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Foreachstatementprovided,choosetheletteroftheappropriatetermfromthelistthateachstate
mentbestdescribes.Sometermsmaybeusedmorethanonce,whileothersarenotusedatall.
a. Capital stock
b. Asset
c. Owners' equity
d. Time period
e. Dividends
f. Economic entity concept
g. Expense
h. Retained earnings
i. Cost principle
j. Creditor
k. Liability
l. Revenue
m. Going concern
n. Monetary unit
o. Corporation
The principle or rule that specifies the amount recorded for an asset upon acquisition.
One likely result of a price ceiling is that:
a. a surplus of product would result.
b. the price charged in the market would be above the equilibrium price.
c. the price charged in the market would be the equilibrium price.
d. the available product must be rationed.
e. the market supply curve will shift to the right.
Exhibit 11-4 Aggregate demand and supply model
Suppose the economy in Exhibit 11-4 is in equilibrium at point E1 and the marginal
propensity to consume (MPC) is 0.75. Following Keynesian economics, the federal
government can move the economy to point E2 and reduce inflation by:
a. decreasing government spending by $750 billion.
b. decreasing government spending by $100 billion.
c. increasing government spending by $25 billion.
d. decreasing government spending by $25 billion.
Which of the following is not part of M1?
a. Checking accounts.
b. Coins.
c. Credit cards.
d. Paper currency.
The North American Free Trade Agreement affects trade between:
a. the United States, Cuba, and Brazil.
b. the United States, Canada, and Mexico.
c. the United States, Puerto Rico, and Cuba.
d. Brazil, Bolivia, Peru, and Columbia.
e. China and the United States.
Drew Mellow, owner of Mellow's Melodies, also owns a personal residence that costs
$400,000. The market value of his residence is $600,000. During preparation of the
financial statements for Mellow's Melodies, the accounting concept most relevant to the
presentation of Drew's home is:
a. monetary unit.
b. a going concern entity.
c. the economic entity concept.
d. the time period assumption.
Keynes argued that the downward slope of the demand for money curve depends on
the:
a. equation of exchange.
b. rate of interest.
c. federal funds rate.
d. discount rate.
Which of the following is not one of the functions of the Federal Reserve?
a. Clearing checks.
b. Printing currency.
c. Supervising and regulating banks.
d. Controlling the money supply.
Since World War II, tariff reductions have occurred in large part because of negotiations
under the:
a. Industry and Trade Administration Act.
b. Employment Act.
c. Monetary Control Act.
d. General Agreement on Tariffs and Trade.
A measure comparing the prices of consumer goods and services that a household
typically purchases to the prices of those goods and services purchased in a base year is:
a. the GDP deflator.
b. the consumer price index.
c. the price level.
d. inflation.
e. the base measure.
When the required reserve ratio is lowered,
a. the money multiplier increases, and the amount of excess reserves increases in the
banking system.
b. the money multiplier decreases, and the amount of excess reserves increases in the
banking system.
c. the money multiplier decreases, and the amount of excess reserves decreases in the
banking system.
d. the money multiplier increases, and the amount of excess reserves decreases in the
banking system.
e. there is no change in either the money multiplier or the amount of excess reserves in
the banking system.
Threeorganizationsimportanttoaccountingarelistedbelow.Selecttheorganizationthatmost
closelyachievestheroledescribed.
a. American Institute of Certified Public Accountants (AICPA)
b. Financial Accounting Standards Board (FASB)
c. Securities and Exchange Commission (SEC) Has the ultimate authority to set
accounting standards, but has allowed the profession to do so.
Which of the following would cause the supply of dollars curve in the United States to
shift to the right?
a. Japanese imports become less popular.
b. The value of the dollar falls.
c. The supply of dollars decreases.
d. Japanese imports became more popular.
Susan Greenberg, who works in a typewriter factory, becomes unemployed because
people start buying personal computers instead of typewriters. Susan can best be
described as:
a. frictionally unemployed.
b. structurally unemployed.
c. cyclically unemployed.
d. not part of the labor force.
e. a discouraged worker.
Exhibit 2-13 Production possibilities curve
In Exhibit 2-13, in terms of efficiency:
a. point A is preferred to point B.
b. point A is preferred to point E.
c. point A is preferred to point D.
d. point B is preferred to point A.
e. point B is preferred to point C.
If the demand curve increases while the supply curve remains unchanged, the
equilibrium price would increase.
The marginal propensity to save plus the marginal propensity to consume always equals
1.
The opportunity cost of holding money is measured by the rate of interest.
The marginal propensity to consume (MPC) is the change in consumption divided by
the change in disposable personal income.
Currently, the U.S. national debt is more than $20 trillion.
Most industrialized nations today use a gold standard to establish exchange rates.
