

Related to the Economics in Practice on page 235: In 2010, Tesla Motors decided to become a public company by offering shares of stock to the public on a stock exchange. The process of doing this is called

If the interest rate is 12%, the current market value of $1 to be delivered in one year is

________ is an example of tangible capital.

Ceteris paribus, when market interest rates , firms undertake investment projects.

In the capital market, households supply the financial resources to firms that allow them to purchase .

The payment made for the use of money is called

Households receive bonds when they loan money directly to a firm.

The stock market, banks, and savings and loans are three examples of institutions that economists would classify as belonging to the financial

If the interest rate is 15%, the current market value of $1 to be delivered in one year is

Those goods produced by the economic system that are used as inputs in the production of future goods and services are known as capital.

You take a class that improves your critical thinking skills. This represents an investment in your

The Scope and Method of Economics

The Economic Problem: Scarcity and Choice

Demand, Supply, and Market Equilibrium

Demand and Supply Applications

Elasticity

Household Behavior and Consumer Choice

The Production Process: the Behavior of Profit-Maximizing Firms

Short-Run Costs and Output Decisions

Long-Run Costs and Output Decisions

Input Demand: the Labor and Land Markets

General Equilibrium and the Efficiency of Perfect Competition

Monopoly and Antitrust Policy

Oligopoly

Monopolistic Competition

Externalities, Public Goods, and Common Resources

Uncertainty and Asymmetric Information

Income Distribution and Poverty

Public Finance: the Economics of Taxation

International Trade, Comparative Advantage, and Protectionism

Economic Growth in Developing Economies

Critical Thinking About Research

Filters

Exam 11: Input Demand: the Capital Market and the Investment Decision

As the inventory of a firm falls

Physical capital refers to material things used as inputs in the production of future goods and services.

A company requires that all new employees become certified in using Microsoft Office. This investment is in ________ capital.

All else equal, more investment takes place at

A firm's ________ is measured as a stock while ________ is measured as a flow.

The formula for present discounted value is ________, where R dollars is to be paid t years in the future and the agreed upon interest rate is r.

Related to the Economics in Practice on page 235: In 2010, Tesla Motors decided to become a public company by offering shares of stock to the public on a stock exchange. The process of doing this is called

If the interest rate is 12%, the current market value of $1 to be delivered in one year is

________ is an example of tangible capital.

Ceteris paribus, when market interest rates ________, firms undertake ________ investment projects.

In the capital market, households ________ supply the financial resources to firms that allow them to purchase ________.

The payment made for the use of money is called

Households receive bonds when they loan money directly to a firm.

The stock market, banks, and savings and loans are three examples of institutions that economists would classify as belonging to the financial

If the interest rate is 15%, the current market value of $1 to be delivered in one year is

Those goods produced by the economic system that are used as inputs in the production of future goods and services are known as capital.

You take a class that improves your critical thinking skills. This represents an investment in your

The Scope and Method of Economics

The Economic Problem: Scarcity and Choice

Demand, Supply, and Market Equilibrium

Demand and Supply Applications

Elasticity

Household Behavior and Consumer Choice

The Production Process: the Behavior of Profit-Maximizing Firms

Short-Run Costs and Output Decisions

Long-Run Costs and Output Decisions

Input Demand: the Labor and Land Markets

General Equilibrium and the Efficiency of Perfect Competition

Monopoly and Antitrust Policy

Oligopoly

Monopolistic Competition

Externalities, Public Goods, and Common Resources

Uncertainty and Asymmetric Information

Income Distribution and Poverty

Public Finance: the Economics of Taxation

International Trade, Comparative Advantage, and Protectionism

Economic Growth in Developing Economies

Critical Thinking About Research

Filters

A firm's is measured as a stock while is measured as a flow.

Ceteris paribus, when market interest rates , firms undertake investment projects.

In the capital market, households supply the financial resources to firms that allow them to purchase .