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Threeorganizationsimportanttoaccountingarelistedbelow.Selecttheorganizationthatmost
closelyachievestheroledescribed.
a. American Institute of Certified Public Accountants (AICPA)
b. Financial Accounting Standards Board (FASB)
c. Securities and Exchange Commission (SEC) Issues financial accounting concepts
that are used as a guide to accounting standard setting.
A balance sheet provides information at one specific point in time, while the other basic
financial statements provide information on activities that occur over a period of time.
a. True
b. False
Which of the following is an example of a normative economic statement?
a. The inflation rate in the United States decreased from 4 percent last year to 3 percent
this year as a result of lower energy prices.
b. The economy grew at an annual rate of 5 percent during the first quarter of this year.
c. If two automobile companies merge, it is likely that the price of automobiles will rise.
d. An increase in international trade benefits some workers but hurts others.
e. The minimum wage should be increased so that low income workers can afford to
keep up with the cost of living.
The condition of scarcity:
a. cannot be eliminated.
b. prevails in poor economies.
c. prevails in rich economies.
d. All of these.
The law of demand indicates that as the price of a good increases:
a. suppliers sell less of it.
b. suppliers sell more of it.
c. buyers buy less of it.
d. buyers buy more of it.
The positive externality associated with education is:
a. producers can get higher prices for their goods and services.
b. less crowding in the classrooms.
c. increases in societal well-being and economic growth.
d. technological progress slows as basic research increases.
e. the market excludes noncontributors to education from benefits.
An advance in technology results in:
a. suppliers offering a larger quantity than before at each given price.
b. suppliers offering the same quantity as before at a lower price.
c. a rightward shift of the supply curve.
d. an increase in supply.
e. all of these.
Assume a simplified banking system subject to a 20 percent required reserve ratio. If
there is an initial increase in excess reserves of $100,000, the money supply:
a. increases $100,000.
b. increases $500,000.
c. increases $600,000.
d. decreases $500,000.
If the economy was about to enter an inflationary boom, which of the following would
be the most appropriate policy?
a. A tax increase.
b. A decrease in government spending.
c. An increase in government spending.
d. A tax decrease.
When an inverse relationship is graphed, the resulting line or curve is:
a. horizontal.
b. vertical. c. upward-sloping.
d. downward-sloping.
Autonomous consumption is equal to the level of consumption associated with:
a. unstable disposable income.
b. positive disposable income.
c. zero disposable income.
d. negative disposable income.
In the U.S. balance of payments, purchases of foreign assets by U.S. residents are
tabulated as a:
a. unilateral transfer.
b. capital outflow.
c. current account outflow.
d. capital inflow.
The portion of the four-sector circular flow model which shows the flow of funds from
savers to borrowers is the:
a. product market.
b. factor market.
c. savings market.
d. financial market.
"Crowding in" refers to federal government deficits:
a. used for public infrastructure that will offset any decline in business investment.
b. which reduce private business and consumption spending.
c. which reduce future rates of economic growth.
d. all of these.
