SeveralitemsfromthefinancialstatementsofStandardTiresarelistedbelow.Usethefollowing
answerchoicestoidentifythetypeofaccountforeachitemlisted.Placeyouranswersinthespac
eprovided.
a. Assets
b. Liabilities
c. Revenues
d. Expenses
e. Owners’ equity Capital stock
A price ceiling that sets the price of a good below market equilibrium will cause:
a. An increase in quantity demanded of the good.
b. A decrease in quantity supplied of the good.
c. A shortage of the good.
d. All of these.
If something is a medium of exchange, then it:
a. serves as a yardstick for measuring the value of other goods.
b. is a means of holding wealth for the future.
c. has an absolute value in gold.
d. is widely accepted as payment for purchases.
Exhibit 8-9 Consumption function
In Exhibit 8-9, when disposable
income is equal to $600, saving equals:
a. $0.
b. $100.
c. -$100.
d. $50.
e. $20.
All points on the production possibilities curve are:
a. unattainable.
b. fair.
c. efficient.
d. optimal.
Exhibit 2-6 Production possibilities curve data A BCDEF
Capital goods 150 140 120 90 50 0
Consumer goods 0 20 40 60 80 100 In Exhibit 2-6, the concept of increasing
opportunity costs is represented by the fact that:
a. the quantity of capital goods produced must be less than 150.
b. the quantity of consumer goods is constant for each change in the quantity of capital
goods produced.
c. greater amounts of capital goods must be sacrificed to produce each additional unit of
consumer goods.
d. the amount of consumer goods produced must be greater than zero.
Exhibit 16-3 Money market demand and supply curves
As shown in Exhibit 16-3, assume the
money supply curve shifts rightward from MS1 to MS2 and the economy is operating
along the intermediate segment of the aggregate supply curve. The result will be a:
a. higher investment, lower real GDP, and lower price level.
b. lower investment, lower real GDP, and lower price level.
c. higher investment, higher real GDP, and higher price level.
d. higher interest rate and no effect on real GDP or the price level.
Suppose a market basket of goods and services costs $1,000 in the base year and the
consumer price index (CPI) is currently 110. This indicates the price of the market
basket of goods and services is now:
a. $110.
b. $1,000.
c. $1,100.
d. $1,225.
Exhibit 18-1 Production possibilities curves
In Exhibit
18-1, the production possibilities curves of wheat and corn for Nabia and Pada are
presented. If these two nations trade, Nabia should specialize in the production of:
a. corn.
b. corn and wheat.
c. neither product since Pada has the comparative advantage in the production of both.
d. neither product since Pada has the absolute advantage in the production of both.
e. wheat.
The law of increasing opportunity costs causes the production possibilities curve to:
a. be a straight line.
b. slope upwards.
c. have a bowed-out shape.
d. shift inward.
Which of the following would most likely cause the production possibilities curve for
DVDs and food to shift outward?
a. A choice of more food and more DVDs.
b. A choice of more food and less DVDs.
c. A choice of more DVDs and less food.
d. An increase in the quantity of natural resources.
According to the quantity theory of money, which one of the following economic
variables would change in response to an increase in the money supply?
a. prices
b. real income
c. velocity
d. employment
When the Fed reduces the money supply, it will cause a decrease in aggregate demand
because:
a. real rates will rise, lowering business investment and consumer spending.
b. the dollar will depreciate on the foreign exchange market, leading to an increase in
net exports.
c. lower interest rates will cause the value of assets (for example, stocks) to rise.
d. the national debt will increase, causing consumers to reduce their spending.
Which one of the following items does notaccurately describe stockholders’ equity?
a. Stockholders’ equity is created when a company issues stock to an investor.
b. Total stockholders’ equity should be equal to Assets in an publicly held entity.
c. Stockholders’ equity represents amounts contributed by the owners to the company.
d. As owners of shares in a corporation, stockholders have claims on the assets of a
business when it is profitable.