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________ isa propositionthatastrongproponentof supplyside economicswouldmostlikelystress.
Selectone:
a. None of these isa likelystatementforasupply-sideproponent.
b. A tax reductionwill increase the disposable income of households, andthus,the primaryimpactof a
tax reductiononaggregate supplywillstemfromthe influenceof the tax change on the size of the
budgetdeficitorsurplus.
c. Highermarginal tax rateswill leadtoa reductioninthe size of the budgetdeficitandlowerinterest
ratesas theydependongovernmentrevenues.
d. Income redistributionpaymentswill exertlittle impactonreal aggregate supplyastheydo not
consume resourcesdirectly.
e. Highermarginal tax ratespromote economicinefficiencyandtherebyretardaggregate outputas
theyencourage investorstoundertake lowproductivityprojectswithsubstantial tax shelterbenefits.
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The correct answeris: Highermarginal tax ratespromote economicinefficiencyandtherebyretard
aggregate outputas theyencourage investorstoundertake low productivityprojectswithsubstantial
tax shelterbenefits.
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A decliningGDPindicatesa(n) ______ economywith______ opportunityfora firmto increase sales.
Selectone:
a. stagnant; little
b. stable;no
c. expanding;little
d. expanding;ample
e. stagnant;ample
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The correct answeris: stagnant;little
Question3
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A firminan industrythatis verysensitivetothe businesscycle will likelyhave astockbeta__________.
Selectone:
a. greaterthan 1.0
b. equal toor lessthan0.0
c. There isno relationshipbetweenbetaandsensitivityto the businesscycle.
d. lessthan1.0 but greaterthan0.0
e. equal to1.0
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The correct answeris: greaterthan1.0
Question4
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A firminthe earlystagesof the industrylife cycle will likelyhave _______.
Selectone:
a. highmarketpenetrationandrapidgrowth
b. highrisk
c. rapidgrowth
d. highriskand rapidgrowth
e. highmarketpenetration
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The correct answeris: highriskand rapidgrowth
Question5
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A peakis_______.
Selectone:
a. a depressionthatlastsmore thanthree years
b. a transitionfroman expansioninthe businesscycle tothe startof a contraction
c. a transitionfroma contractioninthe businesscycle tothe start of an expansion
d. None of these iscorrect.
e. onlya feature of geographyandnotan investmentterm
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The correct answeris: a transitionfromanexpansioninthe businesscycle tothe start of a contraction
Question6
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A rapidlygrowingGDPindicatesa(n) ______ economywith______ opportunityfora firmtoincrease
sales.
Selectone:
a. expanding;little
b. stable;no
c. stagnant;ample
d. expanding;ample
e. stagnant;little
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The correct answeris: expanding;ample
Question7
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A topdownanalysisof a firmstarts with___________.
Selectone:
a. the absolute value of the firm
b. the domesticeconomy
c. the industryoutlook
d. the global economy
e. the relative value of the firm
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The correct answeris: the global economy
Question8
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A troughis _______.
Selectone:
a. a transitionfromanexpansioninthe businesscycle tothe startof a contraction
b. onlysomethingusedbyfarmerstofeedpigsandnotan investmentterm
c. a transitionfroma contractioninthe businesscycle tothe start of an expansion
d. None of these iscorrect.
e. a depressionthatlastsmore thanthree years
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The correct answeris: a transitionfroma contractioninthe businesscycle tothe start of an expansion
Question 9
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A varietyof factorsrelatingtoindustrystructure affectthe performance of the firm, including
Selectone:
a. threat of entryand the state of the economy.
b. rivalrybetweenexistingcompetitors.
c. threatof entryand rivalrybetweenexistingcompetitors.
d. threatof entry.
e. the state of the economy.
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The correct answeris: threatof entryandrivalrybetweenexistingcompetitors.
Question10
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An example of ahighlycyclical industryis_______.
Selectone:
a. the automobile industry
b. the foodindustry
c. the tobacco industryandthe foodindustry
d. the tobacco industry
e. the automobile industryandthe tobaccoindustry
Feedback
The correct answeris: the automobile industry
Question11
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Assume thatthe Federal Reserve decreasesthe moneysupply.Thisactionwill cause ________ to
decrease.
Selectone:
a. trade balance
b. the unemploymentrate
c. interestrates
d. None of these iscorrect.
e. investmentinthe economy
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The correct answeris: investmentinthe economy
Question12
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Assume the U. S.governmentwastodecide todecrease the budgetdeficit.Thisactionwill mostlikely
cause __________ to decrease.
Selectone:
a. None of these iscorrect
b. interestrates
c. unemployment
d. interestratesandgovernmentborrowing
e. governmentborrowing
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The correct answeris: interestratesandgovernmentborrowing
Question13
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Assume the U. S.governmentwastodecide toincrease the budgetdeficit.Thisactionwill mostlikely
cause __________ to increase.
Selectone:
a. interestratesandgovernmentborrowing
b. governmentborrowing
c. unemployment
d. None of these iscorrect.
e. interestrates
Feedback
The correct answeris: interestratesandgovernmentborrowing
Question14
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Classifyingfirmsintogroups,suchas_________ providesanalternative tothe industrylife cycle.
Selectone:
a. slow-growersandstalwarts
b. stalwarts
c. countercyclicals
d. slow-growersandcountercyclicals.
e. slow-growers
Feedback
The correct answeris: slow-growersandstalwarts
Question15
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Demand-sideeconomicsisconcernedwith______.
Selectone:
a. governmentspendingandtax levelsandmonetarypolicy
b. governmentspendingandtax levels,monetarypolicy,andfiscal policy
c. governmentspendingandtax levels
d. fiscal policy
e. monetarypolicy
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The correct answeris: governmentspendingandtax levels,monetarypolicy,andfiscal policy
Question16
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Fiscal policygenerallyhasa_______ directimpactthan monetarypolicyonthe economy,andthe
formulationandimplementationof fiscal policyis______ than that of monetarypolicy.
Selectone:
a. more,quicker
b. less,quicker
c. Cannottell fromthe informationgiven
d. less,slower
e. more,slower
Feedback
The correct answeris: more,slower
Question17
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Fiscal policyisdifficulttoimplementquicklybecause
Selectone:
a. increasesintax rates affectconsumerspendinggradually.
b. it requirespolitical negotiations.
c. itrequirespolitical negotiationsandmuchof governmentspendingisnondiscretionaryandcannotbe
changed.
d. it requirespolitical negotiationsand increasesintax ratesaffectconsumerspendinggradually.
e. muchof governmentspendingisnondiscretionaryandcannotbe changed.
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The correct answeris: itrequirespoliticalnegotiationsandmuchof governmentspendingis
nondiscretionary andcannotbe changed.
Question18
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GDP refersto ________.
Selectone:
a. None of these iscorrect.
b. the total productionof goodsandservicesinthe economy
c. the total manufacturingoutputinthe economy
d. the amountof personal disposable income inthe economy
e. the difference betweengovernmentspendingandgovernmentrevenues
Feedback
The correct answeris: the total productionof goodsand servicesinthe economy
Question19
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If interestratesincrease,businessinvestmentexpendituresare likelyto______ and consumerdurable
expendituresare likelyto________.
Selectone:
a. decrease,decrease
b. increase,decrease
c. be unaffected,be unaffected
d. increase,increase
e. decrease,increase
Feedback
The correct answeris: decrease,decrease
Question20
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If the currencyof yourcountryis appreciating,the resultshouldbe to______ exportsandto _______
imports.
Selectone:
a. discourage,stimulate
b. discourage,discourage
c. stimulate,stimulate
d. stimulate,discourage
e. notaffect,notaffect
Feedback
The correct answeris: discourage,stimulate
Question21
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If the currencyof yourcountryis depreciating,the resultshouldbe to______ exportsandto _______
imports.
Selectone:
a. stimulate,stimulate
b. discourage,discourage
c. notaffect,notaffect
d. discourage,stimulate
e. stimulate,discourage
Feedback
The correct answeris: stimulate,discourage
Question22
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If the economyisgrowing,firmswithhighoperatingleverage will experience _________.
Selectone:
a. higherincreasesinprofitsthanfirmswithlow operatingleverage
b. None of these iscorrect.
c. smallerincreasesinprofitsthanfirmswithlow operatingleverage
d. similarincreasesinprofitsasfirmswithlow operatingleverage
e. nochange inprofits
Feedback
The correct answeris: higherincreasesinprofitsthanfirmswithlow operatingleverage
Question23
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If the economyisgrowing,firmswithlow operatingleverage willexperience_________.
Selectone:
a. smallerincreasesinprofitsthanfirmswithhighoperatingleverage
b. similarincreasesinprofitsasfirmswithhighoperatingleverage
c. higherincreasesinprofitsthanfirmswithhighoperatingleverage
d. None of these iscorrect
e. nochange inprofits
Feedback
The correct answeris: smallerincreasesinprofitsthanfirmswith highoperatingleverage
Question24
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Questiontext
If the economyisshrinking,firmswithhighoperatingleverage will experience _________.
Selectone:
a. None of these iscorrect.
b. smallerdecreasesinprofitsthanfirmswithlow operatingleverage
c. similardecreasesinprofitsasfirmswithlow operatingleverage
d. no change inprofits
e. higherdecreasesinprofitsthanfirmswithlow operatingleverage
Feedback
The correct answeris: higherdecreasesinprofitsthanfirmswithlow operatingleverage
Question25
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Questiontext
If the economyisshrinking,firmswithlow operatingleverage will experience _________.
Selectone:
a. similardecreasesinprofitsasfirmswithhighoperatingleverage
b. no change inprofits
c. smallerdecreasesinprofitsthanfirmswithhighoperatingleverage
d. higherdecreasesinprofitsthanfirmswithhighoperatingleverage
e. None of these iscorrect.
Feedback
The correct answeris: smallerdecreasesinprofitsthanfirmswithhighoperatingleverage
Question26
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If the economywere goingintoarecession,anattractive industrytoinvestinwouldbe the ________
industry.
Selectone:
a. automobile andconstruction
b. automobile
c. construction
d. medical servicesandconstruction
e. medical services
Feedback
The correct answeris: medical services
Question27
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In the consolidationstage of the industrylife-cycle
Selectone:
a. industrygrowthisveryrapid.
b. the performance of firmswill more closelytrackthe performance of the overall industry.
c. industrygrowthisveryrapidandthe performance of firmswill more closelytrackthe performance of
the overall industry
d. it isdifficulttopredictwhichfirmswill succeedandwhichfirmswill failandindustrygrowthisvery
rapid.
e. itis difficulttopredictwhichfirmswill succeedandwhichfirmswillfail.
Feedback
The correct answeris: the performance of firmswill more closelytrackthe performance of the overall
industry.
Question28
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In the decline stage of the industrylifecycle
Selectone:
a. the industrymayexperience negative growth.
b. the product mayhave reachedobsolescence.
c. the productmay have reachedobsolescence,the industrywill grow ata rate lessthanthe overall
economy,andthe industrymayexperience negativegrowth.
d. the product mayhave reachedobsolescenceandthe industrywill grow ata rate lessthan the overall
economy.
e. the industrywill growata rate lessthanthe overall economy.
Feedback
The correct answeris: the productmay have reachedobsolescence,the industrywillgrow ata rate less
than the overall economy,andthe industrymayexperience negativegrowth.
Question29
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In the maturitystage of the industrylife cycle
Selectone:
a. producersare forcedto compete onprice to a greaterextent.
b. the product has reached full potential andprofitmarginsare narrower.
c. the producthas reachedfull potential.
d. the product has reachedfull potential,profitmarginsare narrower,andproducersare forcedto
compete onprice to a greaterextent.
e. profitmarginsare narrower.
Feedback
The correct answeris: the producthas reachedfull potential,profitmarginsare narrower,and
producersare forcedto compete onprice to a greaterextent.
Question30
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In the start-upstage of the industrylife cycle
Selectone:
a. industrygrowthisveryrapid.
b. firmspaya highlevel of dividends.
c. itis difficulttopredictwhichfirmswill succeedandwhichfirmswillfail.
d. it isdifficulttopredictwhichfirmswill succeedandwhichfirmswill failandindustrygrowthisvery
rapid.
e. industrygrowthisveryrapidandfirmspay a highlevel of dividends.
Feedback
The correct answeris: itis difficulttopredictwhichfirmswill succeedandwhichfirmswillfail and
industrygrowthisveryrapid.
Question31
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Increasesinthe moneysupplywillcause demandforinvestmentandconsumptiongoodsto_______ in
the short run andcause pricesto_______ inthe longrun.
Selectone:
a. be unaffected,be unaffected
b. increase,decrease
c. increase,increase
d. decrease,increase
e. decrease,holdsteady
Feedback
The correct answeris: increase,increase
Question32
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Industrial productionrefersto________.
Selectone:
a. the total manufacturingoutputinthe economy
b. the amountof personal disposable income inthe economy
c. the total productionof goodsand servicesinthe economy
d. the difference betweengovernmentspendingandgovernmentrevenues
e. None of these iscorrect
Feedback
The correct answeris: the total manufacturingoutputinthe economy
Question33
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Inflation
Selectone:
a. rates are highwhenthe economyisconsideredtobe "overheated."
b. isthe rate at whichthe general level of pricesisincreasing;andratesare highwhenthe economyis
consideredtobe "overheated."
c. isthe rate at whichthe general level of pricesisincreasing.
d. isunrelatedtounemploymentrates.
e. isthe rate at whichthe general level of pricesisincreasing;andisunrelatedtounemploymentrates.
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The correct answeris: isthe rate at whichthe general level of pricesisincreasing;andratesare high
whenthe economyisconsideredtobe "overheated."
Question34
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Monetarypolicyinthe U.S. is determinedby
Selectone:
a. congressional actions.
b. the board of Governorsof the Federal ReserveSystem.
c. presidentialmandates.
d. governmentbudgetdecisions.
e. None of these iscorrect.
Feedback
The correct answeris: the board of Governorsof the Federal ReserveSystem.
Question35
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Supply-side economistswishingtostimulatethe economyare mostlikelytorecommend
Selectone:
a. a decrease inthe tax rate.
b. None of these iscorrect.
c. a decrease inthe moneysupply.
d. an increase inthe real interestrate.
e. a decrease inproductionoutput.
Feedback
The correct answeris: a decrease inthe tax rate.
Question36
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The "normal"range of price-earningsratiosforthe S&P500 Index is
Selectone:
a. between2and 10.
b. lessthan8.
c. between5and15.
d. between12and 25.
e. greaterthan20.
Feedback
The correct answeris: between12and 25.
Question37
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The "real",or inflation-adjusted,exchange rate,is
Selectone:
a. the budgetdeficit.
b. None of these iscorrect.
c. the balance of trade.
d. unimportanttothe U.S. economy.
e. the purchasingpowerratio.
Feedback
The correct answeris: the purchasingpowerratio.
Question38
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The average durationof unemploymentandchangesinthe consumerprice index forservicesare
_________.
Selectone:
a. None of these iscorrect.
b. laggingeconomicindicators
c. coincidentaleconomicindicators
d. leadingeconomicindicators
e. composite economicindicators
Feedback
The correct answeris: laggingeconomicindicators
Question39
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The industrylife cycle isdescribedbywhichof the followingstage(s)?
Selectone:
a. Absolute decline.
b. Start-up.
c. Consolidation.
d. Start-up,consolidationandabsolute decline.
e. Start-upandconsolidation.
Feedback
The correct answeris: Start-upandconsolidation.
Question40
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The most widelyusedmonetarytool is__________.
Selectone:
a. None of these iscorrect.
b. alteringthe discountrate
c. alteringmarginal tax rates
d. openmarketoperations
e. alteringthe reserve requirements
Feedback
The correct answeris: openmarket operations
Question41
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Questiontext
The North AmericanIndustryClassificationSystem(NAICS) codes
Selectone:
a. are for firmsthatoperate inthe NAFTA region.
b. are forfirmsthat operate inthe NAFTA regionandgroup firmsbyindustry.
c. groupfirmsbyindustry.
d. are forfirmsthat operate inthe NAFTA regionandare a perfectclassificationsystemforfirms.
e. are a perfectclassificationsystemforfirms.
Feedback
The correct answeris: are forfirmsthat operate inthe NAFTA regionandgroupfirmsby industry.
Question42
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The stock price index andnewordersfornondefensecapital goodsare
Selectone:
a. not useful aseconomicindicators.
b. leadingeconomicindicators.
c. coincidentaleconomicindicators.
d. None of these iscorrect
e. laggingeconomicindicators.
Feedback
The correct answeris: leadingeconomicindicators.
Question43
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Two firms,A and B, bothproduce widgets.The price of widgetsis$1 each.FirmA has total fixedcostsof
$500,000 and variable costsof 50 centsper widget.FirmBhas total fixedcostsof $240,000 and variable
costs of 75 cents perwidget.The corporate tax rate is40%. If the economyisstrong,each firmwill sell
1,200,000 widgets.If the economyentersarecession,eachfirmwill sell 1,100,000 widgets.If the
economyentersarecession,the after-tax profitof FirmA will be _______.
Selectone:
a. $0
b. None of these iscorrect
c. $30,000
d. $6,000
e. $60,000
Feedback
The correct answeris: $30,000
Question44
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Questiontext
Two firms,A and B, bothproduce widgets.The price of widgetsis$1 each.FirmA has total fixedcostsof
$500,000 and variable costsof 50 centsper widget.FirmBhas total fixedcostsof $240,000 and variable
costs of 75 cents perwidget.The corporate tax rate is40%. If the economyisstrong,each firmwill sell
1,200,000 widgets.If the economyentersarecession,eachfirmwill sell 1,100,000 widgets.If the
economyentersarecession,the after-tax profitof FirmBwill be ______.
Selectone:
a. $0
b. None of these iscorrect
c. $36,000
d. $60,000
e. $6,000
Feedback
The correct answeris: None of these iscorrect
Question45
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Questiontext
Two firms,A and B, bothproduce widgets.The price of widgetsis$1 each.FirmA has total fixedcostsof
$500,000 and variable costsof 50 centsper widget.FirmBhas total fixedcostsof $240,000 and variable
costs of 75 cents perwidget.The corporate tax rate is40%. If the economyisstrong,each firmwill sell
1,200,000 widgets.If the economyentersarecession,eachfirmwill sell 1,100,000 widgets.If the
economyisstrong,the after-tax profitof FirmA will be ______.
Selectone:
a. $60,000
b. $36,000
c. $0
d. None of these iscorrect
e. $6,000
Feedback
The correct answeris: $60,000
Question46
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Questiontext
Two firms,A and B, bothproduce widgets.The price of widgetsis$1 each. FirmA has total fixedcostsof
$500,000 and variable costsof 50 centsper widget.FirmBhas total fixedcostsof $240,000 and variable
costs of 75 cents perwidget.The corporate tax rate is40%. If the economyisstrong,each firmwill sell
1,200,000 widgets.If the economyentersarecession,eachfirmwill sell 1,100,000 widgets.If the
economyisstrong,the after-tax profitof FirmB will be _________.
Selectone:
a. $36,000
b. None of these iscorrect
c. $6,000
d. $0
e. $60,000
Feedback
The correct answeris: $36,000
Question47
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Questiontext
Two firms,A and B, bothproduce widgets.The price of widgetsis$1 each.FirmA has total fixedcostsof
$500,000 and variable costsof 50 cents per widget.FirmBhas total fixedcostsof $240,000 and variable
costs of 75 cents perwidget.The corporate tax rate is40%. If the economyisstrong,each firmwill sell
1,200,000 widgets.If the economyentersarecession,eachfirmwill sell 1,100,000 widgets.Calculate
firmA's degree of operatingleverage.
Selectone:
a. None of these iscorrect
b. 2.86
c. 9.09
d. 11.0
e. 1.00
Feedback
The correct answeris: 11.0
Question48
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Questiontext
Two firms,A and B, bothproduce widgets.The price of widgetsis$1 each.FirmA has total fixedcostsof
$500,000 and variable costsof 50 centsper widget.FirmBhas total fixedcostsof $240,000 and variable
costs of 75 cents perwidget.The corporate tax rate is40%. If the economyisstrong,each firmwill sell
1,200,000 widgets.If the economyentersarecession,eachfirmwill sell 1,100,000 widgets.Calculate
firmB's degree of operatingleverage.
Selectone:
a. .714
b. 7.86
c. 9.09
d. 7.14
e. None of these iscorrect
Feedback
The correct answeris: 7.86
Question49
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Questiontext
Whichof the followingare examplesof defensive industries?
Selectone:
a. Pharmaceutical firms.
b. Durable goodsproducers.
c. Foodproducers.
d. Publicutilities.
e. Foodproducers,pharmaceutical firmsandPublicutilities
Feedback
The correct answeris: Foodproducers,pharmaceutical firmsandPublicutilities
Question50
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Questiontext
Whichof the followingare notexamplesof defensiveindustries?
Selectone:
a. Durable goodsproducers.
b. Foodproducers.
c. Durable goodsproducersandpharmaceutical firms.
d. Pharmaceutical firms.
e. Publicutilities.
Feedback
The correct answeris: Durable goodsproducers.

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mcq6.docx

  • 1. ________ isa propositionthatastrongproponentof supplyside economicswouldmostlikelystress. Selectone: a. None of these isa likelystatementforasupply-sideproponent. b. A tax reductionwill increase the disposable income of households, andthus,the primaryimpactof a tax reductiononaggregate supplywillstemfromthe influenceof the tax change on the size of the budgetdeficitorsurplus. c. Highermarginal tax rateswill leadtoa reductioninthe size of the budgetdeficitandlowerinterest ratesas theydependongovernmentrevenues. d. Income redistributionpaymentswill exertlittle impactonreal aggregate supplyastheydo not consume resourcesdirectly. e. Highermarginal tax ratespromote economicinefficiencyandtherebyretardaggregate outputas theyencourage investorstoundertake lowproductivityprojectswithsubstantial tax shelterbenefits. Feedback The correct answeris: Highermarginal tax ratespromote economicinefficiencyandtherebyretard aggregate outputas theyencourage investorstoundertake low productivityprojectswithsubstantial tax shelterbenefits. Question2 Correct Mark 1.00 out of 1.00 NotflaggedFlagquestion Questiontext A decliningGDPindicatesa(n) ______ economywith______ opportunityfora firmto increase sales. Selectone: a. stagnant; little b. stable;no c. expanding;little d. expanding;ample e. stagnant;ample Feedback The correct answeris: stagnant;little Question3
  • 2. Correct Mark 1.00 out of 1.00 NotflaggedFlagquestion Questiontext A firminan industrythatis verysensitivetothe businesscycle will likelyhave astockbeta__________. Selectone: a. greaterthan 1.0 b. equal toor lessthan0.0 c. There isno relationshipbetweenbetaandsensitivityto the businesscycle. d. lessthan1.0 but greaterthan0.0 e. equal to1.0 Feedback The correct answeris: greaterthan1.0 Question4 Correct Mark 1.00 out of 1.00 NotflaggedFlagquestion Questiontext A firminthe earlystagesof the industrylife cycle will likelyhave _______. Selectone: a. highmarketpenetrationandrapidgrowth b. highrisk c. rapidgrowth d. highriskand rapidgrowth e. highmarketpenetration Feedback The correct answeris: highriskand rapidgrowth Question5 Correct
  • 3. Mark 1.00 out of 1.00 NotflaggedFlagquestion Questiontext A peakis_______. Selectone: a. a depressionthatlastsmore thanthree years b. a transitionfroman expansioninthe businesscycle tothe startof a contraction c. a transitionfroma contractioninthe businesscycle tothe start of an expansion d. None of these iscorrect. e. onlya feature of geographyandnotan investmentterm Feedback The correct answeris: a transitionfromanexpansioninthe businesscycle tothe start of a contraction Question6 Correct Mark 1.00 out of 1.00 NotflaggedFlagquestion Questiontext A rapidlygrowingGDPindicatesa(n) ______ economywith______ opportunityfora firmtoincrease sales. Selectone: a. expanding;little b. stable;no c. stagnant;ample d. expanding;ample e. stagnant;little Feedback The correct answeris: expanding;ample Question7 Correct
  • 4. Mark 1.00 out of 1.00 NotflaggedFlagquestion Questiontext A topdownanalysisof a firmstarts with___________. Selectone: a. the absolute value of the firm b. the domesticeconomy c. the industryoutlook d. the global economy e. the relative value of the firm Feedback The correct answeris: the global economy Question8 Correct Mark 1.00 out of 1.00 NotflaggedFlagquestion Questiontext A troughis _______. Selectone: a. a transitionfromanexpansioninthe businesscycle tothe startof a contraction b. onlysomethingusedbyfarmerstofeedpigsandnotan investmentterm c. a transitionfroma contractioninthe businesscycle tothe start of an expansion d. None of these iscorrect. e. a depressionthatlastsmore thanthree years Feedback The correct answeris: a transitionfroma contractioninthe businesscycle tothe start of an expansion Question 9 Correct Mark 1.00 out of 1.00
  • 5. NotflaggedFlagquestion Questiontext A varietyof factorsrelatingtoindustrystructure affectthe performance of the firm, including Selectone: a. threat of entryand the state of the economy. b. rivalrybetweenexistingcompetitors. c. threatof entryand rivalrybetweenexistingcompetitors. d. threatof entry. e. the state of the economy. Feedback The correct answeris: threatof entryandrivalrybetweenexistingcompetitors. Question10 Correct Mark 1.00 out of 1.00 NotflaggedFlagquestion Questiontext An example of ahighlycyclical industryis_______. Selectone: a. the automobile industry b. the foodindustry c. the tobacco industryandthe foodindustry d. the tobacco industry e. the automobile industryandthe tobaccoindustry Feedback The correct answeris: the automobile industry Question11 Correct Mark 1.00 out of 1.00 NotflaggedFlagquestion
  • 6. Questiontext Assume thatthe Federal Reserve decreasesthe moneysupply.Thisactionwill cause ________ to decrease. Selectone: a. trade balance b. the unemploymentrate c. interestrates d. None of these iscorrect. e. investmentinthe economy Feedback The correct answeris: investmentinthe economy Question12 Correct Mark 1.00 out of 1.00 NotflaggedFlagquestion Questiontext Assume the U. S.governmentwastodecide todecrease the budgetdeficit.Thisactionwill mostlikely cause __________ to decrease. Selectone: a. None of these iscorrect b. interestrates c. unemployment d. interestratesandgovernmentborrowing e. governmentborrowing Feedback The correct answeris: interestratesandgovernmentborrowing Question13 Correct Mark 1.00 out of 1.00
  • 7. NotflaggedFlagquestion Questiontext Assume the U. S.governmentwastodecide toincrease the budgetdeficit.Thisactionwill mostlikely cause __________ to increase. Selectone: a. interestratesandgovernmentborrowing b. governmentborrowing c. unemployment d. None of these iscorrect. e. interestrates Feedback The correct answeris: interestratesandgovernmentborrowing Question14 Correct Mark 1.00 out of 1.00 NotflaggedFlagquestion Questiontext Classifyingfirmsintogroups,suchas_________ providesanalternative tothe industrylife cycle. Selectone: a. slow-growersandstalwarts b. stalwarts c. countercyclicals d. slow-growersandcountercyclicals. e. slow-growers Feedback The correct answeris: slow-growersandstalwarts Question15 Correct Mark 1.00 out of 1.00
  • 8. NotflaggedFlagquestion Questiontext Demand-sideeconomicsisconcernedwith______. Selectone: a. governmentspendingandtax levelsandmonetarypolicy b. governmentspendingandtax levels,monetarypolicy,andfiscal policy c. governmentspendingandtax levels d. fiscal policy e. monetarypolicy Feedback The correct answeris: governmentspendingandtax levels,monetarypolicy,andfiscal policy Question16 Correct Mark 1.00 out of 1.00 NotflaggedFlagquestion Questiontext Fiscal policygenerallyhasa_______ directimpactthan monetarypolicyonthe economy,andthe formulationandimplementationof fiscal policyis______ than that of monetarypolicy. Selectone: a. more,quicker b. less,quicker c. Cannottell fromthe informationgiven d. less,slower e. more,slower Feedback The correct answeris: more,slower Question17 Correct Mark 1.00 out of 1.00
  • 9. NotflaggedFlagquestion Questiontext Fiscal policyisdifficulttoimplementquicklybecause Selectone: a. increasesintax rates affectconsumerspendinggradually. b. it requirespolitical negotiations. c. itrequirespolitical negotiationsandmuchof governmentspendingisnondiscretionaryandcannotbe changed. d. it requirespolitical negotiationsand increasesintax ratesaffectconsumerspendinggradually. e. muchof governmentspendingisnondiscretionaryandcannotbe changed. Feedback The correct answeris: itrequirespoliticalnegotiationsandmuchof governmentspendingis nondiscretionary andcannotbe changed. Question18 Correct Mark 1.00 out of 1.00 NotflaggedFlagquestion Questiontext GDP refersto ________. Selectone: a. None of these iscorrect. b. the total productionof goodsandservicesinthe economy c. the total manufacturingoutputinthe economy d. the amountof personal disposable income inthe economy e. the difference betweengovernmentspendingandgovernmentrevenues Feedback The correct answeris: the total productionof goodsand servicesinthe economy Question19 Correct
  • 10. Mark 1.00 out of 1.00 NotflaggedFlagquestion Questiontext If interestratesincrease,businessinvestmentexpendituresare likelyto______ and consumerdurable expendituresare likelyto________. Selectone: a. decrease,decrease b. increase,decrease c. be unaffected,be unaffected d. increase,increase e. decrease,increase Feedback The correct answeris: decrease,decrease Question20 Correct Mark 1.00 out of 1.00 NotflaggedFlagquestion Questiontext If the currencyof yourcountryis appreciating,the resultshouldbe to______ exportsandto _______ imports. Selectone: a. discourage,stimulate b. discourage,discourage c. stimulate,stimulate d. stimulate,discourage e. notaffect,notaffect Feedback The correct answeris: discourage,stimulate Question21
  • 11. Correct Mark 1.00 out of 1.00 NotflaggedFlagquestion Questiontext If the currencyof yourcountryis depreciating,the resultshouldbe to______ exportsandto _______ imports. Selectone: a. stimulate,stimulate b. discourage,discourage c. notaffect,notaffect d. discourage,stimulate e. stimulate,discourage Feedback The correct answeris: stimulate,discourage Question22 Correct Mark 1.00 out of 1.00 NotflaggedFlagquestion Questiontext If the economyisgrowing,firmswithhighoperatingleverage will experience _________. Selectone: a. higherincreasesinprofitsthanfirmswithlow operatingleverage b. None of these iscorrect. c. smallerincreasesinprofitsthanfirmswithlow operatingleverage d. similarincreasesinprofitsasfirmswithlow operatingleverage e. nochange inprofits Feedback The correct answeris: higherincreasesinprofitsthanfirmswithlow operatingleverage Question23
  • 12. Correct Mark 1.00 out of 1.00 NotflaggedFlagquestion Questiontext If the economyisgrowing,firmswithlow operatingleverage willexperience_________. Selectone: a. smallerincreasesinprofitsthanfirmswithhighoperatingleverage b. similarincreasesinprofitsasfirmswithhighoperatingleverage c. higherincreasesinprofitsthanfirmswithhighoperatingleverage d. None of these iscorrect e. nochange inprofits Feedback The correct answeris: smallerincreasesinprofitsthanfirmswith highoperatingleverage Question24 Correct Mark 1.00 out of 1.00 NotflaggedFlagquestion Questiontext If the economyisshrinking,firmswithhighoperatingleverage will experience _________. Selectone: a. None of these iscorrect. b. smallerdecreasesinprofitsthanfirmswithlow operatingleverage c. similardecreasesinprofitsasfirmswithlow operatingleverage d. no change inprofits e. higherdecreasesinprofitsthanfirmswithlow operatingleverage Feedback The correct answeris: higherdecreasesinprofitsthanfirmswithlow operatingleverage Question25 Correct
  • 13. Mark 1.00 out of 1.00 NotflaggedFlagquestion Questiontext If the economyisshrinking,firmswithlow operatingleverage will experience _________. Selectone: a. similardecreasesinprofitsasfirmswithhighoperatingleverage b. no change inprofits c. smallerdecreasesinprofitsthanfirmswithhighoperatingleverage d. higherdecreasesinprofitsthanfirmswithhighoperatingleverage e. None of these iscorrect. Feedback The correct answeris: smallerdecreasesinprofitsthanfirmswithhighoperatingleverage Question26 Correct Mark 1.00 out of 1.00 NotflaggedFlagquestion Questiontext If the economywere goingintoarecession,anattractive industrytoinvestinwouldbe the ________ industry. Selectone: a. automobile andconstruction b. automobile c. construction d. medical servicesandconstruction e. medical services Feedback The correct answeris: medical services Question27 Correct
  • 14. Mark 1.00 out of 1.00 NotflaggedFlagquestion Questiontext In the consolidationstage of the industrylife-cycle Selectone: a. industrygrowthisveryrapid. b. the performance of firmswill more closelytrackthe performance of the overall industry. c. industrygrowthisveryrapidandthe performance of firmswill more closelytrackthe performance of the overall industry d. it isdifficulttopredictwhichfirmswill succeedandwhichfirmswill failandindustrygrowthisvery rapid. e. itis difficulttopredictwhichfirmswill succeedandwhichfirmswillfail. Feedback The correct answeris: the performance of firmswill more closelytrackthe performance of the overall industry. Question28 Correct Mark 1.00 out of 1.00 NotflaggedFlagquestion Questiontext In the decline stage of the industrylifecycle Selectone: a. the industrymayexperience negative growth. b. the product mayhave reachedobsolescence. c. the productmay have reachedobsolescence,the industrywill grow ata rate lessthanthe overall economy,andthe industrymayexperience negativegrowth. d. the product mayhave reachedobsolescenceandthe industrywill grow ata rate lessthan the overall economy. e. the industrywill growata rate lessthanthe overall economy. Feedback
  • 15. The correct answeris: the productmay have reachedobsolescence,the industrywillgrow ata rate less than the overall economy,andthe industrymayexperience negativegrowth. Question29 Correct Mark 1.00 out of 1.00 NotflaggedFlagquestion Questiontext In the maturitystage of the industrylife cycle Selectone: a. producersare forcedto compete onprice to a greaterextent. b. the product has reached full potential andprofitmarginsare narrower. c. the producthas reachedfull potential. d. the product has reachedfull potential,profitmarginsare narrower,andproducersare forcedto compete onprice to a greaterextent. e. profitmarginsare narrower. Feedback The correct answeris: the producthas reachedfull potential,profitmarginsare narrower,and producersare forcedto compete onprice to a greaterextent. Question30 Correct Mark 1.00 out of 1.00 NotflaggedFlagquestion Questiontext In the start-upstage of the industrylife cycle Selectone: a. industrygrowthisveryrapid. b. firmspaya highlevel of dividends. c. itis difficulttopredictwhichfirmswill succeedandwhichfirmswillfail. d. it isdifficulttopredictwhichfirmswill succeedandwhichfirmswill failandindustrygrowthisvery rapid.
  • 16. e. industrygrowthisveryrapidandfirmspay a highlevel of dividends. Feedback The correct answeris: itis difficulttopredictwhichfirmswill succeedandwhichfirmswillfail and industrygrowthisveryrapid. Question31 Correct Mark 1.00 out of 1.00 NotflaggedFlagquestion Questiontext Increasesinthe moneysupplywillcause demandforinvestmentandconsumptiongoodsto_______ in the short run andcause pricesto_______ inthe longrun. Selectone: a. be unaffected,be unaffected b. increase,decrease c. increase,increase d. decrease,increase e. decrease,holdsteady Feedback The correct answeris: increase,increase Question32 Correct Mark 1.00 out of 1.00 NotflaggedFlagquestion Questiontext Industrial productionrefersto________. Selectone: a. the total manufacturingoutputinthe economy b. the amountof personal disposable income inthe economy c. the total productionof goodsand servicesinthe economy
  • 17. d. the difference betweengovernmentspendingandgovernmentrevenues e. None of these iscorrect Feedback The correct answeris: the total manufacturingoutputinthe economy Question33 Correct Mark 1.00 out of 1.00 NotflaggedFlagquestion Questiontext Inflation Selectone: a. rates are highwhenthe economyisconsideredtobe "overheated." b. isthe rate at whichthe general level of pricesisincreasing;andratesare highwhenthe economyis consideredtobe "overheated." c. isthe rate at whichthe general level of pricesisincreasing. d. isunrelatedtounemploymentrates. e. isthe rate at whichthe general level of pricesisincreasing;andisunrelatedtounemploymentrates. Feedback The correct answeris: isthe rate at whichthe general level of pricesisincreasing;andratesare high whenthe economyisconsideredtobe "overheated." Question34 Correct Mark 1.00 out of 1.00 NotflaggedFlagquestion Questiontext Monetarypolicyinthe U.S. is determinedby Selectone: a. congressional actions. b. the board of Governorsof the Federal ReserveSystem.
  • 18. c. presidentialmandates. d. governmentbudgetdecisions. e. None of these iscorrect. Feedback The correct answeris: the board of Governorsof the Federal ReserveSystem. Question35 Correct Mark 1.00 out of 1.00 NotflaggedFlagquestion Questiontext Supply-side economistswishingtostimulatethe economyare mostlikelytorecommend Selectone: a. a decrease inthe tax rate. b. None of these iscorrect. c. a decrease inthe moneysupply. d. an increase inthe real interestrate. e. a decrease inproductionoutput. Feedback The correct answeris: a decrease inthe tax rate. Question36 Correct Mark 1.00 out of 1.00 NotflaggedFlagquestion Questiontext The "normal"range of price-earningsratiosforthe S&P500 Index is Selectone: a. between2and 10. b. lessthan8. c. between5and15.
  • 19. d. between12and 25. e. greaterthan20. Feedback The correct answeris: between12and 25. Question37 Correct Mark 1.00 out of 1.00 NotflaggedFlagquestion Questiontext The "real",or inflation-adjusted,exchange rate,is Selectone: a. the budgetdeficit. b. None of these iscorrect. c. the balance of trade. d. unimportanttothe U.S. economy. e. the purchasingpowerratio. Feedback The correct answeris: the purchasingpowerratio. Question38 Correct Mark 1.00 out of 1.00 NotflaggedFlagquestion Questiontext The average durationof unemploymentandchangesinthe consumerprice index forservicesare _________. Selectone: a. None of these iscorrect. b. laggingeconomicindicators c. coincidentaleconomicindicators
  • 20. d. leadingeconomicindicators e. composite economicindicators Feedback The correct answeris: laggingeconomicindicators Question39 Correct Mark 1.00 out of 1.00 NotflaggedFlagquestion Questiontext The industrylife cycle isdescribedbywhichof the followingstage(s)? Selectone: a. Absolute decline. b. Start-up. c. Consolidation. d. Start-up,consolidationandabsolute decline. e. Start-upandconsolidation. Feedback The correct answeris: Start-upandconsolidation. Question40 Correct Mark 1.00 out of 1.00 NotflaggedFlagquestion Questiontext The most widelyusedmonetarytool is__________. Selectone: a. None of these iscorrect. b. alteringthe discountrate c. alteringmarginal tax rates d. openmarketoperations
  • 21. e. alteringthe reserve requirements Feedback The correct answeris: openmarket operations Question41 Correct Mark 1.00 out of 1.00 NotflaggedFlagquestion Questiontext The North AmericanIndustryClassificationSystem(NAICS) codes Selectone: a. are for firmsthatoperate inthe NAFTA region. b. are forfirmsthat operate inthe NAFTA regionandgroup firmsbyindustry. c. groupfirmsbyindustry. d. are forfirmsthat operate inthe NAFTA regionandare a perfectclassificationsystemforfirms. e. are a perfectclassificationsystemforfirms. Feedback The correct answeris: are forfirmsthat operate inthe NAFTA regionandgroupfirmsby industry. Question42 Correct Mark 1.00 out of 1.00 NotflaggedFlagquestion Questiontext The stock price index andnewordersfornondefensecapital goodsare Selectone: a. not useful aseconomicindicators. b. leadingeconomicindicators. c. coincidentaleconomicindicators. d. None of these iscorrect e. laggingeconomicindicators.
  • 22. Feedback The correct answeris: leadingeconomicindicators. Question43 Correct Mark 1.00 out of 1.00 NotflaggedFlagquestion Questiontext Two firms,A and B, bothproduce widgets.The price of widgetsis$1 each.FirmA has total fixedcostsof $500,000 and variable costsof 50 centsper widget.FirmBhas total fixedcostsof $240,000 and variable costs of 75 cents perwidget.The corporate tax rate is40%. If the economyisstrong,each firmwill sell 1,200,000 widgets.If the economyentersarecession,eachfirmwill sell 1,100,000 widgets.If the economyentersarecession,the after-tax profitof FirmA will be _______. Selectone: a. $0 b. None of these iscorrect c. $30,000 d. $6,000 e. $60,000 Feedback The correct answeris: $30,000 Question44 Correct Mark 1.00 out of 1.00 NotflaggedFlagquestion Questiontext Two firms,A and B, bothproduce widgets.The price of widgetsis$1 each.FirmA has total fixedcostsof $500,000 and variable costsof 50 centsper widget.FirmBhas total fixedcostsof $240,000 and variable costs of 75 cents perwidget.The corporate tax rate is40%. If the economyisstrong,each firmwill sell 1,200,000 widgets.If the economyentersarecession,eachfirmwill sell 1,100,000 widgets.If the economyentersarecession,the after-tax profitof FirmBwill be ______. Selectone: a. $0
  • 23. b. None of these iscorrect c. $36,000 d. $60,000 e. $6,000 Feedback The correct answeris: None of these iscorrect Question45 Correct Mark 1.00 out of 1.00 NotflaggedFlagquestion Questiontext Two firms,A and B, bothproduce widgets.The price of widgetsis$1 each.FirmA has total fixedcostsof $500,000 and variable costsof 50 centsper widget.FirmBhas total fixedcostsof $240,000 and variable costs of 75 cents perwidget.The corporate tax rate is40%. If the economyisstrong,each firmwill sell 1,200,000 widgets.If the economyentersarecession,eachfirmwill sell 1,100,000 widgets.If the economyisstrong,the after-tax profitof FirmA will be ______. Selectone: a. $60,000 b. $36,000 c. $0 d. None of these iscorrect e. $6,000 Feedback The correct answeris: $60,000 Question46 Correct Mark 1.00 out of 1.00 NotflaggedFlagquestion Questiontext
  • 24. Two firms,A and B, bothproduce widgets.The price of widgetsis$1 each. FirmA has total fixedcostsof $500,000 and variable costsof 50 centsper widget.FirmBhas total fixedcostsof $240,000 and variable costs of 75 cents perwidget.The corporate tax rate is40%. If the economyisstrong,each firmwill sell 1,200,000 widgets.If the economyentersarecession,eachfirmwill sell 1,100,000 widgets.If the economyisstrong,the after-tax profitof FirmB will be _________. Selectone: a. $36,000 b. None of these iscorrect c. $6,000 d. $0 e. $60,000 Feedback The correct answeris: $36,000 Question47 Correct Mark 1.00 out of 1.00 NotflaggedFlagquestion Questiontext Two firms,A and B, bothproduce widgets.The price of widgetsis$1 each.FirmA has total fixedcostsof $500,000 and variable costsof 50 cents per widget.FirmBhas total fixedcostsof $240,000 and variable costs of 75 cents perwidget.The corporate tax rate is40%. If the economyisstrong,each firmwill sell 1,200,000 widgets.If the economyentersarecession,eachfirmwill sell 1,100,000 widgets.Calculate firmA's degree of operatingleverage. Selectone: a. None of these iscorrect b. 2.86 c. 9.09 d. 11.0 e. 1.00 Feedback The correct answeris: 11.0 Question48
  • 25. Correct Mark 1.00 out of 1.00 NotflaggedFlagquestion Questiontext Two firms,A and B, bothproduce widgets.The price of widgetsis$1 each.FirmA has total fixedcostsof $500,000 and variable costsof 50 centsper widget.FirmBhas total fixedcostsof $240,000 and variable costs of 75 cents perwidget.The corporate tax rate is40%. If the economyisstrong,each firmwill sell 1,200,000 widgets.If the economyentersarecession,eachfirmwill sell 1,100,000 widgets.Calculate firmB's degree of operatingleverage. Selectone: a. .714 b. 7.86 c. 9.09 d. 7.14 e. None of these iscorrect Feedback The correct answeris: 7.86 Question49 Correct Mark 1.00 out of 1.00 NotflaggedFlagquestion Questiontext Whichof the followingare examplesof defensive industries? Selectone: a. Pharmaceutical firms. b. Durable goodsproducers. c. Foodproducers. d. Publicutilities. e. Foodproducers,pharmaceutical firmsandPublicutilities Feedback
  • 26. The correct answeris: Foodproducers,pharmaceutical firmsandPublicutilities Question50 Correct Mark 1.00 out of 1.00 NotflaggedFlagquestion Questiontext Whichof the followingare notexamplesof defensiveindustries? Selectone: a. Durable goodsproducers. b. Foodproducers. c. Durable goodsproducersandpharmaceutical firms. d. Pharmaceutical firms. e. Publicutilities. Feedback The correct answeris: Durable goodsproducers.