11) Suppose a developing country receives more machinery and capital equipment as foreign entrepreneurs increase the amount of investment in the economy.  As a result,

A) the long-run aggregate supply curve will shift to the right.

B) the long-run aggregate supply curve will shift to the left.

C) the economy will move up along the long-run aggregate supply curve.

D) the economy will move down along the long-run aggregate supply curve.

12) Which aggregate supply curve has a positive slope?

A) long run only

B) short run only

C) both long run and short run

D) neither long run nor short run

13) The short-run aggregate supply curve has a(n) ________ slope because as prices of ________ rise, prices of ________ rise more slowly.

A) positive; final goods and services; inputs

B) infinite; final goods and services; inputs

C) positive; inputs; final goods and services

D) infinite; inputs; final goods and services

14) All of the following are reasons why the wages of workers and the prices of inputs rise more slowly than the prices of final goods and services except

A) unions are successful in pushing up wages.

B) firms are often slow to adjust wages.

C) contracts make prices and wages "sticky."

D) menu costs make some prices sticky.

15) An increase in the price level will

A) shift the short-run aggregate supply curve to the left.

B) shift the short-run aggregate supply curve to the right.

C) move the economy up along a stationary short-run aggregate supply curve.

D) move the economy down along a stationary short-run aggregate supply curve.

16) If, due to a recession, foreign workers begin to leave the United States to search for temporary work in their home countries until the recession has ended, this will

A) shift the short-run aggregate supply curve of the home country to the left.

B) shift the short-run aggregate supply curve of the home country to the right.

C) move the home country's economy up along a stationary short-run aggregate supply curve.

D) move the home country's economy down along a stationary short-run aggregate supply curve.

17) The invention of the cotton gin ushered in the Industrial Revolution and began a long period of technological innovation.  What did this technological change do the short-run supply curve?

A) It shifted the short-run aggregate supply curve to the left.

B) It shifted the short-run aggregate supply curve to the right.

C) It moved the economy up along a stationary short-run aggregate supply curve.

D) It moved the economy down along a stationary short-run aggregate supply curve.

18) Hurricane Katrina destroyed oil and natural gas refining capacity in the Gulf of Mexico which subsequently drove up natural gas, gasoline, and heating oil prices.  Three years later, once the refining capacity was restored, these prices came back down. The restoration of refining capacity should

A) shift the short-run aggregate supply curve to the left.

B) shift the short-run aggregate supply curve to the right.

C) move the economy up along a stationary short-run aggregate supply curve.

D) move the economy down along a stationary short-run aggregate supply curve.

19) When the price level rises from 110 to 115, the aggregate level of GDP supplied rises from $80 billion to $120 billion.  This ________ relationship represents the ________ relationship between the quantity of real GDP firms are willing to supply and the price level.

A) negative; short-run

B) positive; short-run

C) negative; long-run

D) positive; long-run

20) If full-employment GDP is equal to $4.2 trillion, what does the long-run aggregate supply curve look like?

A) It is a horizontal line at $4.2 trillion of GDP.

B) It is a vertical line at a level of GDP below $4.2 trillion.

C) It is a vertical line at $4.2 trillion of GDP.

D) It is a vertical line at a level of GDP above $4.2 trillion.

11) Suppose a developing country receives more machinery and capital equipment as foreign entrepreneurs increase the amount of investment in the economy.  As a result,

A) the long-run aggregate supply curve will shift to the right.

B) the long-run aggregate supply curve will shift to the left.

C) the economy will move up along the long-run aggregate supply curve.

D) the economy will move down along the long-run aggregate supply curve.

12) Which aggregate supply curve has a positive slope?

A) long run only

B) short run only

C) both long run and short run

D) neither long run nor short run

13) The short-run aggregate supply curve has a(n) ________ slope because as prices of ________ rise, prices of ________ rise more slowly.

A) positive; final goods and services; inputs

B) infinite; final goods and services; inputs

C) positive; inputs; final goods and services

D) infinite; inputs; final goods and services

14) All of the following are reasons why the wages of workers and the prices of inputs rise more slowly than the prices of final goods and services except

A) unions are successful in pushing up wages.

B) firms are often slow to adjust wages.

C) contracts make prices and wages "sticky."

D) menu costs make some prices sticky.

15) An increase in the price level will

A) shift the short-run aggregate supply curve to the left.

B) shift the short-run aggregate supply curve to the right.

C) move the economy up along a stationary short-run aggregate supply curve.

D) move the economy down along a stationary short-run aggregate supply curve.

16) If, due to a recession, foreign workers begin to leave the United States to search for temporary work in their home countries until the recession has ended, this will

A) shift the short-run aggregate supply curve of the home country to the left.

B) shift the short-run aggregate supply curve of the home country to the right.

C) move the home country's economy up along a stationary short-run aggregate supply curve.

D) move the home country's economy down along a stationary short-run aggregate supply curve.

17) The invention of the cotton gin ushered in the Industrial Revolution and began a long period of technological innovation.  What did this technological change do the short-run supply curve?

A) It shifted the short-run aggregate supply curve to the left.

B) It shifted the short-run aggregate supply curve to the right.

C) It moved the economy up along a stationary short-run aggregate supply curve.

D) It moved the economy down along a stationary short-run aggregate supply curve.

18) Hurricane Katrina destroyed oil and natural gas refining capacity in the Gulf of Mexico which subsequently drove up natural gas, gasoline, and heating oil prices.  Three years later, once the refining capacity was restored, these prices came back down. The restoration of refining capacity should

A) shift the short-run aggregate supply curve to the left.

B) shift the short-run aggregate supply curve to the right.

C) move the economy up along a stationary short-run aggregate supply curve.

D) move the economy down along a stationary short-run aggregate supply curve.

19) When the price level rises from 110 to 115, the aggregate level of GDP supplied rises from $80 billion to $120 billion.  This ________ relationship represents the ________ relationship between the quantity of real GDP firms are willing to supply and the price level.

A) negative; short-run

B) positive; short-run

C) negative; long-run

D) positive; long-run

20) If full-employment GDP is equal to $4.2 trillion, what does the long-run aggregate supply curve look like?

A) It is a horizontal line at $4.2 trillion of GDP.

B) It is a vertical line at a level of GDP below $4.2 trillion.

C) It is a vertical line at $4.2 trillion of GDP.

D) It is a vertical line at a level of GDP above $4.2 trillion.

148.The following information is available for Halle Department Stores:

Average operating assets$600,000

Controllable margin60,000

Contribution margin150,000

Minimum rate of return8%

How much is Halle’s residual income?

a.$102,000

b.$540,000

c.$12,000

d.$48,000

a149.What is the goal of residual income?

a.To maximize the amount of costs which are controllable

b.To maximize profits

c.To maximize the total amount of residual income

d.To maximize controllable margin

a150.Which one of the following is a correct statement about residual income?

a.Its goal is to maximize profits of an investment center.

b.It is less effective for evaluating investment centers than ROI.

c.It is the ratio of controllable margin to the minimum rate of return on average operating assets.

d.It evaluates performance by comparing the return of an investment center with the company’s minimum rate of return.

a151.Which one of the following does not impact the amount of residual income?

a.Contribution margin

b.Net income

c.Sales

d.Controllable costs

a152.For what purpose do companies calculate residual income?

a.To determine whether decentralization is possible or not

b.To motivate managers through possible termination

c.To evaluate management performance

d.To measure company profits

a153.Lew Co. had sales of $400,000, variable costs of $200,000, and direct fixed costs totaling $100,000. The company’s operating assets total $800,000, and its required return is 10%. How much is the residual income?

a.$120,000

b.$20,000

c.$80,000

d.$320,000

a154.Quincy Corp. earned controllable margin of $500,000 on sales of $6,400,000. The division had average operating assets of $5,200,000. The company requires a return on investment of at least 8%. How much is residual income?

a.$416,000

b.$84,000

c.$584,000

d.$512,000

a155.The performance of the manager of Ottawa Division is measured by residual income. Which of the following would decrease the manager’s performance measure?

a.Decrease in required rate of return

b.Increase in amount of return on investment desired

c.Increase in sales

d.Increase in contribution margin

156.              Which of the following would not be considered an aspect of budgetary control?

a.It assists in the determination of differences between actual and planned results.

b.It provides feedback value needed by management to see whether actual operations are on course.

c.It assists management in controlling operations.

d.It provides a guarantee for favorable results.

157.              A static budget is usually appropriate in evaluating a manager's effectiveness in controlling

a.fixed manufacturing costs and fixed selling and administrative expenses.

b.variable manufacturing costs and variable selling and administrative expenses.

c.fixed manufacturing costs and variable selling and administrative expenses.

d.variable manufacturing costs and fixed selling and administrative expenses.

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