61.Serenapurchased10sharesofGLC,Inc.stockfor$200pershare;oneyearlatershesoldthe10sharesfor$220ashare.Overtheyear,thepricelevelincreasedfrom135.0to143.1.Thetaxrateoncapitalgainsis50percent.Ifthecapitalgainstaxisonnominalgains,howmuchtaxdoesSerenapayonhergain? a.$90 b.b.$95 c.c.$100 d.Noneoftheaboveiscorrect. 62.Supposeoneyearagothepriceindexwas120andMariapurchased$20,000worthofbonds.Oneyearlaterthepriceindexis126.Mariaredeemsherbondsfor$22,700andisina40percenttaxbracket.WhatisMaria’srealafter-taxrateofinteresttothenearesttenthofapercent? a.5.1percent b.3.1percent c.2.1percent d.2.4percent 63.ThecountryofLessidiniahasataxsystemidenticaltothatoftheUnitedStates.SupposesomeoneinLessidiniaboughtaparceloflandfor20,000foci(thelocalcurrency)in1960whenthepriceindexequaled100.In2002,thepersonsoldthelandfor100,000foci,andthepriceindexequaled600.Thetaxrateonnominalgainswas20percent.Computethetaxesonthenominalgainandthechangeintherealvalueofthelandintermsof2002pricestofindtheafter-taxrealrateofcapitalgain. a.-60percent b.-30percent c.30percent d.60percent 64.ThecountryofRobinyahasataxsystemidenticaltothatoftheUnitedStates.SupposesomeoneinRobinyaboughtaparceloflandfor10,000deera(thelocalcurrency)in1970whenthepriceindexequaled100.In2010,thepersonsoldthelandfor100,000deera,andthepriceindexequaled500.Thetaxrateonnominalcapitalgainswas20percent.Computethetaxesthepersonpaidonthenominalgainandthechangeintherealvalueofthelandintermsof2010pricestofindtheafter-taxrealrateofcapitalgain. a.-20percent b.20percent c.42percent d.64percent 65.KaitlynpurchasedoneshareofNorthwestEnergystockfor$200;oneyearlatershesoldthatsharefor$400.Theinflationrateovertheyearwas50percent.Thetaxrateonnominalcapitalgainsis50percent.WhatwasthetaxonKaitlyn’scapitalgain? a.$50 b.$75 c.$100 d.$200 66.Stevepurchasessomelandfor$30,000.Hemaintainsit,butmakesnoimprovementstoit.Oneyearlaterhesellsitfor $32,000.Stephanieputs$30,000inasavingsaccountthatpays6%interest.Stevehastopaythe50%capitalgainstax,Stephanieisinthe35%taxbracket.Theinflationratewas2%.Whohadthehigherbefore-taxrealgainandwhohadthehigherafter-taxrealgain? a.Stevehadboththehigherbefore-taxrealgainandthehigherafter-taxrealgain. b.Stevehadthehigherbefore-taxrealgainbutStephaniehadthehigherafter-taxrealgain. c.Stephaniehadthehigherbefore-taxrealgainbutStevehadthehigherafter-taxrealgain. d.Stephaniehadboththehigherbefore-taxrealgainandthehigherafter-taxrealgain. 67.Indexingthetaxsystemtotakeintoaccounttheeffectsofinflationwouldbyitself a.meanthatonlyrealinterestearningsaretaxed. b.meananendtotaxingcapitalgains. c.meananincreaseinaveragetaxrates. d.Alloftheabovearecorrect. 68.Whichofthefollowingcostsofinflationcanbesignificantevenifactualinflationandexpectedinflationarethesame? a.menucosts b.inflationtax c.shoeleathercosts d.Alloftheabovearecorrect. 69.Whichofthefollowingiscorrect?Inflation a.impedesfinancialmarketsintheirroleofallocatingresources. b.reducesthepurchasingpoweroftheaverageconsumer. c.generallyincreasesafter-taxrealinterestrates. d.ismostcostlywhenanticipated. 70.Jennifertookoutafixed-interest-rateloanwhentheCPIwas100.SheexpectedtheCPItoincreaseto103butitactuallyincreasedto105.Therealinterestrateshepaidis a.higherthanshehadexpected,andtherealvalueoftheloanishigherthanshehadexpected. b.higherthanshehadexpected,andtherealvalueoftheloanislowerthanshehadexpected. c.lowerthanshehadexpected,andtherealvalueoftheloanishigherthanshehadexpected. d.lowerthenshehadexpected,andtherealvalueoftheloanislowerthanshehadexpected.    

    51) For the economy of Ontario, which is a major oil user and importer, an increase in the world price of oil would be considered A) monetary validation. B) a negative demand shock. C) demand inflation. D) a negative supply shock. E) an adjustment process. 52) For the economy of Alberta, a major oil exporter, an increase in the world price of oil […]

  8) Which of the following is not a disadvantage of exchange-rate targeting? A) It relies on a stable money-inflation relationship. B) The targeting country gives up an independent monetary policy. C) The targeting country is left open for a speculative attack. D) It can weaken the accountability of policymakers.   9) Two reasons for an industrialized country to adopt an exchange-rate targeting regime are […]

  51) When the value of nominal GDP increases from one year to the next, we know that one or two things must have happened during that time: A) The nation produced fewer goods and services and/or prices fell for goods and services. B) Consumption expenditure increased and/or corporate profits increased. C) Investment increased and/or payments to employees increased. D) The nation produced more goods […]

  68) The cost of raising beef cattle has risen at the same time as consumer preference for beef has fallen. In the market for beef, this would be represented by the equilibrium price ________ and the equilibrium quantity ________. A) increasing; increasing or decreasing B) increasing or decreasing; decreasing C) decreasing; increasing or decreasing D) increasing or decreasing; increasing     69) All else […]

1. Activity-based costing is a method of cost allocation that is useful for assigning ____ costs to products or services.  A. direct materials B. direct labor C. overhead D. direct materials and direct labor   2. As companies experience a shift from labor-intensive operations to automated operations, which of the following costs becomes more difficult to trace to products?  A. Administrative costs B. Direct labor costs C. Direct material costs D. Overhead costs   3. Traditional […]

  79.Current period depreciation expense is listed:    A. on the balance sheet. B. in the investment section of the cash flow statement. C. on the income statement. D. on neither the balance sheet nor the income statement; it is a noncash expense. 80.Which of the following is not a typical reason for differences between profit and cash flow?    A. Depreciation expense B. Income taxes C. Changing levels of accounts receivable D. Accrual accounting […]

    21) If the GDP price index is 125 and nominal GDP is $130 billion, then real GDP equals ________ billion. A) $104.00 B) $162.50 C) $96 D) $1.04 E) $9.6 22) Suppose that in 2012, real GDP is larger than nominal GDP. The GDP price index in 2012 is definitely A) negative. B) larger than the GDP price index in 2012. C) less […]

  Case 7.2 As an HR manager at a publishing firm, you are reviewing performance appraisals for a report to the CEO regarding manager performance. The CEO wants to know not only how employees are doing, but also how well managers are evaluating their employees. Matt, Madeline, and Edward are the firm’s key managers.   Reading through Matt’s evaluations, you note that he tends to […]

    11) Which of the following increases the quantity supplied of compact discs but does NOT increase the supply of compact discs? A) a decrease in the price of a compact disc B) an increase in the price of a compact disc C) a decrease in the number of suppliers of compact discs D) an increase in the price of the resources used to […]