20.2   International Banking and the International Capital Market   1) As a country begins to liberalize its capital account, what would you expect to happen to the difference between the interest rates for similar assets in this country and another country with open capital markets? A) get larger B) get smaller C) stay the same D) it depends on the existing exchange rate. […]

  21) Automobile insurance companies have a problem with people who buy insurance and then drive recklessly or take less care to avoid losses after being insured. In other words, the automobile insurance market is subject to  A) asymmetric information. B) market signaling. C) moral hazard. D) adverse selection. 22) If a fire insurance company requires firms buying fire insurance to install automatic sprinkler systems, […]

    17.10   Macroeconomic Policies and the Current Account   1) Which of the following is TRUE of the current account balance? A) Monetary expansion has no effect on the current account balance. B) Monetary expansion decreases the current account balance. C) Fiscal expansion increases the current account balance. D) Fiscal expansion has no effect on the current account balance. E) Monetary expansion increases the […]

    86.Selwyn Fabrics sold 60,000 yards of upholstery fabric for $22 per yard. The company’s unit product cost using process costing is $5 per yard and the company has fixed costs of $86,000 per month. The company predicts that a $2 decrease in the selling price will generate a 12% increase in sales during the next period. If the company lowers the price, which […]

    41. Both Aletha and her partner are getting equal amounts from their relationship. Aletha feels she is putting more into the relationship. According to equity theorists, Aletha is likely to feel:  A. dissatisfied because if she is contributing more she should also be getting more out of the relationship. B. satisfied because both she and her partner are getting equal amounts out of the relationship. C. dissatisfied […]

  Use the following information for questions 11-13.   Michael is a case manager for a homeless shelter in a large metropolitan city. Last week, the program director asked Michael to be the leader of the budget-planning committee. Michael was member of the committee last year, and he agreed to lead this committee because of previous experience. As Michael planned for the first meeting, he […]

  11) Refer to Figure 20.3. Which of the following will shift the supply of pounds from S1 to S0? A) an increase in U.S. income B) an increase in the British price level C) a decrease in the British price level D) a decrease in British income   12) Refer to Figure 20.3. Which of the following will shift the supply of pounds from […]

  41.The amount of value a firm creates is measured by:  A. the difference between the previous year’s profitability and the current year’s profitability. B. dividing the market price of its products by the price that customers are actually willing to pay. C. the difference between its costs of production and the value that consumers perceive in its products. D. dividing the net profits of the firm by total […]

  19.6   The Foreign Exchange Market and Exchange Rates   1) How does an increase in a country’s exchange rate affect its balance of trade? A) An increase in the exchange rate raises imports, reduces exports, and reduces the balance of trade. B) An increase in the exchange rate reduces imports, raises exports, and reduces the balance of trade. C) An increase in the exchange […]

  16.5   Explaining the Problems with PPP   1) Which of the following are theories meant to explain “Why Price Levels are Lower in Poorer Countries”? A) only Bhagwati-Kravis-Lipsey B) only Balassa-Samuelson C) only Goldberg-Knetter D) Bhagwati-Kravis-Lipsey and Balassa-Samuelson E) Bhagwati-Kravis-Lipsey and Goldberg-Knetter     2) In January 2013, the world’s cheapest Big Macs were sold in A) the Philippines. B) Russia. C) China. D) […]